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(The Center Square) – High diesel prices have increased farmers’ costs, and agricultural groups are debating whether a proposed railroad merger would cut shipping costs or reduce producers’ choices.
Union Pacific and Norfolk Southern want to combine their networks. It’d make what they call the country’s first coast-to-coast single-operator freight railroad.
Backers say the deal would shorten delays and help farmers reach more buyers. Opponents think fewer independent railroads would raise costs and worsen service.
The debate comes amid a pricey fall harvest.
Nationally, diesel is now around $6.35 per gallon. That’s much higher than it was at this time last year: $3.66 per gallon.
Last week, the U.S. Department of Agriculture announced an $8 billion Harvest Fuel Relief program. It will dole out one-time payments to help cover producers’ losses during the 2026 crop year.
High fuel costs hurt farmers even after crops leave the field.
Omaha-based Union Pacific serves the western United States. Atlanta-based Norfolk Southern serves the east. Shipments crossing their networks often require one railroad to hand cars over to the other.
Those transfers leave cars waiting for crews, track space, or their next scheduled move.
The companies say their merger would let one carrier handle shipments from start to finish on about 10,000 existing routes. They say removing handoffs could shorten those trips by 24 to 48 hours.
They think a merger would save customers $3.5 billion annually by shifting more freight from trucks to rail.
Nebraska Gov. Jim Pillen endorsed the deal back in April.
“Farmers operate on tight timelines,” Pillen said. “When crops are ready, they need to move.”
Pillen thinks fewer handoffs would help farmers meet harvest deadlines and respond better to export demand.
Agricultural businesses think a merger would help them reach more customers.
Ethanol producer POET and Minnesota Soybean Processors publicly backed the merger last month.
POET Chief Operating Officer Ben Sweat said the combined network could help ethanol and distiller’s grains producers. The grain is an animal feed made during ethanol production.
Minnesota Soybean Processors General Manager Jeramie Weller said a merger would help the company meet increased demand in the Northeast.
“A more seamless network would improve our ability to serve these markets while supporting U.S. soybean farmers and biodiesel producers,” Weller said.
The American Farm Bureau Federation opposes the merger. It thinks a merger would hurt farmers’ bargaining power by removing shipping options.
Its economists said many grain producers can’t easily switch to trucks or barges when rail rates rise. It added that truck trips cost too much, and many producers lack easy access to navigable rivers.
The Farm Bureau joined the Stop the Rail Merger Coalition. The coalition includes competing railroads BNSF and CPKC, the American Chemistry Council and the Teamsters Rail Conference.
“This merger would lead to greater consolidation and higher costs when farmers are already hard-pressed with economic headwinds beyond their control,” Farm Bureau President Zippy Duvall said.
The National Farmers Union announced its opposition last month.
“History has shown us that when railroads consolidate, family farmers pay the price,” National Farmers Union President Rob Larew said.
The railroads have offered more protections to satisfy price and service concerns.
Their July filing expanded a pricing program to include bulk grain shipments. It also proposed keeping competing rail options for certain customers and giving more access to other carriers if service falls below certain standards.
The Surface Transportation Board is reviewing the proposal. The companies still need its approval.
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