Nobody asked about a review of railway costs for shipping grain when the federal government announced its strategy to improve railway service last week.
Not even the Canadian Wheat Board (CWB), which seldom misses an opportunity to ask for a review. However, the CWB still wants one, said CWB spokeswoman Maureen Fitzhenry.
A study commissioned for the CWB estimates western Canadian farmers are collectively overpaying the railways about $200 million a year or $6.87 a tonne.
The federal government hasn’t outright said it won’t launch a review.
“Once the ongoing service review has been completed, the government will assess and consider the need for a costing review,” Rob Merrifield, minister of state for transport, said in a statement June 17 last year.
The review is over, but implementing improvements has just begun.
“Let’s get this process through first,” he said. “The No. 1 issue is service. Service affects cost as well, in fact it costs a lot more than anything else.
“We’re not going to be sidetracked on that.”
Farmers need to think before reviewing rail costs because it could result in even higher freight costs, Merrifield said. During the last 10 years the cost of shipping grain has not risen as much as for other freight, he said.
That’s not surprising given railway revenue from grain has been capped since 2000, while railways are free to charge whatever rates they like on other freight.
However, while the revenue cap on grain earnings is adjusted annually for increased rail costs such as fuel and labour, there’s no adjustment for increased rail efficiency.
There are far fewer elevators and rail branch lines today and more grain is shipped in 50-and 100-car units than 10 years ago.
The Grain Growers of Canada (GGC) and Pulse Canada agree with Ottawa’s approach.
There’s no point in calculating how much it costs now for the railways to deliver what’s often viewed to be inadequate service, said Greg Cherewyk, executive director of Pulse Canada. [email protected]
“Let’sgetthisprocess throughfirst.TheNo.1 issueisservice.Service affectscostaswell,in factitcostsalotmore thananythingelse.”
– rob merrifield