Two major western farm groups called on the federal government to increase competition in rail transportation last week by granting running rights on national railroads.
The calls from Keystone Agricultural Producers (KAP) and the Western Canadian Wheat Growers Association (WCWGA) came as the senior railway officials continued to publicly defend their performance and lobby against increased regulation.
KAP delegates passed a resolution April 11 at KAP’s general council meeting to lobby the federal government to force CN and CP Rail to allow competing rail companies to use their tracks.
In a letter to Prime Minister Stephen Harper, the Western Canadian Wheat Growers Association (WCWGA) is calling for “expanded” running rights to force railway competition.
Section 138 of the Canada Transportation Act should be amended “to allow railway companies the ability to apply… to solicit business from shippers along the lines of another railway,” WCWGA president Levi Wood wrote in a March 14 letter just released to the media.
“We recommend the (Canadian Transportation) Agency continue to assess each application on a case-by-case basis, however, that the ‘bar be set low’ so that competition for grain business is maximized.”
The WCWGA also recommended looking to short line railways as an important reservoir of extra grain-shipping capacity. More than a dozen operate in the West, Wood said.
“In our view, having the ability to draw on this existing reserve capacity means that CN and CP do not run the risk of ‘overbuilding’ their capacity. There will be no need for them to ‘build a church for Easter Sunday’ if this reserve capacity is available right next door,” president Levi Wood’s letter says.
The National Farmers Union has had support for joint running rights as standing policy for years.
Both railways have long opposed running rights, saying it would result in poorer service. Speaking to the Winnipeg Chamber of Commerce last week CN CEO Claude Mongeau reiterated his earlier testimony before the parliamentary agriculture committee that this year’s transportation performance is related to bad weather. He also blamed the grain companies for ordering too many cars.
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Mongeau said increased interswitching provisions the federal government has introduced in Bill C-30 would lead to U.S. railroads “poaching” business away from CN and CP.
However, farm organizations say the federal legislation doesn’t go far enough and that the only way to give the railways what the WCWGA association dubbed an “attitude adjustment” is to open the rail lines up to other railway operators.
It’s not a new idea. The late, Willard Estey, a retired Supreme Court justice who studied western grain transportation at Ottawa’s behest in 1998, argued running rights are the best way to bring competition to CN and CP, which now operate as monopolies.
There was little debate on the KAP resolution as discussion over how much this year’s backlog of almost 70,000 cars or seven million tonnes of grain is costing farmers who dominated the executive council meeting.
But some delegates warned obtaining running rights will be a tough fight to win.
“Boy, if you think the railroads are complaining now about being forced to haul grain, you start talking about open running rights, they are going to fight this thing tooth and nail and do everything they can to slow things down to screw up the system,” warned Chuck Fossay, who farms at Starbuck.
Reg Dyck, also of Starbuck, countered saying: “It’s the threat — that’s where your power lies.”
Estey recommended the government implement running rights, but the government established the maximum revenue entitlement, or so-called revenue cap instead, Dyck said. It protects farmers from the railways charging what the market will bear, while giving the railways the freedom to set variable freight rates. That cap is up for debate as well.
KAP delegates from across the province reported mostly poor rail service this winter and complained about the basis.
“We’re just getting to see what these devils can get away with at this point in time,” said Bill Campbell of Minto. “They (grain and rail companies) are testing things. They are testing the government, they are testing the farmers and we’re seeing what they can get away with what they are doing.”
Billie Uruski, a Fisher Branch farmer and a former Manitoba agriculture minister, called the wide basis “obscene.”
“And if we don’t come out with a strong statement saying ‘this has gone too far’ where Manitoba farmers have lost close to a billion dollars… in these last number of months we’re not doing our jobs. So we better make a strong statement to the public, to the grain companies that what they’re doing on basis is unconscionable,” he said sparking some applause.
Some southern Manitoba grain is moving by truck to the United States, several KAP delegates said.
“There are three- to four-mile lines of trucks trying to get through the border crossings,” said Starbuck farmer Doug Livingston.
Earlier in the crop year some U.S. elevators weren’t buying Canadian grain, while others were discounting it, despite the two countries having a free trade agreement, said KAP president Doug Chorney.
However, the canola-crushing plant at Velva, North Dakota was paying a $1.36-a-bushel premium for Canadian canola, Campbell said.