Equitable, Timely Rail Shipments

The crop production industry continues to undergo significant transformation and challenge associated with increasing demands imposed by changing markets, rising energy and manufacturing costs, foreign competition, consolidation, and ever increasing regulatory requirements. One of the most important issues facing the industry has to do with the lack of equitable and timely rail transport of inputs such as chemicals and fertilizers and outputs including grain and feed. The exorbitant cost and shipment delays associated with rail transport have brought this issue to the forefront of industry outrage and political debate.

Deregulation of the railroad industry including exemption from antitrust regulations, connected to passage of the Staggers Act of 1980, has led to a variety of continuing negative economic impacts on agribusiness and agriculture in general. The Act resulted in deregulation of competitive railroad activities and directed the organization now referred to as the Surface Transportation Board (STB) to “ensure rail customer access to rail competition and to maintain reasonable rates where there is an absence of effective competition.” Many critics of the STB have described the organization as failing its legislative directives miserably. Some of the most concerning issues that have resulted from the Staggers Act include the railroads’ continuing consolidation and monopoly of rail transport markets, the decline in rail service standards, and, most significantly, the rate increases that continue to negatively impact our businesses, our customers, and the economic health of the entire country.

A Class 1 Problem

Consolidations have led to a decline in the number of Class 1 railroad companies, which accounts for the fact that only four companies are now responsible for servicing the lion’s share of freight (averaging approximately 90% of rail shipment). In most cases, customers are held captive by dictates on delays and high cost since their transport needs are monopolized by one of the four Class 1 railroads. The prevailing attitudes of the railroad companies are best described as a “take it or leave it” provision of service. In cases where there are multiple carriers, customers find that railroad companies refuse to compete for their business.

It is also widely believed that lease agreements between short line railroad companies and Class 1 companies are designed to prevent movement of freight between competing Class 1 railroads. The STB allows railroad companies to take advantage of junctions, where cars can be transferred to another rail system, as a means of preventing rail customer access to competing companies.

Lack of healthy competition is known to drive prices higher. Railroad companies are also more likely to favor higher profit cargo from foreign sources than less favorable farm supply markets. Finally, even though Class 1 railroad companies continue to report record profits, maintenance and repairs of the railroad infrastructure are in decline.

The Need For Rail

Our country needs a financially viable and efficient railroad system that is accountable to rail customers and the nation for reliable service and reasonable rates. The monopoly that railroads have achieved does not accomplish either of these important and legislatively mandated objectives. As a recent example of the railroads’ abuse of market power, excessive fuel surcharges had been included in transport cost that did not coincide with the actual cost for specific rail shipments. Although a ruling by the STB did prohibit the railroads’ excessive fuel surcharge practice, it did not call for the reimbursement of lost revenues to the unfair profiteering.

The STB rate challenge process is also known to be so cumbersome and expensive that it provides essentially no protection to customers who depend on cost effective rail shipping service. In fact, the STB has actually made rulings that permit railroad companies to block customer access to competitors, which flies in the face of the legislative intent of the Staggers Act and documented objectives of the STB.

A coalition composed of hundreds of businesses and trade associations referred to as C.U.R.E. (Customers United for Rail Equity) is gaining valuable ground in urging Congress to repeal the freight rail industry’s antitrust exemptions, to revitalize the STB so that rail competition and reliable service at reasonable rates can once again be achieved, and to ensure that railroads reinvest in their infrastructure to meet the needs of their customers and the crop production industry as a whole.

Some of the champions pushing ahead with this include Rep. James Oberstar (D-MN), senior Democrat on the House Transportation and Infrastructure Committee, and Sen. John Rocke­feller (D-WV) and Sen. Byron Dor­gan (D-ND). There are also other senators that are supportive of this issue.

However, this is a very tough issue since the railroad lobby effort is very strong and the railroad companies have strong opinions as to what is and is not needed. To state the case clearly, C.U.R.E. has declared that “railroads have an obligation to serve ALL rail customers, the nation, and the nation’s taxpayers that have nurtured and protected them for more than 150 years.” 

Leave a Reply

Management Stories

ManagementMACA 2014: The State Of The Agricultural Industry, And Then Some
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
StewardshipA Multi-Layered Approach To Water Quality
October 6, 2014
Illinois event highlights research and technology designed to better monitor and improve water quality — and the benefits of cooperative, coordinated effort. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More

