ASA Director Lance Peterson, a soybean farmer from Underwood, Minnesota, U.S., represented ASA and the Minnesota Soybean Growers Association at the hearing, and re-emphasized points he made at a previous STB hearing in the spring.
“The message that I delivered was that inadequate rail service through delays and increased freight costs is not just a business challenge, but creates massive losses which are passed directly on to the agricultural producer—the farmer. I stated that my lost income would likely exceed $100,000, as one producer,” Peterson said. “I also stated that with thousands of producers across the upper Midwest losses could be in the hundreds of millions of dollars. Unfortunately these tremendous losses have now been confirmed. A recently released report from the University of Minnesota shows lost Minnesota farm income of $100 million from March to May of 2014.”
Peterson said the rail industry discussions in the spring centered on slow shipments due to the coldest winter in 30 years and assured correction before the 2014 harvest. But now, half way through the wheat harvest there’s still an abundance of last year’s crops that have not been moved, grain bin companies are so busy they can’t take any more business and farmers are in a difficult position of adding storage to avoid piling grain on the ground during this year’s harvest.
“The rail problems of the last year have grain shippers trying to figure out how to navigate through this year. In many cases shippers have spent millions of dollars in premiums on initial rail car auctions to access rail cars for the coming year,” Peterson said during his testimony. “Based on expected car movement, this amounts to an approximate $700/car premium just to access the cars. If grain movement is not adequate, shippers will be forced to look to the secondary market to acquire additional cars. The asking price for October/November shipments is currently more than $4,000/car. It is imperative that rail movement is adequate and timely.”
He requested fuller reporting of rail service, asking the STB to require railroads to submit metrics showing past dues, average days late, turnaround times, etc. for agricultural customers vs. crude oil customers and other customers.
His full testimony is available here.