Ken Rosaasen has witnessed previous grain transportation battles right back to Hall Commission in the 1970s and believes farmers and grain companies are making some headway this time around.
“I think the transportation issue is moving on to the front burner and I think it’s going to stay there,” the University of Saskatchewan agricultural economist said in an interview following a panel discussion on rail transportation here last week.
“I guess I’m an optimist. When a group becomes well informed there is a much higher probability of positive change.”
In the past Prairie farmers have been divided over grain transportation. Not now. They’re sending the same message – railway service will only improve with regulation – to a federal government whose members include a large number of western MPs.
And that message is backed by line elevator companies, including giants Viterra and Cargill, as well as the independent inland terminals and Canadian Wheat Board.
“The balance of power is significantly in favour of the railways and the railways say ‘no more regulations’ because currently the regulations are skewed strongly in their favour,” Rosaasen said. “I see the farm groups becoming more informed. It is perhaps coming to the head.”
The recent review of railway service has put the railways and their unreliable service in the spotlight.
The railways have traditionally won the lobbying war with government, Rosaasen said. Railways are powerful, but collectively Prairie farmers have more assets. What they’ve lacked is a unity.
“The Prairies just haven’t had a voice because they haven’t been united,” Rosaasen said. “Now I think they’re starting to
better understand how important it is and how much annually it costs to ship your grain to port.”
Farmers have also been asking for a review of railway costs – something that hasn’t been done in depth since 1992. The government has said it wants to get the service review done first.
“If I had to make a forecast I would say there will be a costing review and it will come way sooner than most people think,” Rosaasen said.
While the railways have been free to charge whatever they want to transport grain since 2000, total revenue has been capped to prevent farmer gouging.
When introduced, the cap gave the railways a 20 per cent contribution above costs, which was deemed fair. (The cap is adjusted for inflation and the volume of grain shipped.)
A study commissioned by the Canadian Wheat Board estimates that contribution has risen to 58 per cent due to increased rail efficiency. Farmers say much of that efficiency came at their expense as small elevators and rail branch lines were closed.
The study estimates farmers are paying $200 million a year or $6.87 a tonne too much for grain shipping. [email protected]
– KEN ROSAASEN
transportationissueis movingontothefront burnerandIthinkit’s goingtostaythere.”