Top 100 Articles

CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
CropLife 100BRANDT, Verdesian Ink Distribution Agreement
December 9, 2014
The agreement grants BRANDT the exclusive right to sell and market Verdesian’s patented Steric chemistry in the Turf and Ornamental and eastern U.S. ag markets under the BRANDT Reaction product line name. Read More
CropLife 100CropLife 100: The Colors Of Custom Application
December 5, 2014
Although many color spray rigs are in the yards of the nation’s top ag retailers, the majority of them still come in only a few shades. Read More
CropLife 100Pinnacle Invests In Meridian Agriculture Distribution
December 4, 2014
Meridian will provide retailers with supplier-branded products and numerous opportunities to differentiate themselves from their competitors. Read More
CropLife 100CropLife 100: Entering A New Seed Era
December 4, 2014
The seed category has been re-vitalized during the past few years, and more good news (and varieties) are headed the industry’s way in 2015. Read More
CropLife 100CropLife 100: The Depressed State Of Fertilizer
December 3, 2014
Following downright giddy growth earlier this decade, fertilizer sales have fallen back down to earth the past two years. Read More

Latest News

Seed/BiotechKaren Arthur Joins AgriThority As Seed Treatment Produc…
December 19, 2014
Prior to joining AgriThority, Arthur directed research and development programs, overseeing laboratory and field research, to build the Valent U.S.A. seed treatment portfolio. Read More
EquipmentJohn Deere To Sell Crop Insurance Business
December 19, 2014
Deere & Co. has reached a definitive agreement to sell its crop insurance business, subject to regulatory approval, to Farmers Mutual Hail Insurance Co. of Iowa. Read More
Crop InputsNufarm Fills Regulatory VP Position
December 18, 2014
Nufarm announced today that Rob Schwehr has been promoted to the position of Vice President of Innovation & Regulatory Affairs for Nufarm Americas. Read More
Seed/BiotechReport: China Approves Viptera Corn, U.S. Officials Awa…
December 17, 2014
Chinese authorities have informed some agriculture industry officials the government has approved U.S. imports of a type of genetically modified corn developed by Syngenta. Read More
FertilizerMonty’s Plant Food Brings In New Sales Rep
December 16, 2014
Monty's Plant Food Company has hired Warren Kearns as its newest Sales Representative for the South Carolina area. Read More
EquipmentHagie Wins 2014 CropLife IRON Product Of The Year Award
December 15, 2014
The self-propelled sprayer maker has a hit on its hands with the new STS Series model. Read More
Syngenta
Seed/BiotechSyngenta Sees China Approving Contentious GMO Corn Soon
December 15, 2014
Syngenta will make an announcement when it receives official documentation from China that Agrisure Viptera corn, known as MIR 162, has been cleared for import. Read More
Crop InputsVerdesian Life Sciences Names Vice President Of Communi…
December 15, 2014
Amy Bugg will oversee the execution of all promotional strategies for the corporate brand and the complete product portfolio. Read More
StewardshipFarmers, Retailers Attend 4R Certification 4U Workshop
December 15, 2014
More than 160 farmers and ag retailer attended the “4R Certification 4U” workshop December 12 to learn more about the 4Rs of nutrient stewardship, water quality research in the area and cost-sharing opportunities. Read More
Matt Hopkins10 Best New Agriculture Apps For 2015
December 15, 2014
These new agriculture apps are certain to help ag professionals do their jobs more efficiently in 2015 and beyond. Read More
ManagementARA Learnings, Retail Buying Intentions: Welcome To Cro…
December 12, 2014
This informal video program puts news and events effecting retailers into context, and features Editors Paul Schrimpf and Eric Sfiligoj. Read More
Seed/BiotechMonsanto Herbicide-Tolerant Technology Closer To Commer…
December 12, 2014
The final EIS moves Monsanto one step closer to the introduction of Bollgard II XtendFlex cotton and Roundup Ready 2 Xtend soybeans, paving the way to provide access to dicamba-tolerant soybeans and cotton. Read More
Seed/BiotechUSDA Issues Final Environmental Impact Statement On Her…
December 12, 2014
The USDA Animal and Plant Health Inspection Service (APHIS) is issuing a final environmental impact statement on varieties of cotton and soybeans that have been genetically engineered for resistance to several herbicides, including the one known as dicamba. Read More
CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
LegislationARA Applauds CFATS Passage Prior To Holiday Adjournment
December 11, 2014
The streamlined bill provides a four-year authorization of the CFATS program and guidance to DHS on key issues of chemical facility security Read More
Seed/BiotechBayer CropScience’s ILeVO Approved By EPA
December 11, 2014
EPA has approved ILeVO, the only seed treatment that protects the root system against infections caused by the Sudden Death Syndrome fungus and has activity against dangerous nematodes. Read More
Biologicals in Emerging Markets Map.
Crop InputsBiocontrols Could Quadruple By 2025; Will Regulators Pl…
December 11, 2014
The European experience with GMOs offers caution — and a promise — for biologicals. Read More
Crop InputsBASF Donates $75,000 To Feeding America
December 10, 2014
The donation will support Feeding America’s National Produce Program, an initiative that helps with planning, transportation and logistics to ensure fresh produce deliveries to the 200 member food banks around the country. Read More