news5-18




Volume 52, Number 8, May 18, 2000

		USDA Issues Interim Rule on Farm Storage Subsidy Program The U.S. Department of Agriculture's Farm Service Agency on May 11 published in the *Federal Register* its interim rule reinstating the farm storage facility loan program, providing a 30-day comment period that ends June 12. Among other things, the interim rule expressly requests comments on whether CCC should authorize the building of "alternative types of storage arrangements, such as `condominium storage' or storage for other agricultural products." Condo storage refers to bins erected under purchase or long-term lease arrangements with producer-customers. In the interim rule, USDA projected that the farm storage subsidy program will expand on-farm storage capacity by more than 750 million bushels over the next five years. As for why it chose to implement the rule immediately without first seeking public comment, USDA said, "…recent data indicate a critical shortage of storage that continues to deteriorate" and "changing market needs are putting pressure on producers to build new facilities since some buyers of grain seek to limit purchases to specialty grains that are not genetically modified or to segregate either specialty crops or grains that are not genetically modified." USDA to Begin Seeking Applications for Subsidized Farm Storage Loans on May 30: Prior to issuing the interim rule, USDA announced it would begin accepting applications for subsidized farm storage loans starting May 30. In one important policy change, USDA's announcement said farmers who bought or built storage facilities between Feb. 2 and May 30 will be allowed to apply for the subsidized storage loan program and "may be approved if they meet eligibility and loan-security requirements." Previously, USDA had notified Farm Service Agency county offices that producers who began construction or obtained materials for storage structures prior to the publication of the rules in the *Federal Register* would not be eligible for the program. As previously reported by the NGFA, USDA said comments specifically will be requested on whether to authorize use of the loan program for building so-called "condominium storage" at commercial grain handling facilities. The NGFA has received indications from USDA that condo storage likely will be allowed to qualify for subsidized loans once a final rule is issued in mid-to-late July. During its meeting at the NGFA's March convention, the NGFA Country Elevator Committee recommended that the association continue to oppose the program but to urge USDA to authorize condo storage if it decides to proceed with the program anyway, so long as both privately owned and cooperative elevators are eligible. Eligibility Criteria: USDA also provided the following criteria -- most of which has been reported already by the NGFA -- that will be included in the interim final rule authorizing resumption of the farm storage subsidy program: Loan Amount and Terms: The loans will be for a seven-year term. The loans will be in amounts to finance 75 percent of the net cost of the facility and associated handling equipment, not to exceed $100,000 per loan. Borrowers will be limited to obtaining one loan per fiscal year. Principal and interest will be amortized over the term of the loan. Equal annual installments will be due by no later than the last day of each 12-month period of the loan. USDA said outstanding loan amounts, whether or not overdue, may be collected from marketing loan gains or loan deficiency payments that the borrower otherwise might be entitled to receive. While not contained in USDA's announcement, the NGFA previously has learned that USDA will approve loan requests to finance storage for up to two years' crop production on the individual farm. Interest Rate: The interest rate will be the rate equivalent to the rate charged on Treasury securities of comparable maturity in effect during the month the loan is approved; the interest rate will be frozen for the term of the loan. It is the NGFA’s understanding that this benchmark interest rate is approximately 0.5 percent less than the Commodity Credit Corporation interest rate for commodity loans, which for May 2000 is 6.5 percent. Eligible Borrowers: To be eligible to borrow funds under the program, producers will be required to: 1) have a satisfactory credit rating as determined by CCC; 2) have no delinquent federal debt; 3) be a producer of commodities authorized for storage under the program (i.e., farm program crops); 4) provide proof of crop insurance from the Federal Crop Insurance Corp. or a private company; 5) comply with USDA provisions for highly erodible land and wetlands; 6) demonstrate the ability to repay the debt; 7) demonstrate compliance with the National Environmental Policy Act; and 8) demonstrate compliance with local zoning, land use and building codes for the applicable farm storage structures. Eligible Storage: To be eligible for loans, the storage structure will be required to have at least a 10-year useful life span. Eligible structures include: 1) new conventional-type cribs or bins for whole grain storage; 2) upright silo-type storage designed for whole grain storage; and 3) flat storage facilities for which the primary use is whole grain storage. Also eligible for loans will be: 1) permanently affixed grain-handling and grain-drying equipment, including perforated floors; 2) equipment to “improve, maintain or monitor” the quality of stored grain, such as cleaners, moisture testers and heat detectors; 3) electrical equipment, including labor and materials for installation; and 4) concrete foundations, aprons, pits and pads (including site preparation, labor and materials) essential to proper operation of the storage structure and handling equipment. Loan Security Requirements: USDA said all loans will be secured by a promissory note and security agreement covering the farm storage facility. A lien on the real estate on which the structure is located will be required in the form of a real estate mortgage, deed of trust, or other security instrument acceptable to CCC. For loan amounts exceeding $50,000, USDA said it will require that CCC’s interest in the real estate be superior to all other lien holders. Submitting Comments: The NGFA’s Country Elevator Committee is reviewing the USDA interim rule and will be developing the Association’s comments. Individual companies also may wish to submit comments to USDA by the June 12 deadline. Comments should be directed to: Grady Bilberry, director, Price Support Division, Farm Service Agency, 1400 Independence Ave., S.W., STOP 0512, Washington, D.C., 20250-0512. The NGFA also would appreciate receiving a copy of your comments! CCC to Offer 1999-Crop Forfeitures for Immediate Sale The U.S. Department of Agriculture’s Commodity Credit Corporation issued a notice May 15 stating that it will make available for immediate sale all 1999-crop loan forfeitures under procedures virtually identical to those used last year. CCC said it will continue to refuse to pay receiving charges on purchased commodities, reasserting its view that the receiving charge is reflected in the purchase price. CCC also will not pay storage charges that may have accrued on warehouse-stored loans after the loan maturity date. When purchasing the commodity, the warehouse operator is required to purchase the entire quantity, as reflected on the Form CCC-691 Commodity Delivery Notice or the forfeited warehouse receipt. No split warehouse receipts will be allowed. Payment is required to be made to the Farm Service Agency (FSA) county office within five business days after the purchase date. For warehouse-stored loans, the storing warehouse operator will have 10 business days to purchase forfeited stocks, so long as the warehouse receipts are still in the possession of the FSA county office. The storing warehouse operator will be responsible for contacting the FSA county office to determine which loans have been forfeited and which receipts remain in the county office. When purchasing the commodity, the warehouse operator is to notify the USDA Kansas City Commodity Office of the commodity and quantity forfeited, the grade and grading factors, the moisture content (if applicable), the fax number of the county office and the warehouse receipt number. For farm-stored loans, warehouse operators may elect to purchase the forfeited collateral at delivery instead of issuing warehouse receipts. For low-quality stocks, CCC is retaining its long-standing policy of requiring notification of the KCCO before receipts are issued for CCC’s account. For all grains, rice and oilseeds, low-quality is defined as U.S. No. 3 because of damage, or U.S. No. 4, 5 (or 6 for rice) or sample grade, or moisture content greater than 14.5 percent. Warehouse operators accepting delivery of forfeited farm-stored stocks will be given the first opportunity to purchase. No Agreement Reached on International Biotech Labeling Standards The NGFA has received reports that the Codex Alimentarius Commission’s Committee on Food Labeling did not reach agreement on an approach to international standards for labeling of foods or food ingredients containing biotech commodities during its May 9-12 meeting in Ottawa, Canada. Instead, a “working group” comprised of representatives from 32 nations – headed by Canada – was formed to attempt to merge two disparate biotech labeling approaches. The first approach, favored by the United States delegation, would require labeling of foods and food ingredients as containing biotech ingredients only if: 1) the product “differs significantly” from the corresponding existing conventional product in terms of its “composition, nutritional value or intended use”; 2) contains an allergen that could cause hypersensitivity in humans; or 3) has been demonstrated to have adverse health effects on at-risk segments of the population. The second approach, favored by the European Union and several other countries, would require labeling based upon the product’s method of production. Under the EU approach, all foods and food ingredients would be required to be labeled as containing biotech ingredients if they contain or are produced from genetically modified organisms. The working group is to develop proposals concerning conditions under which biotech labeling should be required and instances in which voluntary labeling is appropriate, and is to report its findings at the Codex Food Labeling Committee’s meeting in April 2001. Anne MacKenzie, a Canadian who chairs the Codex Food Labeling Committee, praised the Japanese delegation for proposing the “blended” approach to biotech food labeling. The U.S. delegation proposed to refer the issue back to the working group for further development, asking that it “explore the issues surrounding the practical aspects of mandatory provisions for the (biotech) labeling of foods.” Despite the disagreement over the approach to international standards for biotech food labeling, the Codex committee did agree to forward a recommendation for final ratification by Codex that would require labeling of all biotech foods that have the potential to cause allergy problems. That proposal is scheduled to be up for consideration when the full Codex meets in 2001. Codex, established in 1962 by two UN organizations (the Food and Agriculture Organization and the World Health Organization) is the major body that develops international standards, codes of practice and other guidelines concerning food safety and wholesomeness. Its importance has been elevated in recent years because its rules and procedures are recognized by the World Trade Organization in resolving international trade disputes.





