ND Department of Agriculture Comments, Speeches and Testimony

My name is Roger Johnson. I am the North Dakota Commissioner of Agriculture. My business address is North Dakota Department of Agriculture, 600 East Boulevard, Bismarck, North Dakota 58505-0020. I am submitting this Verified Statement in support of North Dakota's request for conditions in Finance Docket No. 33556, Canadian National, et al. -- Control -- Illinois Central Corporation, et al.

Agriculture is of paramount importance to the economic health of North Dakota. Agriculture accounted for 38 percent of North Dakota's economic base in 1996 with $3.8 billion in cash receipts. Wheat is the largest component of farm cash receipts accounting for 40 percent of the total and oilseeds accounted for an additional 11 percent. North Dakota ranks first in the United States in the production of spring wheat, durum, sunflowers and dry edible beans and cost effective transportation to markets is essential.

Agricultural exports are vital to the survival of North Dakota's agricultural economy. About half of the hard red spring wheat crop and forty percent of the durum wheat crop are exported each year from the United States. North Dakota producers compete in a world market that includes other domestic producers and producers in the Prairie Provinces of Canada. Access to reliable and economical transportation systems that allow our products to reach existing and future markets is essential.

The proposed merger of the Illinois Central with the Canadian National could reduce access by North Dakota shippers to domestic markets in the southeastern United States and to foreign markets that are accessed through Gulf ports. These markets are currently reached by the SOO Line Railroad Company by interchanging with IC at Chicago. The merger would also enhance access by Canadian shippers to these same markets and provide them with a competitive transportation advantage. The Canadian National serves shippers in the Canadian Prairie Provinces but does not serve those in North Dakota. Similarly, the 'alliance' with Kansas City Southern may reduce access by North Dakota shippers to markets in the Southwest and Mexico.

Because of our geographic location and low level of transportation competition, North Dakota is already at a transportation disadvantage to other production areas. The proposed merger could exacerbate this problem and would be a mistake unless reasonable interchange agreements are mandated to assure that North Dakota shippers have continued access to markets with reasonable service and rates.

North Dakota is in the midst of an economic crisis. Net farm income declined by a staggering 90 percent to a mere $3,440 per farm in 1997 (see Exhibit 1). Survival of North Dakota's family farms and rural economy and the health of the state economy require that a viable, reliable and competitive transportation system exist to provide access to domestic and international markets. With only two class I rail carriers in the state, no water transportation, and long distances from markets that make long distance truck transportation nonviable, it is imperative that access to markets by rail be preserved. We must not be placed at a competitive transportation disadvantage to Canadian producers or further dilute competitive transportation options for our agricultural products.

I, Roger Johnson, verify under penalty of perjury under the laws of the United States that the foregoing is true and correct. Further, I certify that I am qualified and authorized to file this Verified Statement.

Executed on October 23, 1998

Roger Johnson

Commissioner of Agriculture

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