For the full article, click on the headline above. Ancient locks and damsmonopolistic railroad serviceskyrocketing fuel surcharges: A crumbling transportation infrastructure may seem like someone else's problem. But it's really a pain in the behind for farmers — i.e. a pain in your pocketbook.
For the full article, click on the headline above.
Ancient locks and damsmonopolistic railroad serviceskyrocketing fuel surcharges: A crumbling transportation infrastructure may seem like someone else's problem. But it's really a pain in the behind for farmers — i.e. a pain in your pocketbook.
That's one of the points
The farmers on the
In a way this group is working for all farmers as a kind of watchdog on the transportation industry, but it's also working to build relationships within that industry so that every one wins from greater efficiencies. The railroad companies know they have a sweet deal by having nearly no competition among themselves. But they don't like bad publicity and agriculture is a major rail customer.
The value of a soybean on your farm is nothing until you factor in the cost of transport, processing and everything else needed before that oilseed feeds someone, here, or 5,000 miles away.
Today we have higher rail costs, higher fuel costs for trucks, and higher barge rates. Ocean freight rates are through the roof. Will higher transport costs damage grain exports?
If infrastructure costs continue to skyrocket, we will be pricing ourselves out of business? As globalization continues and we become more integrated with the world community, how do we buttress
"One way to fortify it is to have an efficient logistics channel that is always WTO compliant,bCrLf says Steenhoek. "It's not acute right now but it will be in the future.bCrLf
Rail worries One of the biggest areas of concern for
"It used to be every country elevator 20 miles apart from each other had a railroad that called on them,bCrLf says Steenhoek. "The rail industry increasingly says, we can't be stopping every 20 miles. The two most expensive miles a train takes is the first mile when they leave and the last mile upon arrival. When they're chugging along the countryside at 50 mph that's what they do best.bCrLf
Even as rail service vanishes, the rail companies have had "significantbCrLf cost escalation with rates and fuel surcharges. "It's not widely known or understood by the farmers,bCrLf says Steenhoek. "What farmers need to realize is that when the elevator pays a higher rail rate, there's a corresponding effect on the amount of money they offer to pay farmers for their grain.
"The farmer is the one entity that can't pass on costs; it's unique that they are price takers on both their input costs and on the revenue side as well.bCrLf
On the other hand, most people don't understand that the rail industry is privately financed. "The fact is we in this country have obligated the rail industry — unlike the road and interior waterways — to finance their own maintenance and expansion,bCrLf says Steenhoek. "It's one of the most capital intensive industries on the planet. A new locomotive costs $2.5 - $3 million. So we can't just simply berate them for not providing the service we would like. The rail industry has the highest degree of reinvestment in their own industry of any in this country.bCrLf
Higher fuel costs
"Roughly half of the crop finds its way into the international markets,bCrLf says Steenhoek. "If all of a sudden transportation becomes much more costly it's going to impair our ability to move it into markets. To what degree are we going to maintain our customer base - whether its livestock in the southwest, swine in
Steenhoek is hoping that the more farmers learn about inefficiencies in transportation, the more active they will be on the issue. That's the only way to minimize losses resulting from higher fuel costs or less-than-competitive modes of transport.
"We need farmers to regard transportation as similar in importance to other issues critical to the industry such as renewable fuels, market access and production research," he says. "After all, if we have a breakdown in our distribution system, producer investments in these other areas will not be fully realized."