OMAHA (DTN) -- The country's largest general farm organization is now officially opposing the country's largest railroad merger, warning the deal would leave farmers with fewer rail options and higher transportation costs.

The American Farm Bureau Federation (AFBF) released an analysis concluding the proposed $85 billion merger between Union Pacific and Norfolk Southern "would further exacerbate agricultural shippers' already limited transportation options." Farmers would be left exposed to pricing and service decisions they cannot control, AFBF stated.

The long-term effect of a merger could be higher food prices for consumers as transportation costs ripple through the food supply chain, Farm Bureau warned.

Union Pacific and Norfolk Southern have proposed creating the first coast-to-coast freight railroad combining two networks across roughly 50,000 miles of track spanning 43 states. Shareholders for the two railroads have approved the merger, but the Surface Transportation Board (STB) in January ruled their companies' initial merger application was incomplete. However, the board did not rule on the merits of the merger itself. The two railroads are expected to refile their application later this month.

DTN reached out to Union Pacific for comment on Farm Bureau's opposition. They had not responded at time of publication.

In a column on UP's website earlier this month, an executive for the railroad stated a single system crossing the country would improve service reliability.

"A transcontinental railroad is a more reliable railroad. Fewer handoffs mean fewer opportunities for delay while expediting our customers' shipments. A larger pool of crews and locomotives means better resilience and faster recovery. One customer service system means one team responsible for resolving issues from origin to destination," wrote John Turner senior vice president of Northern Region Operations for UP.

Yet Turner's column also acknowledged service challenges in the late 1990s when Union Pacific merged with Southern Pacific. He said the situation is different today because both UP and Norfolk Southern "are well-run railroads coming together from positions of strength."

The merger of two of the country's six Class I railroads comes as farm groups are increasingly raising antitrust and competition issues across agricultural supply chains. Separately, farm and livestock groups have pressed the Trump administration to investigate the country's largest meatpackers and fertilizer companies over market power and potential anti-competitive behavior.

Farm Bureau released an analysis stating the proposed railway merger would leave farmers with fewer transportation options and make them more vulnerable to higher shipping costs "at a time when balance sheets have been squeezed to the breaking point by rapidly rising input costs." AFBF stated transportation, marketing and storage expenses are projected to rise to a record $14 billion in 2026.

Farm Bureau pointed to a USDA transportation study showing agricultural and food products combined account for roughly 20% of railroad tonnage, putting agriculture fifth among industries for tonnage volume. In 2024, that amounted to nearly 80 million short tons of corn, 26 million tons of soybeans and nearly 26 million tons of corn, most of that originating in the Midwest or Northern Plains.

Farm Bureau noted, "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."

"The risk of the UP-NS merger is clear," Farm Bureau's Market Intel report states. "It would leave farmers more dependent on fewer railroads at a time when they already have almost no ability to walk away from higher costs or poor service. The merger does not create new competition for agriculture. It removes what little leverage remains by eliminating key routing and interchange options that currently help keep rates and service in check. When that pressure disappears, history shows that farmers do not ship less -- they get paid less."

Farm rail demand is also inelastic, meaning farmers can't reduce or change how much they ship even when rail costs rise. For commodities such as grain, producers and elevators that are not near major river systems or processing facilities cannot easily replace railroads.

"Trucking long distances significantly increases per-unit costs, while barge access is geographically limited," AFBF stated.

Farm Bureau's Market Intel report: https://www.fb.org/…

Also see, "STB Ruled Union Pacific-Norfolk Southern Merger Application Incomplete," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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