		CBOT to Increase Daily Price Limits for Ag Futures, Options by Kendell W. Keith *President* The Chicago Board of Trade on May 17 announced that it plans to proceed with a significant increase in its daily price limits for agricultural futures and options contracts. The CBOT plans to implement the new limits in late summer to coincide with its adoption of the Eurex-based electronic trading technology, which currently does not have the capability to automatically handle daily price limits like those existing in CBOT futures markets. But before increasing the daily price limits, the CBOT first must secure approval of the change from the Commodity Futures Trading Commission, which will publish a notice for public comment. In the aftermath of a May 3 informational meeting conducted by the CBOT, the NGFA on May 12 submitted a statement to the exchange expressing "strong reservations" with each of three alternatives originally considered by the exchange: 1) Eliminate price limits entirely in the agricultural contracts; 2) Maintain existing price limits but use a manual trading halt in the commodity when one contract month reaches limit; or 3) Increase the price limits by 50 percent, eliminate expanded limits now in use (effective after the first day of limit trading) and enforce the new limits through manual trading halts. [See *Issues and Actions* publication inserted with this *Newsletter.] The CBOT price limit increases announced May 17 actually exceed 50 percent for some agricultural commodities, as reflected in the accompanying chart. The increased agricultural price limits "will provide market users with more efficient price discovery and improved market access during volatile markets," the CBOT said in a statement. "The proposed changes will also simplify agricultural price limits by replacing the expandable price limit procedure with a single fixed limit for each market." National Foundation Helps Establish Larry Tompkins Scholarship Fund* The National Grain and Feed Foundation has contributed $5,000 to the Indiana Agribusiness Foundation in the name of Larry Tompkins, a former executive with Countrymark Cooperative who was the tragic victim of an as-yet-unsolved shooting crime in 1995. The funds will be used exclusively for scholarships for Indiana University students, as requested by Tompkins' family. Funds contributed by the National Grain and Feed Foundation are comprised of donations made in Larry Tompkins' name during the last five years, plus some additional funds. The National Grain and Feed Foundation contribution will be added to funds collected by Countrymark to establish an ongoing scholarship to be managed by the Indiana Agribusiness Foundation. "It is hoped that the contribution and the establishment of this scholarship fund will bring new attention to this unsolved crime by the authorities," commented Kendell W. Keith, who serves as secretary of the National Grain and Feed Foundation. "We are grateful to Larry's many industry friends who have contributed to this fund in his name." Additional contributions toward the Larry Tompkins scholarship fund should be made directly to the Indiana Agribusiness Foundation at 1313 E. Tower, 101 W. Washington St., Indianapolis, Ind., 46204-3413. Contributing to the National Grain and Feed Foundation: Undesignated contributions for other research and education efforts benefiting the grain, feed and processing industry and public can be made to the National Grain and Feed Foundation, which is administered through the NGFA's office in Washington. NGFA charges the Foundation no administrative costs, so 100 percent of all charitable contributions go toward research and education, and are fully tax-deductible.




