Capital Press

Increased rail freight rates and declining service for some shippers have pushed more grain onto trucks, according to a new study on rural transportation.

Nationally, rail rates for grain and oilseeds are higher than for other commodities, and those rates have increased rapidly since 2003, the USDA study found.

Rail rates for grain and oilseeds rose 46 percent from 2003 to 2007, while rates for all other commodities increased 32 percent during the same period.

The 500-page study released April 27 was mandated by Congress as part of the 2008 Farm Bill. It focused on the four major modes of transportation commonly used to move agricultural products -- truck, rail, barge and ocean vessel.

Ocean shipping and railroads are exempt from antitrust rules, and those exemptions have the potential to "decrease competition, reduce service and raise rates," authors of the study said.

While higher rail rates have in some cases pushed more freight onto trucks, rail remains the only cost-effective transportation available to many ag producers, the study pointed out.

In Idaho, about 50 percent of the state's wheat is exported, but there's only a single major rail carrier, Union Pacific, that provides service in both northern and southern Idaho.

Shipments to Portland for export to the Pacific Rim must either go by rail or by barge via the Port of Lewiston, said Scott Brown, president of the Idaho Grain Producers Association.

Rail is also the only reasonable transportation option for shipping barley malt from the Modelo plant in Eastern Idaho to Mexico, he said.

The level of rail competition for grain and oilseed shipments has decreased significantly, according to the study.

Nearly 75 percent of agricultural areas lost rail competition from 1992 to 2007, and the percentage of areas in which a railroad had a monopoly in transporting grains and oilseeds increased from 10 percent to 15 percent.

The findings provide further evidence that the major railroads enjoy monopoly pricing power and that more competition is needed, said Bob Szabo, executive director of Consumers United for Rail Equity, a coalition of freight rail customers pushing for federal law changes.

Rail industry officials said the study points out the vital link that railroads provide to agricultural shippers.

"USDA took a comprehensive look back and reinforced what railroads are seeing in the marketplace -- since deregulation, the health of the railroad industry has improved, in turn benefiting America's farmers and rural areas," Edward R. Hamberger, president of the Association of American Railroads, said in a press release.


The USDA Agricultural Transportation study is available at:

Recommended for you