The organization representing more than 5,000 U.S. ag retail locations says the Union Pacific-Norfolk Southern merger should not happen.
Ag Retailers Association Senior Vice President Richard Gupton says, “We’re not really sure how that enhances competition.” He predicts the proposed merger would put nearly 50% of rail traffic in the hands of one company. “We’re worried about the major impact it would have on America’s agriculture industry, on rural communities, and the service, or potential lack of service that could happen because of this merger.”
Gupton says with consolidation, railroads have often left their captive shippers with higher rates, reduced service, and few options. “One example in the Midwest, we had a member where the railroad asked them to spend millions of dollars to upgrade their rail spur to their facility, and then, like a year later, they’re saying they’re going to try to cut off service to that facility.”
Gupton tells Brownfield Ag News that the Ag Retailers Association is part of a stop-the-merger coalition, which includes the American Farm Bureau Federation, labor unions representing Union Pacific and Norfolk Southern employees, the National Industrial Transportation League (NITL), and two competing railroads.
Gupton says the Surface Transportation Board has delayed its decision until the railroads provide more information.
EDITOR’S TAKE:
Rail mergers have forever been troublesome for rural America. As rail expansion occurred in the 19th and 20th centuries, many rural elevators, fertilizer dealers, etc., built facilities at the local level that were located near a rail spur. Rail service provided a lower cost and often more dependable way to move product in and out of that facility. Fast forward to modern times where the emphasis on railroads has been consolidation and less service to many rural areas, thus, leaving many local ag businesses with no access to rail services. Not only did it cut off rail service but raised operating costs significantly. It is not surprising that the Ag Retailers Association is opposed to such a merger. Their members can be very negatively affected if this occurs.
What is going on in your market area as it relates to rail services? Are they still available? If so, you might want to consider how this merger impacts your business and that of your ag customer. Perhaps a meeting with local officials and farmers/ranchers and agribusiness leaders in your area to assess this merger could be in order. This would also provide you with exposure to potential ag customers!
