Arlington, VA — The American Farm Bureau Federation released a report on Sept. 8 that found steadily increasing rail shipping rates for grain have created additional stress on already tight margins for producers.
“Increasing tariff rates associated with railways put additional pressure on producers’ bottom lines, especially in locations with weak competitive forces, high product supply, constrained transportation infrastructure and increased fuel prices,” noted the report, titled Increasing Freight Rail Rates Put Additional Pressure on Farm and Ranch Income.
Over the last five years, the cost of shipping grain on railways has increased by 18 percent, 13 percent, 11 percent and 7 percent for ethanol, corn, soybeans and wheat, respectively, the report noted.
Data also show that since 2004 the proportion of total revenue from non-competitive rail movements has increased two-fold (20 percent to 43 percent as shown in the chart below).
“This means a larger percentage of revenue is from movements not subject to strong competitive forces, a possible incentive for railways to exhibit price setting behavior,” Farm Bureau noted.
The report goes on to say that if the Surface Transportation Board fails to evaluate rate increases on all non-competitive movements, rate increases can slip under the radar and disproportionally impact customers limited in their ability to choose other transportation options.
- From the Sept. 10 NGFA Newsletter
