Small town ag shippers take aim at rail captivity, STB

Small town ag shippers take aim at rail captivity, STB Agricultural shippers in small town America expressed their frustration to lawmakers about the inflexible and increasingly expensive service offered by the nation’s railroads.
   “By and large, wheat country is centered away from our waterways and ocean ports, leaving us primarily dependent on railroads to move our product to export facilities,” said David Cleavinger, a Texas farmer and president of the National Association of Wheat Growers, to the House Small Business Committee on May 1. “Many times and in many locations, an ever-consolidating rail system has taken advantage of our dependence and lack of transportation options.”
   If a rural community has rail access, it’s generally served by a single railroad. Otherwise, agricultural shippers must pay to truck or barge their commodities to consolidation points with rail service.
   “Agricultural retailers and farmers must continue to use the railroad system for transportation of agricultural inputs despite the railroads’ continued abuse of shippers,” Dan Weber, vice president of agronomy for Ceres Solutions in Indiana and chairman of the Agricultural Retailers Association, told the committee.
   Many agricultural shippers in rural markets believe they are “captive” to the railroad that serves their particular area and that the federal agency charged with protecting them from rail rate abuse — the Surface Transportation Board — is inept.
   “Rates in excess of 180 percent are considered above the threshold of unreasonableness by the STB and are therefore challengeable,” Cleavinger said. “In some captive wheat growing areas the rates can run as high as 300 to 400 percent or more of variable cost.”
   “The cost of rail service to our agricultural retail operations has increased at a rate that forces us to look at alternatives but finding few,” Weber said.
   According to the Agricultural Retailers Association, dry rail fertilizer tariffs into Indianapolis increased from $33.32 per ton for a single car shipment of diamonium phosphate from Florida in July 2005 to today’s rate of $52.63 per ton, a 58 percent increase over three years. The cost to transport imported anhydrous ammonia by rail from the Port of Tampa to Ceres Solutions’ facility in Renssellaer, Ind. in 2000 was $22.79 per ton, and has since increased to $163.55 per ton. Agriculture shippers say they’re forced to pay the price because alternatives for long hauls, such as truck, are not economical either.
   It’s estimated that for an agricultural shipper to challenge a railroad’s rate through the STB would cost about $250,000.
   “Even if the rules can be changed to give greater access to rate relief for small shipments, we don not believe that rail rate challenges before the STB would ever become a popular course of action for rail customers, because litigation with a carrier that they are so dependent upon risks souring a business relationship that may be critical to business survival,” testified Kendell W. Keith, president of the National Grain and Feed Association.
   Shippers testifying before the House Small Business Committee Thursday said they endorse recent House and Senate bills offering improved federal oversight and commercial protections to shippers with limited rail access (H.R. 2125 and S. 953) and calling for the elimination of several antitrust exemptions for the railroads (H.R. 1650 and S. 772).
   “Rural businesses across America have proven they can adapt to new technologies and changing market conditions. Their products won’t remain competitive, however, without affordable and reliable means of transportation,” said Rep. Nydia M. Velazquez, D-N.Y., chairwoman of the House Small Business Committee, in a statement. “Addressing this problem is not optional. It is a priority for our rural communities — and for the nation’s economy as a whole.” ' Chris Gillis