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Montana Ag Network: Rail rate hikes could impact farmers

Posted at 1:01 PM, Apr 18, 2019
and last updated 2019-04-21 18:53:47-04

As farmers continue to experience historically low grain prices, Montana producers will also experience a rate hike in rail transportation to get their product to market. Recently, the Montana Farmers Union’s (MFU) Chris Christiaens traveled to Washington D.C. to share agriculture’s concerns regarding the increases with the Surface Transportation Board (STB).

“One of the primary reasons we went back was the simple fact, we’re talking about captive shippers and with Burlington Northern Santa Fe Rail Road (BNSF) being the only rail across the northern part of Montana,” said Christiaens.  “It costs about thirty four hundred and some odd dollars for a grain car to take our grain to the port in Washington.”

North Dakota and South Dakota will also see rate hikes, but their rates are around $350 dollars cheaper per train than the rates in Montana.

“It’s interesting in the simple fact that both North Dakota and South Dakota are further from the port than is Montana,” Christiaens added.

With BNSF accounting for 94% of the state’s rail traffic, Farmers Union is pleased the Surface Transportation Board is looking into the issue.

“One of the things that the board is asking for are some rate data from the railroads,” Christiaens explained. “They will be getting that information by the end of May, at which point they will then be looking at it thinking about how do you deal with states such as Montana where you are captive shipper.”

Rail transportation is a critical part in moving commodities, but Christiaens said more competition would benefit Montana farmers.

“I doubt that there’s ever going to be a real opportunity to have competition along that line that Burlington Northern does,” said Christiaens. “But you know, even if the Canadian Pacific could come down at some part it could help. When you’ve got competition, generally you can get some better rates. Whether that will happen I don’t know. But I think it will also be interesting to find out what the rates will show when they’re all compiled by the STB the end of May of this year.”

BNSF is the largest railroad operator in Montana, accounting for 94% of the state’s rail traffic.

President Donald Trump is threatening tariffs against the European Union if the EU doesn’t bring agriculture to the trade negotiation table. Trump has threatened tariffs on European cars and auto parts imports, a move the EU has previously said it would abandon the talks over.

The EU agreed to move forward with the trade talks earlier this week but reiterated that agriculture will not be part of the negotiation. The refusal to include agriculture makes any deal with the EU uncertain, as lawmakers from farm states have threatened the potential agreement would not pass Congress.

Agriculture groups are urging the Trump administration to demand agriculture be included in the negotiation, citing biotechnology and pesticide regulations in the EU, among other issues. If Trump goes ahead with the auto tariffs, the EU seems likely to retaliate with tariffs on U.S. wine and dairy.

-Reported by Lane Nordlund/MTN News