Concerned about shipping costs, Montana farm groups will contest a proposed increase in freight rates charged to grain farmers in Shelby.

At issue is a Burlington Northern Sante Fe Corp. plan to raise the rate on Shelby-to-Portland grain shipments by roughly $81 a hopper car, or 3 cents a bushel. Farmers there pay roughly $1,900 a car to ship grain now.

The Montana Farm Bureau Federation and Montana Grain Growers Association will take the issue to mediation with BNSF. The two groups and BNSF agreed earlier this year to mediate and arbitrate their rate differences formally whenever they arose. This is the first time the mediation agreement has been tested.

Lola Raska, MGGA vice president, said the groups will present their complaint to BNSF. If the price cannot be mediated, the three interests will send their case to an independent arbitration board, which will make a decision to which all three parties will be bound.

Raska said members of the farm groups reviewed rates at 13 rail shuttle sites across the state and found only Shelby’s to be excessive.

It’s been at least three years since BNSF increased its Montana shipping rates at grain shuttles. When last they did, farmers could say nothing about it. That’s because the federal government, which sets the rules for contesting shipping rates in states were railroad operate as monopolies, didn’t recognize farmers as rail customers.

Grain elevators, who normally cut the check to the railroads for shipping grain, were the only customer recognized by the federal government. Elevators typically paid the higher rate without complaint and took the costs out of the farmer’s grain payment. At times those shipping costs diminished farmers’ profits by one-third.

The BNSF agreement to mediate gives the grain groups a chance to act as a go-between for farmers for the first time.

Contact Tom Lutey attlutey@billingsgazette.com or 657-1288.