Iowa Public Television

 

Higher input costs could affect rural America; Rail merger causes concern

posted on February 11, 2000


IN RURAL AMERICA THE ECONOMY CONTINUES TO BE PRODDED BY FORCES MORE FUNDAMENTAL THAN FASHION. SUPPLY, DEMAND, WEATHER, AND THE COST OF DOING BUSINESS CONTINUE TO DEFINE MUCH OF WHAT RURAL AMERICA PRODUCES, ESPECIALLY IN ITS CAPITAL INTENSIVE AGRICULTURAL SECTOR. AND THIS WEEK FARMERS AND THE BUSINESS THAT DEAL WITH THEM WERE BRACING FOR A HIT.

AS SPRING PLANTING APPROACHES, FARMERS ARE FACED WITH THE PROSPECT OF HIGHER INTEREST RATES, HIGHER PRICES FOR GASOLINE, PROPANE, AND HEATING OIL, AND HIGHER SHIPPING RATES FROM THE NATION'S LARGEST RAIL CARRIERS.

THE INCREASED RATES, ALONG WITH THE PROPOSED MERGER OF THE CANADIAN NATIONAL RAILWAY AND THE BURLINGTON NORTHERN SANTA FE, WILL HAVE AN IMPACT ON RURAL ECONOMIES. THE MERGER WOULD CREATE THE LARGEST RAIL CARRIER IN NORTH AMERICA, COVERING 50,000 MILES OF TRACK. THE PROPOSAL HAS FUELED FEARS THAT GIANT UNIT TRAINS WORKING ONLY THE MAIN LINES WOULD BYPASS MANY SMALLER COUNTRY ELEVATORS.

AS FOR THE INCREASED FREIGHT RATES, SOME WILL JUMP AS MUCH AS 4 PERCENT THIS YEAR. THAT'S MORE THAN DOUBLE THE ANNUAL RATE INCREASE RAILROADS HAVE LEVIED IN RECENT YEARS.

THE RAIL CARRIERS CLAIM THEY NEED THE HIGHER RATES TO MEET THEIR RISING COSTS FOR FUEL AND LABOR. THE INCREASES ALSO ARE SEEN TIED TO SHIPPING RATE HIKES OF 5 PERCENT IN THE TRUCKING INDUSTRY ... THE PRIMARY FREIGHT-HAULING COMPETITOR FOR TRAINS IN THE U.S.

Tags: agriculture economy farmers news rural trains