			China Trade Bills Advance by David C. Lindsay Director of Legislative Affairs Legislation to grant China permanent normal trade relations (PNTR) status was approved overwhelmingly by two key congressional committees on May 17, as representatives of the agriculture sector pressed their case for the trade bill with undecided congressmen. The House Ways and Means Committee approved its version of the legislation (H.R. 4444) by a vote of 34-4. In an effort to secure the votes of wavering Democrats, the committee included language in the bill that would protect U.S. industries from sudden surges in Chinese imports. That provision, along with the intention of the Republican leadership to push through a companion bill to create a joint congressional-executive branch commission to monitor China's human rights practices, may have succeeded in bringing in some key undecided congressmen, including Ways and Means Committee ranking Democrat Rep. Charles Rangel, D-N.Y., In addition, Rep. Ben Cardin, D-Md., another top Democrat on trade issues, supported the bill. The Senate Finance Committee, which has jurisdiction over trade issues in that body, approved its bill (S. 2277) by a vote of 18-1. The Senate bill does not contain the House bill's provisions on import surges. The next step in the process is for the bill to be considered on the House and Senate floors, at which time members of both chambers have indicated they may attempt to offer amendments. Sen. Fred Thompson, R-Tenn., indicated he likely will offer an amendment that would sanction China for spreading nuclear weapons technology to rogue nations. In the House, some amendments may be offered to require the president to report to Congress on the effects of PNTR on the American economy, as well as to impose sanctions against any nation found to engage in "dumping" imports in the United States. Agriculture Fly-In: On May 16-17, the NGFA Chairman Paul Krug and Director of Legislative Affairs David Lindsay participated in an extensive lobbying effort by agriculture groups. Representatives of producer groups, including the American Farm Bureau Federation and National Corn Growers Association, and other agribusiness industry representatives called on members of Congress who remain undecided on the China trade bill. The two-day event also included a pro-PNTR press conference conducted by leaders of the House Agriculture Committee, followed by a briefing hosted by American Farm Bureau Federation President Bob Stallman.
		Crop Insurance Bill May Include More Producer Assistance The House and Senate Agriculture Committees are nearing final agreement on a crop insurance bill that likely will include provisions granting additional assistance to producers in the form of higher AMTA payments. The House passed its crop insurance bill last year, while the Senate approved its version on March 23. While the provisions granting additional assistance to producers have not been completed yet, the crop insurance portion of the bill has been finalized, and reportedly contains the following provisions: Premium assistance: 50/100 = 67% premium subsidy 70/100 = 59% 55/100 = 64% 75/100 = 55% 60/100 = 64% 80/100 = 48% 65/100 = 59% 85/100 = 38% Catastrophic Insurance Coverage would offered for $100; The non-insured assistance program would be based on individual losses instead of area yield losses, and would be offered by the Farm Service Agency for $100; Development of new insurance products, including livestock coverage; The method of developing "annual production history" (which determines insurable yields) would be changed to allow producers to include in the formula an annual yield of 60 percent of the long-term county average for any year in which the actual yield is less. More than $5 billion in producer income assistance for fiscal year 2000 was included in the annual federal budget blueprint approved by the House and Senate earlier this year. The dispersal of that money was conditioned upon the House and Senate Agriculture Committees passing legislation to authorize its use. While the issue has not been finalized, it now appears the two committees will attach language to the crop insurance bill that sends the money to producers in the form of higher AMTA payments. Once the conference committee reaches final agreement, it will be submitted to the full House and Senate for approval before being sent to President Clinton for his signature.




