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Title:Transportation as an Input to the North Dakota Agricultural Marketing Process
Authors:Kimberly Vachal, John Bitzan, and Denver Tolliver
University:North Dakota State University
Publication Date:Feb 1996
Report #:MPC-96-54
Project #:MPC-055
TRID #:00722179
Keywords:agriculture, competition, grain, grain elevators, marketing, railroad transportation
Type:Research Report – MPC Publications


Recent elimination of the Interstate Commerce Commission, pending rail mergers of major carriers, and the recent attempts to set maximum reasonable rate guidelines have indicated the concerns of captive shippers over rates and service. This study has shed some light on the grain marketing practices of N.D. grain elevators and has explained and measured the competitive factors influencing rates, including their role in market dominance determination.

The study shows that carriers' rates are constrained by four factors not under the control of the carrier. These factors include intramodal competition, intermodal competition, geographic competition, and product competition. While the concepts of intermodal competition and intramodal competition have been widely accepted by many, this is not necessarily the case for geographic and product competition. Regions which grow relatively unique crops such as the Upper Great Plains and the Pacific Southwest have higher rail rates as carriers are not constrained by geographic competition in those areas. In addition, shipments of durum and other crops which don't have many substitutes have higher rates as carriers don't realize product competition for these movements.

Finally, the study highlights the importance of efficient and effective rail service for the future of N.D. agriculture. The explanations of current N.D. grain marketing practices and of the factors influencing rail rates should allow for more enlightened decisions regarding policies that may affect the future of N.D. rail service.

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NDSU Dept 2880P.O. Box 6050Fargo, ND 58108-6050