SWIFT CURRENT, Sask. — The latest cut in the Crow Benefit will leave farmers with 97 cents less in their pockets every time they sell a tonne of export grain.
Under the proposed rate scale for 1994-95, farmers will pay an average freight rate of $14.72 a tonne beginning Aug. 1.
If the federal government had not cut the Crow payment by $33 million in its February budget, the average rate for farmers next year would have been $13.75 a tonne.
The proposed new rate scale, released by the National Transportation Agency at a series of meetings across the Prairies last week, still must receive final approval from the agency and the minister of transport.
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Railways get $30.35 a tonne
But as things stand now, the railways will be paid an average of $30.35 a tonne to haul prairie grain to export position next crop year (based on a distance of 1,670 km).
Assuming the February budget cut goes ahead, the federal government will be committed to pay $555.6 million towards the cost of moving grain. That translates into a payment of $15.63 a tonne, leaving farmers to kick in the remaining $14.72.
The new total freight rate is actually eight percent lower than last year’s $33.08 a tonne, reflecting the NTA’s determination that railway operating costs have declined.
But because the federal government has cut its annual Crow Benefit payment, farmers must pick up a bigger share of the tab.
This year farmers are paying an average of $14.16 a tonne, or about 46 percent of the total freight rate. Next year’s rate of $14.72 works out to just under 49 percent. Five years ago, farmers paid just 28 percent of the total freight bill.
Calculating rates
For those who like numbers, here’s how the freight rate for 1994-95 is calculated (the final official figures could change slightly):
- The total cost of moving grain to market in 1994-95 will be $1.053 billion, based on shipments of 34.3 million tonnes of grain.
- The government is committed to pay $555.6 million, which after some technical adjustments, works out to 51.5 percent of the total cost.
- The $1.053 billion is 5.78 times the revenue the railways would have received for hauling the same volume of grain at the old Crow Rate. The Crow Rate of $5.25 a tonne is multiplied by 5.78 to arrive at the new rate of $30.35 a tonne.
- Ottawa’s 51.5 percent share works out to $15.63 a tonne, leaving farmers to pay the remaining $14.72.
