Increasing Freight Rail Rates Pressuring Ag Income


By NAFB News Service

via Hoosier Ag Today - Sep 12, 2021


The cost of shipping commodities on domestic rail systems is rising, and it’s putting pressure on U.S. farmers’ bottom lines. Daniel Munch, associate economist with the American Farm Bureau Federation, says rail rates on agricultural goods have risen as much as 18 percent.


“Rail rates on corn have gone up 13 percent; on soy, have gone up 11 percent; and on wheat, 7 percent over the past five years. Similarly, rates to transport ethanol increased 18 percent or about four cents a gallon.”


Much to his surprise, Munch said the rising cost of fuel wasn’t a primary driver in the higher cost of shipping freight via railroad.


“Adjusted for inflation, rail fuel costs have remained quite similar to 2018 and 2019 rates, unlike what consumers are experiencing at the pump; they have increased quite a bit in the past year but mainly as a comeback from COVID-19-related demand shocks...