WASHINGTON —The National Grain and Feed Association on Sept. 17 told the Surface Transportation Board that increased grain production in the United States opens the door to rail freight growth and increased market share for grain and grain products.

Mike Seyfert, the organization’s president and chief executive officer, testified on behalf of the NGFA during a hearing before the STB on “Growth in the Freight Rail Industry.”

Seyfert cited US grain production nearly doubling over the past 40 years; US Department of Agriculture projections that corn, soybean and wheat production will increase to 23 billion bus by 2033 from 21 billion in 2023 to 23 billion by 2033; and expectations that grain exports will increase to more than 5.5 billion bus by 2033 from 4.5 billion in 2023.

“USDA’s forecast for growth in grain production and steady export share of grain demand has the potential to provide opportunities for rail freight growth,” Seyfert said.  “In addition to the organic rail freight growth in moving grain products through increased production, I believe there is room to grow market share for grain and grain products through sustained efforts by the Class I railroads to improve service and become more cost-competitive against other forms of transportation. These efforts can be helped by sound rail regulatory policy and commercial practices.”

Seyfert suggested three policy actions to the STB regarding rules for financial penalties, reciprocal switching to enhance competition and defining the common carrier obligation.

The NGFA recommended the STB enact rules that would allow rail customers to impose financial penalties on railroads for the inefficient use of private railcars.

“Financial penalties are used by rail carriers to incentivize shippers to more quickly load and unload trains,” he said. “To the extent the Board can introduce reasonable incentives for both sides, our shipper/receiver members believe it would lead to more reliable freight rail service and one could argue that freight rail growth would follow.”

The NGFA also urged the STB to adopt and continually update rules for reciprocal switching to increase competition beyond the Board’s recent final rule on the matter. The NGFA said increased access to reciprocal switching will result in more robust competition and higher volumes of grain shipped by rail. He also recommended defining the common carrier obligation to establish a regulatory framework that all industry participants can rely on and emphasized the importance of open lines of communication between agricultural shippers and the Class I railroads.

Seyfert said a growing relationship between agriculture and rail was evident in rail spurs being built next to new grain processing facilities. He acknowledged increasing global competition in such countries as Brazil, where production of corn, soybeans and wheat increased by 65% in the past 10 years, and 76% in Russia over the same period. Most of the new production has entered the export market.