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1/9/2007

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WisBusiness Tuesday Trends
January 9, 2006

By Brian E. Clark

RISING

Rail rates

Dairyland Power Cooperative of La Crosse and Xcel Energy both say the rising cost of shipping coal by rail forced them to raise rates. And Wisconsin Electric Power of Milwaukee is suing the Union Pacific Railroad, alleging poor service and excessive charges dating back more than three years.

Other rail customers also say they are being squeezed by increasing costs to ship paper, grain and ethanol by rail. The Wisconsin Paper Council now says rail rates have jumped so much that trucks offer a better deal than trains. In Dairyland's case, its shipping costs went up 93 percent in 2006. Railroad officials, however, say the charges are justified and that they need more money to improve old tracks and other equipment.

In response, Sen. Herb Kohl, D-Wis., has announced plans to again introduce legislation to repeal antitrust exemptions that he says protect freight railroads from competition. He introduced similar legislation last year, but it died. With Democrats in charge of the U.S. Senate and House, it may fare better this year.

MIXED

Corn prices

An impending shortage of corn caused by rising demand for ethanol will mean better prices for farmers who grow the grain, but also higher food and dairy costs for consumers. It could also lead to food riots in poor countries, according to an analysis by Lester Brown, head of the Earth Policy Institute, an environmental think tank in Washington, D.C.

The Brown report estimates that by 2008, U.S. ethanol production will use 139 metric tons of corn, or about half the country's corn crop. Roughly 20 percent of Wisconsin's corn crop is now used for ethanol. Six years ago, the state did not have a single ethanol plant. It now has more than half a dozen and an equal number are planned. Ethanol demand has pushed the cost of a bushel of corn to $3.70 a bushel, up nearly 80 percent from 2005.

The U.S. Agriculture Department has estimated that 60 million tons of corn will be needed for ethanol in 2008, less than half the amount that Brown said would be needed. Still, ag department officials say Brown's concerns are valid.

FALLING

Department of Revenue

Legislators were hopping mad over a state Department of Revenue mistake that led to the mailing of 171,000 forms with taxpayers' Social Security numbers on them.

The department has urged taxpayers to contact credit bureaus to guard against identity theft. The post office reportedly recovered about a third of the forms, meaning more than 110,000 of them were mailed.

A department spokesman said the misprinted labels went to taxpayers who used the basic Form 1 and filed jointly as married couples for the 2005 tax year. That means people who filed their taxes with other forms, had a professional service prepare their taxes or filed electronically were not affected.


Written exclusively for subscribers. Tuesday Trends is Copyright © 2007.



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