Ag group hopeful but skeptical about planned railroad merger

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Ag group hopeful but skeptical about planned railroad merger

The Executive Director of the Soy Transportation Coalition hopes the planned acquisition of Norfolk Southern by Union Pacific railroad is good for the agriculture sector.  Mike Steenhoek tells Brownfield he has concerns and skepticism based on past mergers. “You know, one thing that history has taught us is that for a lot of mergers and acquisitions and consolidaitons within the rail industry, one of the byproducts of that is a decrease in service and an increase in rail rates.”

Steenhoek says what often happens is consolidation changes the dynamic between the customer and the railroad provider. “We want as many transportation providers, and that includes the rail industry, competing for out business. We want them to want to serve agriculture and compete vigorously for it. That puts us in a more viable position.”

Steenhoek says the combination of the two railroads might bring new markets for goods farmers produce, and it should improve efficiency by reducing the time needed to hand freight off from one railroad to another, but he is concerned about losing some routes and local service.

American Farm Bureau Federation’s Director of Government Affairs RJ Layher commented on the railroad proposal, telling Brownfield, “Today it was announced that Union Pacific and Norfolk Southern are seeking a merger. At this point, more evaluation is needed to determine whether routes, access or shipping costs will be affected. We look forward to learning more about potential impacts to our members, who rely on the nation’s rail system to deliver inputs and ship commodities.”

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