Rail Merger Raises Alarm as Farm Bureau Warns of Higher Grain Shipping Costs
Farm Bureau opposes a massive rail merger, warning it could limit competition, raise grain shipping costs and squeeze farmers already facing record input expenses.
OMAHA - The American Farm Bureau Federation (AFBF) on March 12 officially opposed the proposed $85 billion merger between Union Pacific and Norfolk Southern, warning the deal could reduce rail competition and drive up grain transportation costs for U.S. farmers already struggling with rising input expenses.
The farm organization released an analysis arguing the merger would combine two major Class I railroads into a single network spanning roughly 50,000 miles of track across 43 states, leaving agricultural shippers with fewer transportation options and greater exposure to pricing and service decisions beyond their control. According to the AFBF Market Intel report, the consolidation could deepen existing logistics challenges across the agricultural supply chain, particularly for producers dependent on rail to move bulk commodities such as corn and soybeans to domestic processors and export terminals.
Farm Bureau analysts say the merger would exacerbate already limited transportation choices for agricultural shippers, especially in rural areas where rail is often the only economically viable option for moving large volumes of grain. The organization warned that higher rail shipping rates would ultimately ripple through the broader food supply chain, potentially contributing to higher food prices for consumers.
The railroads have proposed creating the first coast-to-coast freight network in the United States, linking Union Pacific's western network with Norfolk Southern's eastern lines. While shareholders from both companies have approved the transaction, the Surface Transportation Board (STB) ruled in January that the initial merger application was incomplete, requiring the companies to refile later this month.
Executives from Union Pacific argue the combined network would actually improve reliability and efficiency across the national freight system. In a recent column published by the company, senior vice president John Turner said a single transcontinental system would reduce shipment handoffs between rail carriers, a process that often causes delays.
According to Turner, fewer transfers, a larger pool of locomotives and crews, and unified customer service operations could help streamline freight movements and allow faster recovery from disruptions. However, the company acknowledged past service challenges during earlier rail consolidations, including Union Pacific's late-1990s merger with Southern Pacific. Turner emphasized that both companies involved in the current deal are "well-run railroads coming together from positions of strength."
The proposed merger arrives amid growing concern among agricultural organizations about consolidation across the food and farm supply chain. Farm and livestock groups have recently called for federal investigations into market power among major meatpackers and fertilizer manufacturers. Farm Bureau argues the rail merger would add another layer of concentration in an industry already dominated by just six Class I railroads nationwide.
The organization noted that agriculture accounts for roughly 20% of total U.S. rail freight tonnage, making it the fifth-largest category transported by rail. In 2024 alone, railroads moved nearly 80 million short tons of corn, about 26 million tons of soybeans and roughly 26 million tons of wheat, most originating in the Midwest and Northern Plains.
For many producers, rail remains an essential link in the supply chain. Farm Bureau emphasized that demand for rail transportation is largely inelastic, meaning farmers cannot easily reduce shipments even when costs rise. Alternative options are limited. Long-distance trucking significantly increases per-unit transportation costs, while barge transportation is restricted to regions with direct river access.
Farm Bureau also warned that fewer independent rail networks could increase systemic risk for time-sensitive agricultural supply chains, amplifying the consequences of service disruptions and reducing logistical redundancy. "The risk of the UP-NS merger is clear," the report states. "Farmers would become more dependent on fewer railroads at a time when they already have almost no ability to walk away from higher costs or poor service." With transportation, marketing and storage expenses projected to reach a record $14 billion in 2026, the group says maintaining competitive rail access will be critical for farm profitability and export competitiveness.
