Rail freight rates on grain should be scaled back immediately, says the government of Saskatchewan.
Provincial transportation minister Judy Bradley says a rate roll-back is needed to ensure farmers aren’t “overcharged” for hauling grain.
In a July 27 letter to her federal counterpart David Collenette, she asked that rates be reduced by an unspecified amount for the crop year that began Aug. 1.
“Farmers are suffering an income crisis and should be paying no more costs than the railways are incurring,” she said.
The new crop year saw an increase of 0.2 percent in the maximum rate, bumping the average rate (for a haul of about 1,670 kilometres) up to $34.45 a tonne from $34.38.
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That works out to an increased freight bill of about $70 a year for a Moose Jaw, Sask., area farmer shipping 1,000 tonnes of wheat to Vancouver.
The province says a rollback is justified in light of a recent study by the Canadian Transportation Agency.
The agency found that the costs of moving grain were reduced by about $9 a tonne from 1992 to 1998.
The rail companies passed about half of those savings back to shippers and producers and kept the rest.
Railways benefit
Bradley said it’s obvious that railways have been the main beneficiaries of the system changes brought about since the demise of the Western Grain Transportation Act in 1995.
“Saskatchewan has always maintained that farmers must benefit first from any changes to the grain handling and transportation system,” she said in the letter.
The letter doesn’t say what the new rate should be.
In an interview, Bernie Churko, head of grain and rail planning for the provincial transportation department, would say only that rates should be reduced by “an appropriate amount.”
He said farmers can’t afford to wait for the transportation review process now being led by Arthur Kroeger to run its course.
“Any recommendations from the Kroeger process don’t come into effect until the following crop year (Aug. 1, 2000),” he said. “Now there is evidence that the actual rates are considerably more than the railways’ costs, so we say take action in the interim to get it down to the cost level, until the Kroeger process recommends change.”
