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

Crop InputsEPA: Let’s Talk Imidacloprid, Bees On February 18
February 11, 2016
EPA will hold an online technical briefing on its preliminary pollinator risk assessment for imidacloprid, a neonicotinoid insecticide, on Feb. Read More
ManagementThe latest on Syngenta-ChemChina Deal
February 11, 2016
Executive Editor Paul Schrimpf invites Jackie Pucci and Dave Frabotta from sister publication AgriBusiness Global to discuss the latest developments Read More
Syngenta Sign
Crop InputsSyngenta: Keep Ag In Mind During Election Season
February 10, 2016
As presidential candidates stake out their 2016 election platforms and key priorities, growers and their business partners should seek opportunities Read More
Crop InputsWeed Expert: Adding A Second Herbicide Not Always Easy
February 9, 2016
In my last post, I reviewed some recent research that suggests one of the best ways to delay the evolution Read More
Top 100 Articles
Elburn Cooperative
CropLife 100Elburn Cooperative Members Vote To Join CHS
December 28, 2015
With 81% of eligible producers voting, 94% cast an affirmative ballot for Elburn Cooperative, a diversified agricultural retailer based out Read More
West Central Cooperative, Jefferson, IA
CropLife 100Farmers Cooperative-West Central Merger Approved
December 21, 2015
The members of Farmers Cooperative Co. (FC), Ames, IA, and West Central Cooperative, Ralston, IA, have both approved the merger Read More
Wheat Growers Innovation Center, Bath, SD
CropLife 100Wheat Growers Opens Innovation Center
December 21, 2015
Wheat Growers’ commitment in providing its farmer-owners with the latest in technological advancements now has a one-of-a-kind focal point, as Read More
CropLife 100ARA Selects The Andersons As 2015 Retailer Of The Year
December 9, 2015
The Agricultural Retailers Association today named Maumee, OH-based The Andersons as its Retailer of the Year for 2015. The award Read More
CPS Washington Court House John Deere Sprayer
CropLife 100Application Equipment Report: It Is Easy Being Green For Top 100 Ag Retailers
December 5, 2015
On The Muppets television show, Kermit the Frog is famous for singing a song about the troubles he encounters in Read More
Fertilizer Bin
CropLife 100Fertilizer Sales: Another Down Year For Top 100 Ag Retailers
December 4, 2015
In pure number terms, the fertilizer category still dominates all crop inputs/services among CropLife 100 ag retailers. In 2015, for Read More
Latest News
Crop Protection Products in storage
Crop InputsNewsweek: World Is ‘Awash In Glyphosate’
February 11, 2016
The world is awash in glyphosate, the active ingredient in the herbicide Roundup, produced by Monsanto. It has now become Read More
Crop InputsEPA: Let’s Talk Imidacloprid, Bees On February 18
February 11, 2016
EPA will hold an online technical briefing on its preliminary pollinator risk assessment for imidacloprid, a neonicotinoid insecticide, on Feb. Read More
ManagementThe latest on Syngenta-ChemChina Deal
February 11, 2016
Executive Editor Paul Schrimpf invites Jackie Pucci and Dave Frabotta from sister publication AgriBusiness Global to discuss the latest developments Read More
AdjuvantsUniversity of Illinois Confirms Adjuvant’s Perfor…
February 11, 2016
An independent University of Illinois study has shown that WETCIT adjuvant, now with TransPhloem technology, provides greater herbicide uptake and Read More
Crop InputsSyngenta’s Acuron Flexi Receives EPA Approval
February 11, 2016
Growers looking to control their toughest weeds with flexibility will have access to Acuron Flexi corn herbicide from Syngenta, now Read More
EquipmentAGCO Showcases White Planters 9800VE Series Planters AT…
February 11, 2016
AGCO unveiled the new White Planters 9800VE Series planter during the 2016 National Farm Machinery Show in Louisville, KY. The Read More
EquipmentCase Unveils 2000 Series Early Riser Planter At NFMS
February 10, 2016
Case IH revealed the all-new 2000 Series Early Riser planter to media and attendees at the opening of the National Read More
Syngenta Sign
Crop InputsSyngenta: Keep Ag In Mind During Election Season
February 10, 2016
As presidential candidates stake out their 2016 election platforms and key priorities, growers and their business partners should seek opportunities Read More
Crop InputsMarrone Bio Innovations Submits New Bio-Fungicide For E…
February 9, 2016
Marrone Bio Innovations, Inc. (MBI) today announced that it has submitted a new biological fungicide (MBI-110) to EPA. The broad spectrum Read More
Crop InputsWeed Expert: Adding A Second Herbicide Not Always Easy
February 9, 2016
In my last post, I reviewed some recent research that suggests one of the best ways to delay the evolution Read More
Crop InputsGenetic Literacy Project: Farmers Need More Herbicide C…
February 9, 2016
There are two things that I think just about every weed scientist can agree on, writes Andrew Kniss for The Read More
HerbicidesWeed Expert Warns North Dakota Growers Of Coming Herbic…
February 9, 2016
Ford Baldwin painted a bleak picture of weed control at a recent workshop here exploring the future of ag production, Read More
HerbicidesWSSA Announces New, Updated Free Web Resources
February 9, 2016
Today the Weed Science Society of American (WSSA) announced that new and updated educational materials for both weed scientists and Read More
Soybean field
FungicidesFour Arysta Fungicide Formulations Given FIFRA Approval…
February 8, 2016
Arysta LifeScience North America recently announced the issuance of Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 2(ee) Recommendations for Read More
FungicidesAgri-Fos Systemic Fungicide Plus Receives EPA Registrat…
February 8, 2016
Vivid Life Sciences has announced the EPA registration of Agri-Fos Systemic Fungicide Plus, a highly concentrated active ingredient phosphite fungicide, Read More
Crop InputsBayer Contests EPA’s Decision On Valuable Insecticide F…
February 5, 2016
Crop Science, a division of Bayer, has announced it has refused a request by the Environmental Protection Agency (EPA) to Read More
Wheat Field North Dakota
Seed/BiotechSyngenta Wins Seed Fraud Suit Against South Dakota Grow…
February 5, 2016
Syngenta has obtained a $25,000 settlement from Paul and John Mayclin, Mayclin Farms, Plankinton, SD, in response to their Plant Read More
ManagementOABA Annual Conference Wraps Up In Columbus
February 5, 2016
More than 300 Ohio AgriBusiness Association (OABA) members and industry professionals were on hand to engage in collaborative learning and Read More