		EPA Proposes New Emissions Standards for On-Road Diesel Engines by Thomas C. O'Connor Director of Technical Services The U.S. Environmental Protection Agency on May 17 proposed new emissions standards for new heavy-duty diesel engines used in on-road trucks that would take effect starting with the 2007 model year. The proposed standards are based upon the use of high-efficiency catalytic devices or comparably effective advanced technology, EPA said. Because these devices are damaged by sulfur, the agency also is proposing new fuel requirements to remove most of the sulfur from highway diesel fuel by mid-2006. EPA said that fuel changes will enable all sizes of diesel-equipped vehicles to reduce exhaust emissions to levels comparable with gasoline-burning engines, and will help enable light-duty diesel engines to meet recently established emissions standards. Who's Affected: Affected by the EPA proposals would be on-road commercial trucks, such as those used to transport bulk grains, oilseeds and feed. Not affected by the proposals would be off-road diesel engines, such as locomotive or barge tow board engines. The diesel engine standards would apply only to new engines and vehicles, while the fuel standards would apply to diesel sold for highway vehicles. Heavy-Duty Highway Engines: Under EPA's proposal, particulate matter emissions for new heavy-duty diesel engines would be reduced from 0.1 grams per brake-horsepower-hour (g/bh-hr) to 0.01 g/bh-hr. The agency also proposed to set diesel engine emissions standards for nitrogen oxide (NOX) and non-methane hydrocarbons (NMHC) at 2.0 g/bh-hr and 0.14 g/bh-hr, respectively. The current standard for NOX and NHMC are 4 g/bh-hr and 1.3 g/bh-hr, respectively. The NOX and NMHC standards would be phased in concurrently between 2007 and 2010 for diesel engines. Heavy-Duty Vehicles: EPA proposed that complete vehicles between 8,500 and 10,000 pounds meet an emissions standard of 0.2 grams per mile for NOX, 0.02 grams per mile for particulate matter and 0.195 grams per mile for NMHC. For vehicles between 10,000 and 14,000 pounds, the proposed standards are 0.4 grams per mile for NOX, 0.23 grams per mile for NMHC and 0.02 grams per mile for particulate matter. Diesel Fuel: The agency proposed that diesel fuel sold to consumers for use in highway vehicles have a sulfur content no greater than 15 parts per million (p.p.m.), effective June 1, 2006. The current standard is 500 p.p.m. In addition, EPA proposed new standards for formaldehyde emissions, new requirements for crankcase emissions control on turbocharged diesel engines and a 50 percent reduction in evaporative emissions for heavy-duty engines and vehicles. Costs and Benefits: EPA estimated the new standards would increase the average cost of a new vehicle by $1,000 to $1,600, depending upon vehicle size. The agency also estimated that the reduced limit on sulfur content would increase the cost of diesel fuel by approximately 4 cents per gallon. However, EPA maintained that its proposal would reduce emissions of NOX and NMHC emissions, key ingredients in ozone formation, by 2.8 million and 305,000 tons per year by 2030, respectively. Particulate emissions from these vehicles would be reduced by 110,000 tons per year by 2030 under the new standard, EPA said. EPA to Conduct Public Meeting to Review Risk Assessment on Reldan™ The Environmental Protection Agency has scheduled a June 8 public “technical briefing” to present and discuss its revised risk assessment for Reldan™ (chlorpyrifos-methyl). Officials from the U.S. Department of Agriculture also are scheduled to attend the briefing to propose potential risk-management techniques for Reldan™. The manufacturer of the organophospate chemical – Dow AgroScience – has declined to spend the $6.2 million it estimates would be necessary to complete the toxicological studies required by EPA to maintain the product’s registration and continued use. The technical briefing is part of the agency’s strategy for involving more public participation in its reassessment of pesticide tolerances under the Food Quality Protection Act and the registration of individual organophosphate pesticides under the Federal Insecticide, Fungicide and Rodenticide Act. In an April 28 *Federal Register* notice, EPA said its revised risk assessment indicates some uses of Reldan may result in worker exposures that exceed the agency’s level of risk concern. During the public review period, EPA said it is seeking information on application methods (such as bin treatment or direct-grain treatment), the volume of chemical used, the formulation (liquid or dry powder), the frequency of treatment during the year (i.e, the number of hours per day and days per year), and any protective equipment used during treatment. The revised risk assessment may be accessed at the following site on EPA’s web site: http://www.epa.gov/pesticides/op/chlorpyrifos-methyl.htm.

