Rising Rail Freight Costs Squeezing Farmers and Ranchers Incomes

Brian German Agri-Business, Radio Reports

Freight Costs

The domestic rail transportation network is vital to moving products and goods supplied by America’s farmers and ranchers. Over 33 million carloads of U.S. goods moved up and down the 140,000-mile rail system, generating over $85 billion in total rail revenue in 2019. The Surface Transportation Board says farm products contributed nearly 7.4 percent, or $6.3 billion, of the total rail revenue.

An American Farm Bureau Market Intel Report shows that over the last five years, the cost of shipping grain on railways has increased. Rail rates on corn, soybeans, and wheat, including fuel charges, have gone up 13, 11, and 7 percent, respectively, since 2016. Rates on ethanol transportation have increased 18 percent during the same period. Increasing fuel prices in the broader economy are influencing rising rates but not as sharply as some might think.

The Association of American Railroad’s three-year fuel price index shows a modest increase in rail fuel prices, but that’s primarily a recovery from COVID-19-related price drops linked to reduced consumption in early 2020. In the first half of 2021, the prices have all but returned to 2018 and 2019 levels. Ohio experienced the highest rate increase of 26 percent by origin, while North Carolina saw the highest increase of 22 percent based on shipping destinations.

The National Association of Farm Broadcasting and the American Farm Bureau Federation contributed to this report.

Rising Rail Freight Costs Squeezing Farmers and Ranchers Incomes