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

LegislationUSDA: Quick Implementation Of Disaster Assistance Programs A ‘Top Priority’
July 9, 2014
USDA has processed 106,000 payments to farmers in 40 states across the country who suffered livestock and grazing losses between Oct. 2011 and passage of the 2014 Farm Bill. Read More
LegislationTFI Praises White House For Signing WRRDA Into Law
June 11, 2014
The bill streamlines U.S. Army Corps of Engineers projects, prioritizes authorized waterway improvements and provides needed adjustments to the Inland Waterways Trust Fund. Read More
Allied Cooperative Grain Plant
ManagementAllied Cooperative, Arcadia Co-op Plan Merger
June 10, 2014
The Board of Directors of Allied Cooperative and Arcadia Co-op recently signed a letter of intent for a merger between the two cooperatives. Read More
EmployeesSyngenta: ‘Take Charge’ Of Farm Safety
June 4, 2014
Syngenta and health officials warn of four health-related challenges in agriculture and how they can be managed. Read More

Trending Articles

Green Valley Ag facility
Retail FacilitiesGreen Valley Ag Adopts A.J. Sackett’s Precision Fertilizer Blending® Technology At New Facility
July 8, 2014
Sackett's Precision Fertilizer Blending® Technology is making huge strides around the world. Green Valley Ag adopts the technology at its new facility to support its advancing agronomic needs. Read More
Retail FacilitiesWaconia Manufacturing Builds Facility Designed For Speed, Efficiency
July 7, 2014
To make its new hub facility more efficient, Cooperative Elevator enlisted the aid of Waconia Manufacturing. Read More
EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More

Latest News

HerbicidesWillowood To Market Glufosinate
July 28, 2014
Willowood USA recently announced that Federal EPA has approved its technical registration for glufosinate. Read More
InsecticidesHow To Scout For Corn Earworms In Corn
July 28, 2014
In her weekly report, University of Missouri Agronomy Specialist Jill Scheidt discusses what to look for when scouting for corn earworm. Read More
Crop InputsDuPont Pioneer, Weyerhaeuser Enter Technology License A…
July 28, 2014
The agreement brings together agricultural and forestry know-how to sustainably improve crop productivity for corn growers around the world. Read More
EquipmentAGCO Launches Global iPad App
July 28, 2014
The free AGCO Global iPad App can be downloaded from the Apple iTunes Store and features the full family of RoGator self-propelled sprayers and TerraGator high-floatation spreaders. Read More
Eric SfiligojYuma Centennial Ag Supply Earns 2014 National Environme…
July 28, 2014
Colorado-based ag retailer receives top trophy in 24th annual DuPont Crop Protection/CropLife ceremony. Read More
CropLife 100Pinnacle Forms Alliance With Wildlife Managment, Seed O…
July 25, 2014
The strategic alliance will provide Tecomate with key wildlife products, processing facilities, distribution centers and sales through Pinnacle’s ever-growing retail network. Read More
ManagementFranken Presses White House On RFS Support
July 25, 2014
Al Franken and a group of Senate democrats recently met with senior White House official John Podesta to urge the administration to change its position on an EPA proposal. Read More
ManagementASA, FarmLink To Launch ‘Operation Benchmark̵…
July 25, 2014
The American Soybean Association (ASA) and FarmLink are teaming up to help farmers close the $11 billion gap between what they harvested in 2013 and what they could harvest annually. Read More
StewardshipNorthey: Farmers Commit $1.4 Million to Try New Water Q…
July 25, 2014
The practices that are eligible for funding include cover crops, no-till or strip till and using a nitrification inhibitor when applying fall fertilizer. Read More
Precision AgFarmers Learn How Changing World Will Impact Iowa
July 24, 2014
Technology and understanding global consumer demand for Iowa farm products brought hundreds of farmers and agribusiness leaders to Ames recently for the annual Iowa Farm Bureau Federation Economic Summit. Read More
HerbicidesPurdue: Late Season Weeds May Require Manual Removal
July 24, 2014
Hand-rouging and pulling late season weeds by hand may be the best way to remove them, more so than using a herbicide, a Purdue Extension weed scientist says. Read More
Soybean Field
InsecticidesTransform WG, Closer SC Insecticides Receive R&D 10…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More
EquipmentKinze, Raven Team Up On 4900 Planter Monitor
July 23, 2014
Kinze Manufacturing announces a partnership with Raven Industries to develop a standalone monitor solution for the Kinze 4900 series planter. With this new Read More
LegislationNew Farm Bill Continues To Confuse As Growers Await USD…
July 23, 2014
The new five-year Farm Bill eliminates many of the direct payments previously payed to growers and could benefit from USDA clarification, reports a Toledo Blade columnist. Read More
EquipmentPrecisionAg.com Relaunches With Responsive Design For M…
July 22, 2014
PrecisionAg, the worldwide leader in precision agriculture information and analysis, announces the launch of its completely redesigned website, PrecisionAg.com. Read More
FungicidesEPA OKs Two Willowood Fungicides
July 21, 2014
The EPA has approved Willowood Azoxy 2SC and Willowood AzoxyProp Xtra. two widely used broad spectrum, preventative fungicides with systemic and curative properties. Read More
Precision AgFarmers Learning Fast As UAVs Take Off
July 17, 2014
Farmers and others interested in how UAVs can be used in agricultural applications were able to learn more about the technology during the recent Precision Aerial Ag Show. Read More
CropLife 100Bobby Knight, Richard Petty To Highlight Ag PhD Field D…
July 17, 2014
Attendees at the July 24 Ag PhD Field Day at Hefty Farms will learn about the latest agricultural technologies, and get a chance to meet legendary sports figures Bobby Knight and Richard Petty. Read More