NGFA Rail Transportation

Symposium Special Report

by Randall C. Gordon

V.P., Communications/Gov't Relations

Changing Dynamics of U.S. Rail System Explored at NGFA Symposium

The changing dynamics of the U.S. rail system were explored by top executives from the rail industry, grain and processing industry, government officials and media representatives during the NGFA’s Rail Transportation Symposium, conducted on May 16-17 in Ponte Vedra Beach, Fla.

A major challenge facing the rail industry is to manage growth in a dynamic economy in an era when the “reward” system for rail executives has been based on their ability to streamline the rail network and cut costs by reducing track miles, rail car supplies and employee numbers, according to Lawrence H Kaufman, national transportation correspondent for The Journal of Commerce. “There is not a wealth of rail executives who know how to handle growth,” he noted. The veteran transportation journalist also said he believed that the United States eventually will have two transcontinental railroads, with some form of competitive access for shippers.

Keynote speaker John Snow, chairman and chief executive officer the CSX Corp., Richmond, Va., said Wall Street reaction to the proposed Burlington Northern Santa Fe-Canadian National combination, combined with what he termed “shipper and congressional sentiment” argued for a “pause” in rail mergers. But Snow said the outcome could be a paradox, resulting either in improved prospects for well-structured mergers that enhance railroad performance and shipper satisfaction or burdensome rules that will preclude even the most beneficial mergers.

Snow also argued strenuously against proposals by some shipper groups that Congress legislate “open access” between the lines of competing carriers. He called it a “prescription for shrinking investment in the rail industry and for shrinking the size of the rail network.” But he predicted that the Surface Transportation Board’s current proceeding to develop new rail merger rules would lead to more access for rail users.

But will Wall Street investors provide the capital needed to finance the infrastructure improvements needed to meet a projected doubling of traffic by 2025 in bulk and containerized traffic at U.S. ports resulting from increased international trade? That was the question posed by Charles White, associate administrator for policy and program development at the Department of Transportation’s Federal Railroad Administration, who said the rail industry is approaching the most critical public policy juncture since enactment of the Staggers Rail Act in 1980. White said that the “reward system” of Wall Street penalizes long-term investments, which may eventually necessitate some form of public-private partnership to finance needed improvements in the rail infrastructure.

White said merging rail carriers have “streamlined to the point of creating constraints” in the rail network, with increased traffic density creating congested rail corridors and rail yards that were not designed for the traffic flows now occurring. He also predicted that the U.S. rail system eventually would consolidate into two transcontinental railroads, creating the prospect of having two railroads “that are too big to manage and too big to fail,” which could require greater federal oversight -- “not a happy thought.”

Several billion dollars in investments are needed by the shortline rail industry to meet its “number one priority” – upgrading tracks to handle the shift to 286,000-pound covered hopper cars, said Frank Turner, president of the American Shortline and Regional Railroad Association. Turner said the shortline association has contracted for a new study to determine the amount of funds needed, and again called on the Clinton administration to issue proposed rules that would enable shortline carriers to tap into a $3 billion loan program (TEA-21) approved by Congress last year. The proposed rules currently are embroiled in an interagency dispute between DOT and the White House Office of Management and Budget over the criteria for obtaining such loans. He also said the shortline association is urging Congress to divert the 4.3-cents-per-gallon diesel tax paid by the rail industry from deficit reduction to a trust fund that could be allocated to railroads for upgrading light-density track to accommodate 286,000-pound cars. Turner predicted that unless funding is forthcoming within the next five years "we’ll see a slow death of shortlines and their gradual disappearance from rural America."

Association of American Railroads President Edward Hamberger stressed the interdependence between Class I and shortline carriers and supported generating additional revenues for shortlines. But he said the AAR is “adamantly opposed” to continuation of the 4.3-cents-per-gallon diesel tax, saying that such a trust fund likely would be perpetuated and be used for different purposes. Hamberger stressed the commitment of Class I carriers to improve service and a recognition of that being the way to grow the industry. He also outlined initiatives by the AAR to reduce terminal congestion in Chicago, improve the efficiency of interline movements between carriers, and the launching of its e-commerce web site – www.steelroads.com. Hamberger also cited the NGFA’s Rail Arbitration System as a model the rail industry has used in attempting to implement dispute-resolution forums with other industries, such as the mining.

Hamberger also said he did not envision Class I carriers shifting to larger 315,000-pound cars because track infrastructure limitations would negate the benefit of heavier movements – a statement later corroborated by other rail executives at the symposium.

