CALGARY – Prairie grain farmers should set aside the age-old notion that they are captives of a non-competitive transportation system, requiring government protection to avoid railway gouging, says a senior CP Rail official.
Rick Sallee, vice-president for agri-products and coal, said in an interview last week consolidation of the grain and transportation systems has actually made farmers less dependent on a single railway.
They now are prepared to drive 50 or even 100 miles to deliver their grain, making the railways compete for the business between each other and against other transportation modes.
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“Farmers are not as captive as they sometimes think they are,” said Sallee as he discussed CPR proposals to deregulate the transportation sector, substituting contracts for regulatory requirements. “Eighty-seven percent of the grain that CP hauls originates from within 50 miles of competing choices.”
When senior CPR executives met last week with Willard Estey, who is heading a review of the grain transportation system, they promoted their view that deregulation and commercialization are the way to go.
Sallee conceded in the interview Jan. 15 that it is a notion the railway will have to sell if it is to be acceptable to farmers.
It will try to convince farmers that once government regulations and the freight rate cap are gone, the railways will not simply jack up prices.
“Do you really think, on day one or year five, knowing how politically charged grain is, we would go and start whipping the rates up?” asked Sallee.
“We’re not going to put ourselves in a position where the community is up in arms. I know this is a kind of ‘trust me’ argument, but it is true.”
And he said as the system becomes more commercial and less regulated, and as that fuels the drive for system consolidation, farmers willing to take advantage of the changes will become more powerful players.
