OTTAWA – The federal government should not dismantle the Crow Benefit subsidy until the United States begins to dismantle or restructure its export enhancement subsidy program, a senior CN Rail executive said last week.
Sandi Mielitz, vice-president for Western Canada of CN North America, told the semi-annual meeting of the Canada Grains Council Oct. 25 that an end to the Crow Benefit without an end to the EEP would increase the domestic price gap between U.S. and Canadian grain.
That would increase pressure to open the Canadian border for deliveries into the U.S.
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“If we move precipitously, we’re going to increase that gap between what the farmer gets if he drives his grain into a Canadian elevator versus going right across the border,” she said.
“What we’ve got to do is put much more pressure on the U.S. to restructure the EEP subsidy so that if we are going to phase out the WGTA (Western Grain Transportation Act), we will not be making the situation worse.”
She said American grain companies have built elevators south of the border to accommodate more Canadian grain moving to the U.S. The price incentive to deliver to U.S. buyers already is as much as $70 per tonne.
American prices inflated
An end to the Crow Benefit paid to railways would decrease Canadian grain prices while American prices would remain inflated because of the EEP subsidy.
“From our point of view, the government’s got to make more of an issue of the EEP structure,” she said. “We’ve been on the defensive rather than the offensive. And if you are going to change WGTA, I wouldn’t change it overnight. I’d try to phase it in some step with what the Americans are doing.”
Mielitz said more than 90 percent of Prairie farmers indicated in a recent survey that they support, or at least expect, changes to the Crow Benefit subsidy.
