An obscure and awkwardly named regulation is at the centre of a growing controversy in prairie farm circles.
The two national railways were a combined $59.8 million over their 2007-08 revenue caps.
The rail companies are required by a federal regulation called the Railway Company Pay Out of Excess Revenue for the Movement of Grain Regulations to pay that amount, plus a penalty, to the Western Grains Research Foundation.
The foundation would put the money into a trust fund and use the annual interest earnings to fund research into a variety of crops.
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However, a number of grain industry groups and individual farmers are urging that the rules be changed and that the money instead be paid back directly to the farmers who had to pay the inflated freight bill.
That might not be as simple as it sounds at first blush.
First, the federal government would have to initiate a change to the awkwardly named regulation.
Second, the call for a change is not unanimous.
Some in the industry say the money should be used to fund research.
Third, there is no consensus on how to distribute the money to farmers.
Some in the industry say it would be an expensive administrative and logistical nightmare. Others say that while it may be challenging to come up with a plan, it’s the right thing to do.
“Obviously there will be some administrative difficulties,” said Maureen Fitzhenry of the Canadian Wheat Board.
“But it’s not right to say this is going to be difficult so we shouldn’t even try.”
The board has called on the federal government to figure out a way to get the money into farmers’ hands, but at the same time it acknowledges that farmers should make the decision as to where the money goes.
Ian Wishart, president of Keystone Agricultural Producers, said there is clearly a need to put more money into grain research, adding he has been surprised at the number of calls from farmers saying the money should stay with the WGRF.
He added that while $60 million is a lot of money, it works out to only about six cents a bushel, or $2.22 a tonne, when spread out over the 26.8 million tonnes of grain shipped in 2007-08.
Wishart fears the cost of administering the payout could “eat up” a significant part of it.
“If that’s going to be the case, then what’s the point?”
KAP will be dealing with resolutions supporting both sides at its annual meeting later this month.
The Western Canadian Wheat Growers say the $60 million should be paid back to farmers who shipped grain in 2007-08, with the $9 million penalty forwarded to the WGRF.
Executive director Blair Rutter said if that proves too complex and costly, an alternative would be to reduce the revenue cap by $60 million for the 2009-10 crop year.
While that wouldn’t ensure that the farmers who overpaid in 2007-08 are reimbursed, it would provide some “rough justice,” he said.
National Farmers Union president Stewart Wells said his biggest concern about a farmer payment is the potential cost.
“If a clear, accurate, cost-effective way could be found to get that money back to farmers could be found, it might be worth looking at,” he said. “But I wouldn’t want to lose a significant amount to administration costs.”
Wells added there is merit to arguments from both sides and the NFU hasn’t yet reached a firm position on where the money should go.
