A strong and proactive Surface Transportation Board (STB) is necessary to help agricultural shippers and others who are captive to one railroad line receive fair rates and good service, NAWG President Wayne Hurst told that Board’s Members at a hearing on Wednesday.
Hurst, a wheat, barley and sugar beet farmer from the Burley, Idaho, area, spoke as part of a two-day public forum examining the state of competition in the nation’s railroad industry.
He described to Board members farmers’ situations as “price takers” rather than “price makers,” with little control over the price they receive for their products and no ability to pass along increased costs to customers.
Studies have shown that railroad mergers over the past 30 years have caused a substantial reduction in rail-to-rail competition. In the wheat industry alone there are substantial pockets of captivity in at least 14 states stretching from Texas to the Pacific Northwest that are primarily attributable to the effects of mergers. In these areas the rates are higher and the service levels are not the same as service that is provided in areas where there is rail-to-rail competition.
“Railroads are vital to agricultural production and the value chain. They are extremely important to us, and in my experience, the people who run them are good, smart, hard working Americans, much like the American farmer,” he told STB Members.
“But those facts do not take away from the reality that there are billions of dollars to be made each year in the railroad business, and the pressure to maximize that profit is real.”
Higher transportation costs take away from revenue farmers would reinvest in buying inputs and expanding their businesses. Higher transportation costs also affect the position of U.S. agricultural products in highly competitive export markets – a particular concern for wheat farmers, who export about half of their annual production in a typical year.
“Farmers believe that both railroads and shippers would be better off with more competition in the marketplace. We fervently believe that a strong, proactive STB can provide a host of benefits where competition cannot physically be created,” he said.
Hurst also told STB Members that wheat growers using the nation’s railroads continue to face high rates and spotty service, particularly in areas without competition.
Hurst did note that, based on his understanding and experience, in recent years service has generally improved, though a good portion of the change is attributable to a weaker economy and continued direct dialogue between shippers and railroads.
NAWG works to help its members find solutions to rail-related concerns by participation in the STB process; advocating for STB and railroad reform on Capitol Hill; and working directly with railroad companies, in particular BNSF Railway.