NGFA Rail Transportation

Symposium Special Report

More than 100 rail shippers, receivers and rail carriers gathered in Jacksonville, Fla., on May 15-16 for the NGFA's Rail Transportation Symposium. Through an excellent series of presentations and extensive audience questions and participation, attendees learned about major challenges facing Class I and shortline railroads, the grain car service plans for each of the Class I railroads for this year's harvest, the future for less-than-unit-train shippers and steps being taken to create a system of seamless rail shipments between the United States and Mexico.

John Snow, chairman and chief executive officer of the CSX Corp., Richmond, Va., discusses recent management changes in its rail operations and subsequent improvements in car velocity, dwell times and reduced terminal congestion in an effort to improve service following its acquisition of portions of Conrail.

Larry Kaufman, national transportation correspondent for The Journal of Commerce, Denver, Colo., tells participants that the major challenge facing senior rail executives is their relative inexperience in how to manage growth.

Speakers addressing the symposium included (from left): Dan Stirling, director, grain, Canadian Pacific Railway, Winnipeg, Manitoba, Canada; John Brattten, vice president, transportation, Central Soya Co. Inc., Fort Wayne, Ind.; Stevan Bobb (second from right), group vice president, agricultural products, Burlington Northern Santa Fe Railway Co., Fort Worth, Texas; and David C. Barrett Jr., NGFA corporate secretary and counsel for public affairs. Bobb, who chairs the NGFA's Rail Arbitration Rules Committee, discussed the use of NGFA arbitration to resolve disputes. Stirling analyzed the extensive changes underway in the Canadian grain and rail system.

CSX Corp. Chairman and CEO John Snow (right) visits with NGFA Rail Shipper/Receiver Committee Chairman John Bratten, vice president, transportation, Central Soya Co., Inc., Fort Wayne, Ind.

Representatives of the Class I railroads discuss their grain car service plans for the 2000 harvest. Pictured are (front row, from left): Diane Knutson, vice president/agricultural products, Union Pacific Railroad Co., Omaha, Neb.; Randy Knox, director of freight equipment, Burlington Northern Santa Fe Railway Co., Fort Worth, Texas; Michael Mohan, assistant vice president, grain and fertilizer -- U.S., and assistant vice president, division sales for the Midwest Division of the Canadian National/Illinois Central Railroads, Homewood, Ill.; and Mark Bazan, manager, strategic planning, Canadian Pacific Railway, Minneapolis, Minn. Also pictured are (back row, from left): Tom Brugman, assistant vice president, agriculture, CP&G, Norfolk Southern Corp., Roanoke, Va.; Tom Owen, assistant vice president, agricultural products, CSX Transportation Co., Jacksonville, Fla.; and Lynn Hizer, director of transportation, A.E. Staley Manufacturing Co. Inc., Decatur, Ill., who moderated the session.

Challenges facing the rail industry is the topic explored by (from left): Edward Hamberger, president, Association of American Railroads, Washington, D.C.; Frank Turner, president, American Shortline and Regional Railroad Association; Sharon Mock, director, traffic, Grain and Oilseeds Division, Perdue Farms Inc., Salisbury, Md.; and Charles White, associate administrator for policy and program development, Federal Railroad Administration, Washington, D.C.

The impact of high-volume rail shipments on single- and multiple-car shippers is discussed by (from left): Steven D. Strege, executive vice president, North Dakota Grain Dealers Association, Fargo, N.D.; Keith Klindworth, chief, marketing and transportation analysis group, Agricultural Marketing Service, U.S. Department of Agriculture, Washington, D.C.; Dana Koenig, director of transportation -- small and specialty grains, ConAgra Trade Group Inc., Omaha, Neb.; and Michael Donnelly, president, R.F. Cunningham & Co. Inc., Smithtown, N.Y.

Improvements being made to create a more fluid rail transportation system between the United States and Mexico -- and the rapid ramp-up of the recently privatized Mexican rail system -- is explored by (from left): Herman Saenger, sub-director for agricultural transportation, Transportacion Ferroviaria Mexicana (TFM), Mexico City, Mexico; Victor Valdes, commercial director for Mexico, Burlington Northern Santa Fe Railway Co.; Mexico City, Mexico; Eduardo Cavazos Garza, commercial sub-director for agricultural, metals, minerals and cement, Ferrocarril Mexicana (FERROMEX), Mexico, City, Mexico; Douglas V. Martin, business director, wheat and flour, Union Pacific Railroad Co., Omaha, Neb.; and Michael Bilovesky, director of food and grain marketing, Kansas City Southern Railway Co., Kansas City, Mo. Moderating the session is Jay O'Neil, general manager, transportation, Bartlett and Co., Kansas City, Mo.



