Groups representing Prairie farmers have appealed to Prime Minister Stephen Harper to do something about excessive railway profits at the expense of farmers. This is the letter they sent June 29.
We, the undersigned, call on the Government of Canada to immediately undertake a full costing review of the railway revenue cap on grain transportation.
Further to earlier meetings with both Agriculture Minister Gerry Ritz and Minister of Transportation (State) Rob Merrifield, we are bringing this request directly to your attention. Prairie grain producers are being significantly overcharged for the transportation of their crops, and immediate action is required to address the situation.
The study recently completed (March 2010) by John Edsforth, an internationally renowned expert in rail transportation economics, pegged excessive railway profits at $123 million in 2007-08. For the crop year 2008-09, this number climbed to an astonishing $275 million. This effectively means Prairie grain farmers have paid anywhere from $4.61 to $8.81 per tonne more than what the railways could have obtained according to contribution levels that the Canadian Transportation Agency (CTA) had deemed fair and adequate under the Western Grain Transportation Act.
This situation has only partly been addressed by the decrease in the rail revenue cap that was ordered by the Canadian Transportation Agency (CTA) to reflect actual hopper car maintenance costs in 2008. All railway costs need to be reviewed; this has not been done since 1992 and much has changed in the last 18 years. Railway revenues have continued to climb while farmers have seen rail freight rates jump by roughly 40 per cent. This is in addition to longer trucking distances, the need to reconfigure their yards to accommodate larger and heavier trucks and added wear and tear on their municipal roads.
We are fully aware that a service review of the rail carriers is currently underway through the office of Transport Canada. While we are pleased to see that this service review has been undertaken, we do not agree with the federal government’s current position that it must be completed before assessing the need for a full costing review. The meter is running on grain producers’ rail freight costs and every day that goes by under the current rail revenue cap is another day where farmers are being overcharged.
Delays in the completion of the service review only make a bad situation worse: grain producers are now having to wait another six to 12 months before the needed review of actual railway costs can begin. This means that in the time it will have taken to complete the service review, it is likely that another $200 million to $250 million will have been unfairly removed from Prairie grain producers’ bottom line.
The time for action is now. While Transport Canada completes its service review of rail performance, the CTA must address the pressing issue of excessive railway profits. All parties in the House of Commons must therefore act co-operatively to rectify the grievous harm that is being currently done to western Canadian grain producers.
Ron Bonnett, president, Canadian Federation of Agriculture Ian Wishart, president, Keystone Agricultural Producers Greg Marshall, president, Agriculture Producers Association of Saskatchewan Humphrey Banack, president, Wild Rose Agriculture Producers Allan Oberg, chair, Canadian Wheat Board