SASKATOON — A three percent reduction in farmers’ grain freight rates announced last week will likely never go into effect.
Instead, the bill paid by farmers to ship their grain to market in 1994-95 will almost certainly increase by about four percent.
The confusion over next year’s rates arises from the uncertainty over the status of the federal budget.
The government announced in February that the annual Crow Benefit payment would be cut by $33 million next crop year.
That cut in government spending would boost the farmers’ share of the total freight bill.
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But the omnibus bill containing the budget provisions has yet to be passed into law.
That made life difficult for the National Transportation Agency, which is required to publish a freight rate scale at the beginning of May.
The agency had no choice but to publish a rate scale using the existing Crow Benefit of about $588.2 million, even though it doesn’t expect those rates will actually go into effect.
“We know it’s clumsy and seems unnecessary, but we have to follow the legislation,” said Don Rees of the agency’s rail subsidies branch.
The rate scale published last week would see the total rate fall by eight percent to $30.35 a tonne (for a distance of 1,650-1,690 km.)
The farmer’s share would drop by three percent to $13.75 a tonne.
However if, as expected, the government passes its February budget by June 16, the agency will issue a new rate scale based on a Crow Benefit of $555.6 million.
Under that scenario, the total rate would remain $30.35 a tonne, but the farmers’ share would increase by four percent to $14.72 a tonne.
The section of the budget dealing with the Crow Benefit says if the spending cut has not been approved by June 16, it cannot take effect until the 1995-96 crop year.
“It’s a budget, so one would expect it will be approved,” said Rees. “It’s just the timing.”
Under the rate scale published last week, farmers would pay 45.3 percent of the total cost of shipping their grain to export position, with the federal government paying 54.7 percent.
If the Crow Benefit cut goes ahead as outlined in the budget, the farmers’ share will jump to 48.5 percent while Ottawa’s share will drop to 51.5 percent.