			NGFA Rail Transportation Symposium Special Report by Randall C. Gordon V.P., Communications/Gov't Relations
	Class I Railroads Discuss Grain Car Service Plans for 2000 Harvest Representatives from each of the Class I rail carriers offered their grain car service plans for the 2000 harvest during the NGFA's Rail Transportation Symposium. The NGFA will post the visual presentations of each of the panelists on its web site home page www.ngfa.org as they become available. The following are some of the highlights presented by the panelists, which is pictured on page 7: Burlington Northern Santa Fe: The BNSF said its program for 2000 will be basically unchanged. It will offer its SWAP program, but won't be taking on more cars, although it said grain byproduct cars might be added to the SWAP program. It said its fleet size for whole grains is adequate, amounting to 29,000 cars. Since 1990, BNSF said it has spent $577 million to acquire 11,500 cars that are of the 286,000-pound variety. It said its future focus will be on purchasing additional 286,000-pound cars, which currently comprise 42 percent of its fleet. Canadian National/Illinois Central: The CN/IC foresees no major changes in its program for 2000. It plans to continue offering "super train" service, which consists of 100- to 105-car units that make 30 trips from Iowa, Illinois and Indiana origins to export ports under guaranteed transit times, with customers making commitments to load within 24 hours and unload within 16 hours. It also offers "domestic efficiency" trains, consisting of 75-car units under 12-month terms, with no volume commitments but 15-hour loading and unloading commitments. CN/IC also has a car auction program, with 100 cars offered weekly with guaranteed performance. The carrier reported it has begun imposing a monetary penalty and demurrage on cars that are overloaded. The CN has 15,315 covered hopper cars dedicated to grain service, 3,728 of which are for U.S. service, down about 1,000 cars from 1999. Canadian Pacific: The CP -- which has a total fleet of 25,000 cars, 18,500 devoted to grain service -- will announce its program for the 2000 crop by mid June or early July. Currently, it offers three car-ordering programs: 1) protected equipment rate exchange (PERX), which comprises about 10 percent of its shipments; 2) guaranteed freight (which accounts for 60 percent); and 3) tariff service (which represents 30 percent). The PERX program, begun in 1993, sells equipment up to four months in advance through certificates, and penalties are assessed for non-performance. The guaranteed freight program, instituted in 1995, requires monthly volume commitments negotiated individually with each customer, is traded through certificates and provides for penalties for non-performance. Shuttle train customers are required to use either the PERX or guaranteed freight programs. The CP provides 100-car unit trains for corn, soybeans and mixed shipments, and 75-car units for wheat. CSX Transportation Co.: The CSXT anticipates announcing its "peak load/seasonal pricing" plan in the next few weeks. It is undecided whether such pricing will apply to grains and grain products. CSXT will continue to emphasize unit-train movements, saying 63 percent of all grain is converting to 90-car trains; 65-car units have become "obsolete" because of high-tech A/C locomotives. It anticipates having 11,500 grain cars in service, comparable to 1999, but expects days-per-load to improve by three days during the October-December period, which would be equivalent to adding 1,370 cars to its system. The carrier expects by the fourth quarter of 2000 to be able to provide service comparable to the fourth quarter prior to the split date on which it acquired its share of Conrail. For the 2000, CSXT will offer 24-hour express load and unload contractual agreements, and is examining economic incentives to load on weekends. CSXT also plans to move to year-round lease arrangements for private cars. Most of its current system is capable of handling 286,000-pound cars. Norfolk Southern Corp.: The NS has 5,330 cars assigned to agricultural service, and foresees no drastic change in equipment allocation for 2000. The NS is seeing continued growth in its 50-car unit shipments, and plans to launch a 75-car unit train program this year, with dedicated locomotives that will be held at origin and destination. It is attempting to improve cycle times, and envisions a "major changeover" in the next five years to more use of shuttle trains and service with dedicated locomotives assigned to each train. NS estimated that 85 percent of its lines handle 286,000-pound cars, which accounts for about 50 percent of its shipments. Union Pacific Railroad: The UP will maintain its four basic methods of allocating cars to grain service: 1) general distribution for near-term regional delivery; 2) guaranteed freight, featuring subleasing of approximately 8,000 hopper cars; 3) vouchers that guarantee freight at market-based pricing; and 4) shuttle trains in 75- and 100-car units, with incentives for quick loading and unloading. For 2000, the UP is examining changes in its shuttle program to provide added flexibility in designating origin and destination points, which will be announced within the next two weeks. To enhance efficiency, UP also has instituted a "shuttle management team" with the goal mechanizing notification of car arrival times and providing real-time notification if loading/unloading incentives have been achieved. UP also plans to: 1) increase the number of shuttle trains during peak-demand periods; 2) utilize a "surge plan" for car supply, including increased numbers of locomotives and increased train speeds; and 3) improve traffic flows through increased internal communications and improved dispatching. The UP said it has spend $2 billion in the last year, half of htat on improving 960 miles of rail track and installing 2.9 million ties. It also has purchased 125 new locomotives, and currently owns 31,800 grain cars, with another 5,765 in storage.





