JOHNSON TESTIFIES ON RAILROAD COMPETITION FOR AGRICULTURE

News Date May 02, 2008

       NASDA President and North Dakota Agriculture Commissioner Roger Johnson testified at an April 24 hearing held by the U.S. Surface Transportation Board (STB) on railroad competition and transportation challenges for the agricultural sector. The hearing focused on the common carrier obligation of railroads and several state government officials, grain shippers, and agricultural organizations also testified. 
       Johnson emphasized that rail transportation is a critical component to the agriculture industry, but lack of competition among the railroads has resulted in unreasonably high rates and unreliable service for agricultural producers. He said that greater federal oversight of railroad rates and services is urgently needed, especially when competition is absent. 
       Johnson told federal regulators that producers in North Dakota and other Midwestern states bear the brunt of monopolistic rail practices, such as captive rates and fuel surcharges, as well as rail line abandonment. He was especially critical of the practice of placing overpriced rail cars up for bid to shippers, citing the 2005 example of the Burlington Northern Santa Fe's suspension of nearly all railcar ordering for upcoming harvest months. As a result, bids were more than $400 over tariff. 
       During the hearing, Johnson also said the railroads are discriminating against intermodal shippers of agricultural commodities. The demand for container shipping of agricultural products is dramatically increasing, due in large part to the worldwide demand for identity-preserved commodities. Johnson noted that high rail rates deter further inland rail shipping of the containerized imports. Often, the containers are unloaded at coastal ports for domestic distribution, further exacerbating serious container shortages in the Midwest.
       Earlier this year, NASDA sent letters to Congress expressing support for legislation in the House and Senate that would address some of the rail competition and service concerns.   (Contact: Charlie Ingram)