The Conference Board of Canada has issued a report demanding that prairie farm income problems not be resolved on the backs of the railways.
It recommends the Canada Transportation Act Review, scheduled to report to government in June on issues raised by the 1996 deregulation of Canadian railways, should not propose that government revert to regulations to limit or reduce the cost of transporting grain.
Instead, the farm income problem should be dealt with by government.
“While the crisis on the farm is real and serious, history tells us that the solution does not lie in using the railroads as a substitute for fixing the underlying problem, in this case distorted international grain markets,” says a study by analysts Andrew Shea and Hugh Williams, published April 26.
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The study, sponsored by the Ottawa-based conference board, which promotes its anti-government regulation bias, urges the panel reviewing the Canada Transportation Act not to be swayed by western grain and commodity shippers who want more controls on railway rates.
“The risk of such a response to the crisis in the farm, especially grain, sector is that such actions would undermine the newly won financial health of the railroads, would inhibit further investment in railroad infrastructure and would distort market forces that ensure efficient allocation of scarce resources,” said the report. It also stated that grain farm income problems are not the result of railway gouging.
The report’s exoneration of the railways flies in the face of Liberal caucus members, who were angered in early winter when the CTA review panel issued an interim report suggesting railway viability is a greater issue than farm income or third party access to main line track.
The conference board analysts said Canada needs railways profitable enough to encourage reinvestment.
