Canada’s national railways made big bucks last year.
And that has some farm officials railing against the companies for raking in profits at the expense of prairie farmers, local communities and even grain companies.
“Farmers are going broke and those guys are making dollar after dollar,” said Ron Gleim, chair of the Western Rail Coalition. “We say it’s time they shared, especially now when times are so tough.”
The coalition, made up of farm and community groups from across the Prairies, promotes the use of short-line rail companies to maintain service on branch lines.
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Darrin Qualman, executive secretary of the National Farmers Union, said evidence indicates that the railways have been the big winners — in fact, the only winners — in the deregulation and restructuring of the grain handling and transportation system that has taken place over the past couple of years.
“The railways have handled this just superbly,” he said.
While grain companies have spent hundreds of millions of dollars re-designing their elevator systems to allow for more efficient rail service, the railways have cut their expenses by abandoning branch lines and then reaped the benefits of the grain companies’ investments.
“They’ve hoodwinked the grain companies, the government and farmers all at the same time,” said Qualman. “They should really feel good about this.”
Looking good
In the past couple of weeks, both CN Rail and CP Rail have reported increases in revenues and profits for 2000.
CN Rail saw its net income jump 25 percent to $937 million, on revenues of $5.43 billion (see last week’s issue for more details). Revenues from grain and fertilizer operations increased by seven percent.
Meanwhile, CP reported a 10 percent jump in grain hauling revenue and a record operating income. The company took in $755.2 million hauling grain, up from $687.5 million in 1999, making it the railway’s top revenue-producing commodity.
CP’s total freight revenues were up 4.1 percent to $3.46 billion. Expenses for the year were three percent higher at $2.8 million, due largely to a 47 percent jump in fuel costs. Operating income increased by 11 percent to a record $845.2 million. Net income increased by $164 million to $532 million.
Robert Ritchie, CP’s president and chief executive officer, said the company had record volumes, record operating income and a record operating ratio.
“We’ve continued to raise the bar on efficiency, productivity and customer service, and this has been critical in flowing the growth in our business through to the bottom line,” he said in a press release.
Ritchie cited increased grain production and exports as a key factor in the railway’s financial performance.
More money, less service
Gleim said he doesn’t begrudge the railways a reasonable profit, adding that financially strong railways are important for prairie grain farmers.
But he’s upset the railways are making “excessive” profits while they are reducing service and abandoning branch lines.
They seem to want to destroy the very infrastructure that is allowing them to make so much money, Gleim said.
And while they may be reducing their costs and operating more efficiently, that doesn’t seem to be doing grain farmers much good.
“We were told throughout the Estey and Kroeger process that as the railroads became more efficient, our costs would come down,” he said. “Well they’re becoming more efficient, but our costs are going up, not coming down.”
