March 12, 2015

12/03/2015: Canadian grain producers says railway costing review needed

A Canadian farm coalition says the railway companies are earning 20 percent more than is deemed fair and adequate by the Canadian Transportation Agency (CTA), The Star Phoenix reports.

The coalition, consisting of the Agricultural Producers Association of Saskatchewan (APAS), Sask Wheat, Sask Pulse and Sask Barley, commissioned a report they say shows the need to examine railway costs and efficiency gains as part of the federal government's review of the CTA.

The Travacon Research Limited report says that for the crop year 2013-14, Canadian National Railway (CN) and Canadian Pacific Railway (CP) earned CAN$322 million, or CAN$8.36 per tonne in excess of the 20 per cent contribution level deemed fair and adequate by the CTA.

"These new numbers would conservatively put the cumulative excess revenues earned by the railroads from 2008-14 at an approximate CAN$2 billion," the report said.

"What these numbers mean is that grain producers are being overcharged - grain is paying full freight, and then some," said APAS president Norm Hall. 

"As part of the ongoing review of Canada's grain transportation system, we need a full costing review to determine fair costs for freight."

In December, the coalition group submitted recommendations to the CTA review panel which the group believes would lead to improvements in the grain transportation and handling systems.

Railway costs for grain movement have not been fully reviewed since 1992 and the coalition says since that time elevator consolidation, siding closures and the trend toward multi-car blocks have created efficiencies that should have translated into lower freight costs for producers. 

The coalition group met with the CTA review panel recently to follow up on the initial meeting and one of its key recommendations is for a full costing review and appropriate adjustment of Maximum Revenue Entitlement (MRE).

"As grain producers, rail service and cost directly impact our ability to compete internationally," Mr Hall says. 

"We hope the review panel will continue to respond to our coalition group's recommendations and ensure proper regulations are put in place so that producers get fair treatment."

Hall said other recommendations they have put forth include getting the railways to have more clarity in reporting.

"For western Canadian farmers to make marketing decisions we need to know how much of the grain has moved, and how much is being moved," he said.

Read more HERE.

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