Proposed Rail Merger Comes at Farmers’ Expense

By Daniel Munch

Key Takeaways

• The Union Pacific–Norfolk Southern merger would further exacerbate agricultural shippers’ already limited transportation options. In many regions, competition is limited not by efficiency but by geography and infrastructure, leaving farmers exposed to pricing and service decisions they cannot control.
• By eliminating independent carriers across key gateways and interchange points, the rail merger would reduce the limited bargaining leverage shippers still have today. Fewer routing and carrier options would leave large portions of the country dependent on a single railroad for end-to-end service.
• Agricultural shippers are uniquely vulnerable to consolidation because rail demand is highly inelastic. When rates rise, farmers cannot easily reduce shipments or switch modes and instead absorb higher costs through weaker basis and tighter margins.
• As railroads are primarily accountable to shareholders rather than rural shippers, consolidation weakens the remaining competitive pressures for pricing, service quality and capital allocation. Surface Transportation Board data show that agriculture is carrying a growing share of railroads’ cost recovery, with farm-product rail revenue above variable costs more than doubling between 2004 and 2023 as non-competitive movements expand.
• Large rail mergers increase systemic and resilience risks for time-sensitive agricultural supply chains. Fewer independent networks reduce redundancy, amplify the consequences of service disruptions, and raise broader food, export and national resilience concerns.