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News and analysis on the global poultry
and animal feed industries.
on April 22, 2014

NGFA testifies on effect of rail disruptions on grain industry

Group wants Surface Transportation Board to make changes

The National Grain and Feed Association (NGFA) has urged thefederal Surface Transportation Board (STB) to require Class I rail carriers to reportand make publicly available several specific service-related metrics in the aftermathof the serious disruption in rail service that began last fall.

In written statement submitted April 17, the NGFA told the STB of the impacts and costs rail service disruptions have had on grain elevators, grain processors, integrators and exporters. NGFA's comments focused particularly on service-related disruptions involving the BNSF, Norfolk Southern, Canadian Pacific and CSX Railways. The NGFA's statement, which was presented orally during an April 10 STB public hearing, was endorsed and supported by six other national agribusiness organizations: Agricultural Retailers Association, Corn Refiners Association, National Chicken Council, National Council for Farmer Cooperatives, National Oilseed Processors Association and North American Millers' Association.

"The sheer gravity, magnitude and scope of rail service disruptions now being experienced are unprecedented, and have rippled through all sectors of grain-based agriculture," testified NGFA Rail Shipper/Receiver Committee Chairman Kevin Thompson, assistant vice president and transportation lead for Grain and Oilseed Businesses at Cargill Inc. in Minneapolis. As a result, he pointed out:

Country elevators and other originators of grain and grain products are extremely hesitant to price and book forward sales from farmers or commercial elevators because they cannot count on predictable rail service or reflect the current level of freight costs in their price bids.

Grain processors and export elevators have idled or significantly reduced operating capacity because of an inability to predictably source sufficient quantities of grains and oilseeds.

Millers in the upper and central Midwest are confronting facility shutdowns as they run out of raw commodities to process, including oats and certain classes of wheat.

Still other grain processing and animal feeding operations, particularly in the Eastern United States, are shifting to comparatively inefficient and much more costly long-haul truck movements in an attempt to obtain sufficient quantities of grains and oilseeds. Still others are switching rail origination to other carriers in the limited instances where that is possible.

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