WASHINGTON, D.C. — Rail service issues associated with transporting agricultural products were “center rail” during separate hearings by the U.S. Surface Transportation Board (STB) and U.S. Senate Commerce Committee (SCC) earlier this month.

The STB’s Sept. 4 public hearing was well-attended by agricultural organizations, including the American Soybean Assoc. (ASA) and the National Grain and Feed Assoc. (NGFA). The STB hearing focused partially on whether to grant Class I freight rail carriers’ request for the agency retain its current procedures for challenging unreasonable freight rates for ag products.

The SCC hearing, titled “Freight Rail Service – Improving the Performance of America’s Rail System,” examined freight car backlogs in South Dakota and other top-producing states that have led to service disruptions for farmers, ethanol producers and other businesses. The SCC hearing seemed to go well for ag interests, according to Mike Steenhoek, executive director of the Soy Transportation Coalition.

“Overall, the hearing went well. Senator (John) Thune (R-S.D.), in particular demonstrated a clear understanding of the importance of this issue to agriculture’s profitability,” said Steenhoek, who attended, but did not testify at, the Sept.10 SCC hearing. Thune, the committee’s ranking member, prefaced his testimony before it in a press release.

“With the backlog of rail service and grain bins reaching capacity, South Dakota producers have limited storage options for both last year’s and this year’s expected record-breaking harvest,” stated Thune, who has worked since the beginning of the year with several Class I railroads to address grain service issues.

The SCC hearing was less than one week removed from the STB’s field hearing, conducted in Fargo, N.D., that enabled shippers and the public “to reiterate the ongoing (rail) delays and what it means to agriculture, energy and other shippers,” according to Thune.

That hearing was attended by ASA Director Lance Peterson, who testified along with Eric Broten, representing the North Dakota Soybean Growers Assoc. The pair told STB Chair Daniel Elliott because many upper Midwest elevators are still full of 2013 grain, the backlog of railcars negatively affects basis levels and cash bids and could create a grain storage crisis as a new harvest begins.

“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,” said Peterson, who grows soybeans in Underwood, Minn. “I stated that my lost income would likely exceed $100,000, as one producer.”

Peterson noted Class I freight rail officials assured correction of slow shipments before the 2014 harvest. But now, halfway through the 2014 wheat harvest, an abundance of last year’s crops have still not been moved and local grain elevator storage capacity is overwhelmed, leaving farmers in the difficult position of adding costly storage facilities to avoid piling grain on the ground.

“Farmers are suffering losses of hundreds of millions of dollars through increased basis levels, lower cash market prices and storage losses because of the current rail situation in the upper Midwest,” he said.

Prior to the STB hearing, NGFA submitted a 17-page brief to the agency urging it to reject rail carriers’ plea to retain the status quo regarding its current procedures, which effectively preclude captive shippers and receivers from challenging rail rates. Thirty-three national, state and regional producer or agribusiness organizations joined the NGFA in a joint reply brief to the STB reiterating and supporting NGFA’s assertion that current STB procedures for challenging dubious rail rates are unworkable and should be replaced with new, NGFA-endorsed rules and procedures.

On Aug. 19, Elliott issued a “Full Demand Peak Letter” to the top nine U.S. freight rail carriers, asking each to provide an assessment of its ability to meet expected rail service demands during the traditional fall peak harvest season. Eight of the railroads were directed to respond to the demand by Sept. 15, while Burlington Northern Santa Fe (BNSF) was asked to appear at the STB hearing.

The USDA has weighed in on the rail service issue affecting farmers in the Dakotas and other nearby states, calling it a “serious situation” as the 2014 harvest approaches.

“I will continue working with Chairman Rockefeller and the (STB) to seek commitments from the railroads to address the backlog of grain orders to minimize the harm that South Dakota producers face in getting their crops to market,” said Thune.