SWIFT CURRENT, Sask. (Staff) — A recently-completed review of railway costs will keep a lid on freight bills for grain farmers and taxpayers next crop year.
The National Transportation Agency found that railway costs have declined in several key areas. As a result, the freight rate paid to the railways in 1994-95 will be about eight percent lower than it would otherwise have been.
Don Rees of the agency’s rail subsidies branch said those results will at least partly counter the negative effect of the federal government’s budget cuts, which have boosted the farmers’ share of the total freight bill.
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Pending final approval, the average rate paid to the railways for hauling grain in 1994-95 will be $30.35 a tonne, down from $33.08 this year.
“That reduction is directly the result of the base year review,” Rees said.
He added that if there had been no review and the 1994-95 rate had been calculated on the same basis as it has been the past four years, the rate next year would have been $32.87 rather than $30.35 a tonne.
The review involved a painstaking analysis of the actual costs incurred by the railways in moving some 440,000 grain cars from the Prairies to export position during 1992.
By law, such a review must be done every four years. The last one was done in 1988 and has formed the basis for railway cost estimates and freight rates ever since. The results of the 1992 review will be used for the next four years.
The general conclusion was that railway costs have fallen due to increased operating efficiency in a number of key areas, including car handling costs, labor and fuel.
Both farmers and taxpayers will save money as a result of the review. The rate paid by farmers will be 70 cents a tonne lower than it would have been if the old cost base had been used, while the government rate is lower by $1.82 a tonne.
Railway costs determine rate
The review put the railway costs at $1.072 billion in 1992. That’s the figure that was used in calculating the $30.35 freight rate.
If the old base had been used, with the 1988 cost base indexed to 1992, the railways’ costs would have been pegged at $1.147 billion.
After some technical adjustments, the railways’ total eligible costs for 1992 were determined to be $1.053 billion.
While the presentation focused on freight rates, judging by their questions farmers had other things on their minds.
They wanted to know why the Crow subsidy isn’t available on prairie grain shipped directly south to the U.S. and why there is no subsidy for trucking.
There were questions about road damage arising from rail abandonment, labor relations at west coast ports and the use of Churchill. They even asked the transport agency officials which method of payment will produce a more efficient handling and transportation system.
For the agency officials on hand, whose job is to administer the Western Grain Transportation Act, the answer in just about every case had to be “we can’t do anything about that.”
