By TIM ALEXANDER
Illinois Correspondent

ANKENY, Iowa — The  Soy Transportation Coalition (STC) has updated its annual report on the rail transportation of soybeans and soy products, reporting that 41 percent of the rail movements of soybeans (9.89 million tons) were transported at rates the U.S. Surface Transportation Board (STB) would classify as potentially excessive, during 2008.

The potential overcharge to the soybean industry amounted to $110 million, according to the study, and was spurred by potentially excessive rates being charged by railroads on 60 percent of all biodiesel shipments during that year.
The report is available in its entirety at www.soytransportation.org and provides statistics on national and state levels on the volume of soybean products moved by the rail industry, the leading destinations for the products and the rates charged to customers by railroads. It also addresses potential overcharges made by the railroads, which was one of the driving forces behind the establishment of the STC in 2007, according to Mike Steenhoek, executive director.

“Farmers are increasingly realizing the importance of transportation to their bottom lines,” said Steenhoek, who oversaw the creation of the coalition comprised of nine state soybean boards (Ohio, Indiana, Kentucky, Illinois, Iowa, Kansas, Nebraska and the Dakotas), along with the United Soybean Board and American Soybean Assoc.

“As agriculture has become more and more global, as more and more of what farmers produce gets consumed not only in the U.S. but the far reaches of the globe, farmers increasingly realize that one of the keys to our international competitiveness and profitability is the logistics system that serves the journey from the farm to the customer.”

Steenhoek is concerned the United States is not investing enough capital in its transportation infrastructure to remain competitive in expanding global markets. “You don’t have to be much of a prophet to envision a time when U.S. agriculture is no longer the most economical choice in the international marketplace. As a result of this concern, organizations came together to form the STC, an entity with an exclusive focus on the U.S. transportation infrastructure, be it highways, bridges, rail or maritime,” he explained.
The STC initiated its yearly rail transportation study to document what farmers and shippers had been alleging for years – that railroads were overcharging for the transportation of agricultural products, with the cost for shipping soybeans serving as a prime example.

“Instead of relying on both positive and negative testimonials or anecdotes from the field on how effectively soybeans are moved by rail, we decided to conduct a data-driven study. We wanted to find out what the problems were and where they lie. This study helps establish a baseline for future reference and comparison,” said Steenhoek, adding the report revealed first and foremost that the rail industry remains an increasingly important mode of transportation for agricultural products.

The study showed the largest Class 1 railroads transport 24 percent of soybeans, 43 percent of soybean meal, 67 percent of the soybean oil and 99 percent of the biodiesel produced in the U.S. Burlington-Northern Santa Fe Railway transports the largest volume of soybeans, while Union Pacific Railroad is the largest originator of soybean meal and soybean oil.

The report also revealed the greatest destination for the rail movement of soybeans continued to be the Pacific Northwest ports in Washington and Oregon, underscoring the importance of the Asian export market to agriculture.
With President Obama seeking to increase overall U.S. exports by 50 percent in the next five years, “We’ll need a rail infrastructure system that is well-financed and able to keep up with changes in the rail and agriculture industries,” according to Steenhoek.

He said while some rail rates are justified, many are not, meaning a significant amount of money is not being retained in farmers’ wallets or in the coffers of rural communities. “We will be the first to acknowledge that the railroads have to have sufficient revenue to reinvest and augment their own infrastructure, and we want them to be viable,” Steenhoek said. “But when we see rates go up, particularly in rural areas of the country with little or no access to another railroad, it becomes a concern to us.

“By shedding light on this potential overcharge, it hopefully underscores to policymakers the importance of making sure that the federal government provides a balanced playing field between railroads and rail customers. This is an issue that was debated pretty vigorously in Congress this year and will continue to be next year.”

Steenhoek was referring to S.2889, or the STB Reauthorization Act of 2009, which was passed by the Senate Commerce, Science and Transportation Committee in December 2009. The bill addresses rail shipper concerns by increasing rail industry competition, improving federal oversight and enhancing customer access to regulatory relief. The STC backs the passage of the bill, which has yet to be considered by the full Senate. He said the details of the bill are “complex” and “arcane,” putting the onus on agriculture to educate lawmakers as to how the bill would level the playing field for rail shipments of soybeans and other agricultural commodities.

“It’s incumbent on us to show how farmers are affected and to make the case that it warrants the attention of our elected officials,” he said.

Steenhoek anticipates no new movement on S.2889 during the lame duck session of Congress, but holds out hope the STB will enact the provisions of the bill without need for Congressional direction and approval.