In 1997, the grain industry agreed the transportation system was flawed and needed changes.
But that consensus seems to have dissolved before discussions began this summer on how to implement reforms, said Arthur Kroeger, who was hired by the federal government to lead the talks.
Kroeger said he is struck by the number of people now saying the system is working fine, and the only thing wrong is that the railways make too much money.
“The evidence is everywhere … that there are more fundamental systematic problems than just somebody making too much money.”
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He made his comments to a receptive crowd at the annual meeting of United Grain Growers.
Earlier at the meeting, the chief executive officer of the Canadian Wheat Board explained why the board does not agree with Kroeger’s recommendations.
The wheat board supports some contractual arrangements, but must be able to buy grain in the country rather than just at ports, said Greg Arason.
“The system is working, it is changing and it is becoming more competitive and accountable all the time.”
Arason noted farmers ultimately pay all the costs in the system, and efficiencies must be passed back to farmers.
Kroeger acknowledged there needs to be more competition between railways to ensure they share efficiency gains. But it’s not clear how to best increase competition, he said.
Transport Canada is studying the pros and cons of open running rights and should have more evidence by the end of the year, said Kroeger.
“This is something that you want to think about quite carefully,” he said, explaining open access would also apply to other commodities besides grain.
Kroeger said he believes the wheat board could get the grain it needs when it needs it as a port buyer.
He said he is puzzled by the board’s vehement opposition to that recommendation.
“It’s a little like a building contractor saying, ‘I can’t promise to build you a house because I don’t own the lumberyard and I haven’t got control of the cement plant.’ ”
Complicated grain logistics remind him of controlled economies in Eastern Europe before 1989.
“Yet the clear lesson of the past 20 or 30 years is that you can’t really make a command economy work very well.”
There are risks in moving from an administered logistics system to a commercial system, he said, but there are risks in not changing, too.
In a commercial system, grain companies and railways will be accountable when they don’t perform.
Today, that accountability is “blurred,” he said, and mistakes are paid for from pool accounts.
“And we all know whose money that is,” he said.