		Report Blasts Corps' Upper Mississippi-Illinois River Study *by David C. Barrett Jr.* Counsel for Public Affairs The Washington-based Northeast-Midwest Institute on May 18 released a report by a panel of three economists that identified what it said were problems with the underlying research methods used by the U.S. Army Corps Engineers in its costly and lengthy Upper Mississippi-Illinois River Navigation Study Project. The institute said that it selected "three experts on the economics of trade and transportation issues who were not affiliated with any of the stakeholders in the controversy." The economists -- Steven Berry, Yale University; Geoffrey Hewings, University of Illinois; and Charles Leven, Washington University -- concluded that "the Corps' study effort does not justify construction of the proposed project in the near future." According to the introduction accompanying the report, the Northeast-Midwest Institute conducted a one-day workshop on Dec. 9, to enable the three economists "to hear from and question various stakeholders who had observations about the inputs, assumptions, and model used in the Corps navigation study. Testifying at the workshop were representatives of the Corps, navigation industry, agriculture groups and environmental organizations." The NGFA has no record of being invited to attend the workshop, and the report did not disclose who was present or invited to attend. The report, entitled *"Adequacy of Research on Upper Mississippi-Illinois River Navigation Project,"* said that the economists had "identified the following problems in the underlying U.S. Army Corps of Engineers' research: The forecasts of future demand are based on inappropriate economic assumptions and are inconsistent with recent trends in agricultural exports. While the demand analysis usefully introduces demand elasticity as an important variable, the actual levels of demand elasticity used in the study appear to be chosen arbitrarily, rather than by clearly feasible, if difficult, empirical methods. Recommendations for or against improving locks on the Upper Mississippi ignore possibilities for grain exports being shipped through ports other than New Orleans, for utilizing grain produced in the Midwest for domestic processing or other use, and/or devoting resources now devoted to grain production to other crops. The Corps' study ignores alternative approaches to transportation management, including privatization, investment in other transport modes, congestion pricing, tolls and multi-modal utilization. The Corps' study effort as presented (to the institute panel) was missing and appears to disregard important potential impacts, including impacts on the regional economy and implications for the regional and national transportation networks making a complete accounting of the project's benefits and costs difficult to completely ascertain at this time. Since the projected expansion of facilities seems directed at future demands for barge transportation yet to materialize, the costs of delaying the project (to determine whether predicted demand materializes or to allow proper study that could shed further needed light on the ultimate need for the expansion) would be low." The Institute's Board of Directors has a diverse makeup that includes former members of Congress, university professors and industry representatives, including Deere & Company and the Seaway Port Authority. Formed in the mid-1970s, the Northeast-Midwest Institute describes itself "as a Washington-based, private, non-profit and non-partisan research organization dedicated to economic vitality, environmental quality, and regional equity for Northeast and Midwest states. The institute is closely aligned with the Northeast-Midwest Congressional Coalition, a bipartisan group of 114 congressmen co-chaired by Reps. Bob Franks, R-N.J., and Marty Meehan, D-Mass., . The Northeast-Midwest Senate Coalition, co-chaired by Sens. James Jeffords, R-Vt., and Daniel Patrick Moynihan, D-N.Y., has 36 members. The report on the Corps' study, along with other information about the institute, is posted on the institute's website at: http://www.nemw.org/




		Preparations Begin for 2000-01 NGFA Annual Directory/Yearbook *…Use It as a Recruiting Tool…* *by Todd Kemp* Director of Marketing Need another arrow in your membership recruiting quiver? Being listed in the *NGFA Annual Directory/Yearbook* sometimes can be a persuasive reason for companies to join, especially Associate-member prospects. Around July 1 each year, the NGFA begins collecting information to update this annual directory of the nation's best grain, feed and processing companies and related businesses. This also is the perfect time for companies that want to enhance visibility in the industry to join the NGFA. Here are several reasons why: The *Directory/Yearbook* contains a special section listing all "Associate Members by Business Type." That's in addition to the company's regular listing in the main text of the Directory, and is akin to a "Yellow Pages" section for services being offered to the industry. Advertising offered in the *Directory/Yearbook* is a great value to companies providing goods or services to the industry. A special "Advertisers' Index/ Buyers' Guide" enhances visibility. And in most cases, it makes sense economically for a company to become an NGFA member and advertise rather than advertising as a non-member. The *Directory/Yearbook* ad prospectus will be published in mid-June. Web site advertising on *www.ngfa.org* offers an exciting, new way to get wired to the grain, feed and processing industry. With the advent of the new *NGFA E-Alerts* electronic news information service, traffic on the web site has grown rapidly. Special package rates will be offered to companies advertising both in the *Directory/Yearbook* and on the web. So, if you know a non-member company that wants to enhance recognition and visibility in the industry, here's a great way to do it. Let your prospect know of these marketing opportunities, and let's get them signed up! Membership applications can be downloaded from the NGFA web site at www.ngfa.org, or materials can be sent at the request of recruiters by the NGFA staff. Contact Todd Kemp at (202) 289-0873 or at tkemp@ngfa.org.