Taking action on the Rail Freight Service Review report is important but so is curbing excessive railway charges for grain shipments, says Humphrey Banack, vice-president of the Canadian Federation of Agriculture (CFA).
A rail costing review is needed “right away because every year we wait, farmers pay millions of dollars too much for rail service,” he told the House of Commons agriculture committee Dec. 9. “Farmers don’t mind the railways making a reasonable profit but think they should share their efficiency gains of the last decade with their customers. They are gouging the farmers.”
A study done for the Canadian Wheat Board (CWB) found that grain freight rates were at least $6 a tonne higher than they would have been if a regulated grain rate remained in effect instead of being phased out a decade ago, added CWB chair Allen Oberg.
“Farmers are shouldering an unfair situation,” he said. “How can we not afford a costing review?”
Since 2000, the railways have been free to set rail rates for grain, but the total revenue they can earn from shipping grain is capped under the Canada Transportation Act. That way railways have rate-setting flexibility to encourage efficient movements. And farmers are protected from the excessive charges they fear would occur due to a lack of railway competition.
The cap is adjusted annually for the volume of grain transported, the distance it’s hauled and inflation.
The government has said it would consider a costing review once it has decided how to respond to the final rail service report.
(With files from Allan Dawson)