Railroad Competition Vital to Corn Growers, Notes NCGA (5-3-05)

Corn growers depend on reliable, cost-effective transportation whether by barge truck or rail to receive farm inputs and to deliver their crops. That is why legislation like the Railroad Competitive bill introduced in the Senate last week is vital to growers of all commodities not just corn, according to the National Corn Growers Association (NCGA).

“As corn growers,, we rely on all of the nation’s transportation systems to get our product to the markets. In order to move our product and maintain our economic stability, railroad transportation rates must be competitive and reasonable,” said NCGA Production & Stewardship Action Team Chair Rodney Moe.

Before railroad deregulation 25 years ago, there were more than 40 Class I railroads competing for business. Today, after more than 50 mergers and consolidations there are seven Class I railroads, and four of them control more than 95 percent of railroad business. Three control more than 70 percent of grain movement. Consolidation has led to states, regions and entire industries becoming captive to a single railroad, the NCGA notes.

S. 919, the Railroad Competition Act of 2005, was introduced last week by Sen. Conrad Burns (R-Mont.) largely to enhance competition among and between rail carriers in order to ensure efficient rail service and reasonable rail rates. The bill has been referred to the Senate Committee on Commerce, Science and Transportation. NCGA is hopeful that the committee will hold a hearing on this important issue in the coming weeks.

Current federal policy allows a railroad to determine how traffic will move on the railroad’s system even if the route is away from points where the customer may gain access to rail competition.

S. 919 would:

The STB has the responsibility of protecting “captive rail customers” – those subject to railroad monopoly or market power – from unreasonably high rates. However, the process developed by the STB is complicated, time consuming and expensive.

The legislation would require STB to adopt a new method based on the railroad’s actual costs, including a portion of fixed costs and an adequate return on debt and equity.

The legislation also contains a provision to increase from $3.5 billion to $35 billion a program to provide loan and loan guarantees to entities for rail infrastructure improvements.

“NCGA believes improvements to all transportation infrastructures from railroads to the much needed modernization of the locks on the Upper Mississippi and Illinois River systems are vital to this nation’s ability to be competitive in the world marketplace,” said Moe.

Cosponsors include Sens. Larry Craig (R-Idaho), Mark Dayton (D-Minn.), David Vitter (R-La.), John Thune (R-S.D.), Norm Coleman (R-Minn.), Tim Johnson (D-S.D.), Jay Rockefeller (D-W.V.), Byron Dorgan (D-N.D.), and Max Baucus (D-Mont.).

On the other side of the Capitol, House Reps. Richard Baker (R-La.) and James Oberstar (D-Minn.) are expected to introduce similar legislation sometime this week.

To view the full piece of legislation, please visit NCGA’s Legislation Action Center at http://capwiz.com/ncga/issues/bills/?bill=7521476.

Last reviewed May 3, 2005