Record corn production and growing ethanol production, and its byproducts, are increasing the pressures placed on the U.S. rail system. Last week, in a testimony to the House Transportation and Infrastructure Committee, the National Corn Growers Association told legislators the nation’s railroad freight system is providing “deteriorating service” to agricultural shippers.

In written testimony, NCGA pointed out that “service predictability is a huge issue. Determining when rail equipment will arrive at origin for loading, when it will be furnished locomotive power and when it will reach destination are increasing uncertainties. It is common to hear reports from agricultural shippers who experience wait times for rail cars exceeding 30 days. In a world of ‘just-in-time’ delivery, a 30-day wait for your product to be picked up is unacceptable to your customers.”

NCGA pointed out that agricultural shippers also often pay higher prices and receive a lower service priority than other customers. A Government Accountability Office study found that while railroad rates for coal, motor vehicles and other large shipments have declined, rates for agricultural shippers have increased.

The rising demand for ethanol could make matters worse. Rail is the primary method to transport ethanol. NCGA's testimony stated, “ethanol production is centered in the Midwest, but 80 percent of the population, and therefore the ethanol demand, lives along the coastlines.”

NCGA's testimony also addressed the Railroad Competition and Service Improvement Act of 2007 (H.R. 2125). The bill is a step toward addressing many of the rail transportation problems facing agriculture.  “This legislation will improve access to competitive rail service, protect those without competition from being subjected to unreasonable rates and/or practices and re-establish the reliability of rail service,” NCGA's testimony stated. “In particular, this legislation provides key improvements to issues important to agriculture including the removal of paper barriers and the use of final-offer arbitration.  NCGA looks forward to working with the committee to see that this legislation moves quickly through the congressional process.”

Source: National Corn Growers Association