(Resource News International) — Rail transportation of grain in Western Canada needs less regulation, not more, the country’s two major railway companies say in response to claims that they make excessive profits at the expense of farmers.
A study conducted on behalf of the Canadian Wheat Board (CWB) and released Tuesday charged that Canadian National (CN) and Canadian Pacific Railway (CPR) have made more than $100 million a year in “unreasonably excessive returns” at the expense of western Canadian farmers.
As a result, the CWB and a number of national and provincial farm groups have called on the federal government to conduct a full rail costing review, which hasn’t been done since 1992.
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CN spokesman Jim Feeny said the consultant who conducted the study for the CWB did not consult with the railways, and as a result would not have the necessary information to reach a proper conclusion.
“In actual fact, western Canadian grain rail rates are among the lowest in the world,” said Feeny. For example, he noted, moving 100 cars of grain from Winnipeg to Canada’s West Coast is as much as 34 per cent cheaper compared to moving the same amount of grain from Grand Forks, N.D., to port at Seattle.
“What we see here is a call for re-regulation, and an attempt by the CWB to turn back the clock to a highly regulated grain transportation system,” said Feeny. Such regulations, he said, would be counterproductive, as they were inefficient and costly in the past.
The Western Grain Transportation Act, also known as the “Crow Rate,” had regulated grain movement by rail in the past. However, that act was repealed in 1996.
“It’s just more of the same from the CWB, and we disagree with their continuing call to expand and increase regulation in Canada,” said CPR spokeswoman Breanne Feigel. “Grain transportation should be treated the same as transportation of all commodities.”
When compared with increasing fertilizer and fuel prices, Feigel said, rail transportation costs were one of the lowest input increases for agricultural producers over the past few years.
The farm groups that joined the CWB in calling for a review included the Canadian Federation of Agriculture, National Farmers Union, Manitoba’s Keystone Agricultural Producers, the Agricultural Producers Association of Saskatchewan and Alberta’s Wild Rose Agricultural Producers.
The Western Canadian Wheat Growers Association on Wednesday issued a separate statement supporting a “comprehensive review” of both railway pricing and service. The federal government has already pledged a level-of-service review for both CN and CPR with respect to grain handling.
However, “the development of good grain transportation policies can only happen if we examine price and service issues together,” Con Johnson, chair of the WCWGA’s transportation committee, said in a press release. “We need to create a policy environment that encourages railways to provide improved service at reasonable rates.”
(With files by FBC staff.)
