WHEN the Liberal government announced plans to sell its 12,000 car grain hopper fleet in the mid-1990s, farmers were facing the spectre of higher freight costs in addition to ever-increasing input costs, exacerbated by low commodity prices.
When the Conservative government announced plans to retain the fleet two weeks ago, farmers were facing the spectre of higher freight costs in addition to ever-increasing input costs, exacerbated by low commodity prices.
The Conservatives give themselves credit for action on the 10-year old grain hopper car file, but in effect they’ve maintained the status quo on ownership except for one proposed change to reflect revelations about the true cost of rail car maintenance.
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There is indeed a sense of déjˆ vu, but the government’s recent decision to keep the grain cars and reject the Farmer Rail Car Coalition’s bid to buy them finds farmers in a more vulnerable position than they were 10 years ago.
Since then, the Crow Benefit has been eliminated. Grain companies built, overbuilt and consolidated. Freight rates increased. Branch lines closed, inland terminals opened, pulse crops and attendant shipping needs expanded.
And farmer influence on the grain handling and transportation system continued to erode.
The possibility of increasing that influence was one attraction of the FRCC plan, and it’s doubtful the government’s recent action has the same potential.
It does, however, have the welcome potential to reduce freight costs in the short term now that FRCC actions have revealed an estimated $30 million to $40 million annually in overpayments to the railways for maintenance costs.
As for the longer term, the government hasn’t articulated a plan, if it has one, to replace the cars as they leave service. If it leaves that task to the railways, farmers could once again bear the cost through higher freight rates.
The FRCC arose from the premise that the government-owned hopper car fleet would be sold. The current government has eliminated that premise. But so far, it hasn’t put forth compelling arguments that continued government ownership of the cars will be better for farmers over the long term.
Check the record. During government ownership over the last 10 years, the railways have apparently been overpaid for maintenance by as much as $2,600 per car per year. It is hardly an example of responsible ownership that inspires farmer confidence in the system. Will this government take its ownership responsibilities more seriously?
There’s essentially only one reason for the absence of compelling arguments for rail car retention. Politics.
In opposition, the Conservatives made no secret of objections to the FRCC plan. That the party made good on its objections by rejecting that plan once in government is no surprise.
But if generally accepted conservative philosophy is to remove government from business, retention of the cars is contrary. In some ways, accepting the FRCC plan could be considered more conservative, since it would have allowed a democratic group of farmers, farm groups and rural associations to own the cars, elect their directors and carry on the business of leasing, maintenance and replacement.
If the government plans to cede rail car ownership by simply not replacing the cars as they wear out, it has an optimistic view of its longevity in governance. The first replacements are likely to be needed by 2011 but it will be decades before all 12,000 serve their useful life.
Politics also played a role within the FRCC. In its earliest days, strange bedfellows laid the framework of the ownership plan. Among them were the Western Canadian Wheat Growers Association and the National Farmers Union, opposites on the political continuum. Yet they once agreed that farmer ownership of the cars had advantages.
The WCWGA departed the coalition in 1996, but others joined. General farm groups in each of the prairie provinces became members and remained so. Pulse grower groups and producer car shippers associations are also part of the coalition.
The FRCC came to represent a fairly broad spectrum of farmer and rural interests; on the face of it an even broader cross-section of the rural electorate than the Conservatives can claim.
When we review the on-again, off-again sale of the rail cars through the lens of history, will we see that political ideology rather than logical analysis scuttled a plan that would have provided more farmer influence on grain transportation?
