SASKATOON – While grain industry leaders and politicians held meetings, issued press releases and made public statements last week, prairie grain farmers were quietly trying to figure out how the end of the Crow Benefit will affect them.
But with so many questions about the $1.6 billion payment yet to be answered, it was more guesswork than precise calculation.
The one thing farmers know for sure is that they’ll be paying a lot more to ship their export grain to market.
“I have a very rough idea of what it’s going to do,” said Steve Siemens, who farms about 1,700 acres near Altona, Man. “I think it will cost me about $10,000 or so, just looking at the numbers.”
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As to how much money he expects to get from the Crow buyout, that can best be described as “a grey area,” he said. His rough guess is around $30 an acre.
The $1.6 billion, spread over about 80 million eligible acres, works out to a little over $20 an acre. However individual payments will be adjusted for productivity and distance from port.
Some in the industry argue the higher freight rate will be partially offset by the development of a leaner, more efficient transportation system. The railways will have to compete for the farmers’ business, the argument goes, and the result will be lower costs.
Siemens has heard all that, but remains skeptical.
“I think we’re just leaping off a bit of a cliff here,” he said. While there are promises of long-term benefits in increased efficiencies and more value-added industry, “we have to get through the short term to get to the long term.”
Ken Sapsford, who crops 2,800 acres and raises beef cattle near Perdue, Sask., says he’s been too busy to spend much time time thinking about the Crow change.
“It’s definitely going to be higher costs,” he said. “But I haven’t been able to really sit down and determine what the bottom line on the farm is going to be.”
The end of the export subsidy will definitely lead to major changes in prairie agriculture, but probably not for a couple of years, he said. With all the uncertainty and the prospect of a cash payment this year, Sapsford has no plans to do anything radically different in 1995.
Grain prices will impact
He said grain prices will have a big effect on how farmers react to the freight change: “If prices stay up next year, the bottom line on the farm might not reflect the Crow loss as much. If prices slip a little bit, then all of a sudden it’s going to be a huge thing.”
That’s the way Bruce Logan sees it too, from his wheat and cattle farm just south of Cereal, Alta. With freight rates up, any drop in wheat prices could be disastrous.
“If you take a buck off what we’re getting now, we’re back to where we were five years ago,” he said.
And Logan said there’s not a lot he can do differently on his farm to minimize the effect of the rate increase. Some say the freight hike will cause farmers to switch to higher value crops like canola, but that’s not an option on his dry, sandy land.
“I guess that buy-out money will help for a year, but beyond that it doesn’t look too good,” he said.
