The railways should be barred from buying the federal government’s
fleet of grain hopper cars, says the Farmer Rail Car Coalition.
In an April 24 letter to Transport Canada, the coalition said the grain
revenue cap legislation gives the railways an unfair advantage in
bidding for the cars.
Under the Canada Transportation Act, the revenue cap would be increased
to reflect the costs the railways incurred in acquiring the cars. That
could allow the rail companies to outbid others for the cars knowing
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they can later get the money back from shippers and farmers.
“They’re in a situation where they can recapture whatever bid they put
in,” coalition president Sinclair Harrison said in a interview.
A spokesperson for Canadian National Railway rejected the suggestion
that the railways shouldn’t be allowed to bid for the cars.
“If there’s anything that’s unfair, it’s that kind of position,” said
Jim Feeny.
No matter who ends up owning the cars, he said, the purchase price is
going to be passed on to farmers.
“Anybody who buys the cars would have to recover the costs from the
people who use them. It can’t work any other way.”
Harrison said there is a big difference. The railways could submit a
high bid and pass on the costs with no concern. But it would make no
sense for the farmers’ coalition to make a high bid and then pass the
costs on to fellow farmers.
Harrison said the railways have another advantage in that they know the
exact condition of the cars. The coalition has asked the railways for
detailed maintenance records but the request has been turned down.
Officials with Canadian Pacific Railway could not be reached for
comment.
The cars were acquired for about $570 million in the 1970s and 1980s,
but some current estimates peg their value as low as $100 million.
