Proposed rail deal may reduce competition and increase shipping costs
A proposed merger between two major rail companies has raised concerns among farmers and agricultural groups. The plan involves combining Union Pacific and Norfolk Southern into a single system, creating the first coast-to-coast railroad network in the United States.
Agriculture experts warn that this merger could reduce transportation choices for farmers. With fewer rail companies available, farmers may face higher shipping costs and limited-service options. Transportation, marketing, and storage expenses are already expected to reach a record of $14 billion in 2026, putting additional pressure on farm incomes.
The new combined system would cover about 50,000 miles across 43 states. While this may improve network size, it could reduce competition in many regions. Farmers in certain areas may become dependent on a single railroad for moving their crops, especially grain.
The American Farm Bureau Federation has expressed strong concerns about the proposal. According to its analysis, the merger may reduce the limited bargaining power farmers currently have. “The risk of the UP–NS merger is clear,” the report states, explaining that fewer options could lead to higher costs and lower returns for farmers.
Rail transportation plays a key role in agriculture. In 2024, U.S. railroads moved more than 80 million tons of corn, 26 million tons of soybeans, and nearly 26 million tons of wheat. Food and farm products account for about 20% of all rail shipments.
Farmers often cannot easily switch transportation methods. Rail demand is inelastic, meaning producers must continue shipping even when costs rise. Trucking over long distances is expensive, and barge access is limited to certain regions.
Experts also warn that higher transportation costs could affect consumers. Increased expenses across the supply chain may lead to higher food prices over time.
Due to these concerns, the American Farm Bureau Federation opposes the merger, stating that maintaining competition is essential to protect farmers and ensure a stable food system.
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