Farmers & Railroads Fight Over Rates

The Wall Street Journal recently reported that farmers and railroads have renewed their once dormant fight about rates for carrying goods to shipping ports. Farmers on one hand say that railroads are simply taking advantage of Asia’s surging demand for corn, soybeans and other crops — while on the other hand, railroads say they are raising rates due to higher fuel costs and the need to financially restore the nation’s rail network.

Currently in Congress, farmers, grain merchants and other rail shippers are seeking tougher regulation after the government found freight rates for many crops rose almost 50% from 2003 to 2007. A Senate bill introduced in December would give federal regulators at the Surface Transportation Board new powers to police rates, a bill opposed by railroads.

Two of the biggest names in the business also are duking it out before those regulators. Commodities giant Cargill Inc. has accused Burlington Northern Santa Fe of double dipping on fuel charges by including that expense in its base rate, then adding a fuel surcharge. Burlington Northern disputes the claim, which is similar to complaints in a pending lawsuit against railroads by other customers, according to the WSJ.

Billions of dollars are at stake in potential revenue to be earned from an anticipated jump in U.S. crop exports to China and other Asian nations. U.S. farmers already send about $20 billion of corn, soybeans and wheat to Asia annually, up from $6 billion a decade ago. In some cases, according to the article, railroads are charging more to farmers who are isolated from other economically viable means of transport like barges.