The grain handling and transportation system that serves farmers in Western Canada today bears little resemblance to the system that served their parents or grandparents when the first issue of the Western Producer was published in 1923.
No big super-Bs roaring down prairie highways, no 40,000 tonne capacity concrete terminals, no 100-car unit trains.
In those days things were much simpler.
Farmers would load their wagon with grain, hitch up a team of horses to the wagon and set off for a 20 or 30 kilometre jaunt down the dusty road to the local elevator, a modest wooden structure capable of holding less than 1,000 tonnes of grain on average.
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Back then, grain elevators were sprouting like weeds across the Prairies.
In 1905, there were 1,049 licensed elevators in the three prairie provinces, located on a spider’s web of rail lines that seemed to extend into every nook and cranny of the grain growing area.
By 1915, the number of elevators had climbed to 2,989. In 1920, there were 3,773 and in 1925, there were 4,292. By 1930, the elevator network peaked at 5,724.
Those burgeoning numbers reflect the fact that it was a system designed and built by farmers for the convenience of farmers.
That, too, has changed.
Today’s grain handling and transportation system is designed and built for the convenience of the profit-driven corporations that are involved in the business of handling and shipping grain.
That means fewer and larger elevators situated on fewer and more widely dispersed rail lines.
As of Aug. 1, 2002, there were just 425 licensed primary elevators in Western Canada, with a total storage capacity of 5.3 million tonnes.
While the number of elevators has fallen sharply, the storage capacity is actually 42 percent greater than the 3.7 million tonnes available in the 4,292 elevators that existed in 1925.
The developing prairie grain transportation system was governed by a significant amount of regulation, most famously the Crowsnest Pass freight rate.
The Crow rate was established in 1887 by the Liberal government of Wilfrid Laurier as part of a strategy of exerting federal control over the western territory and the Canadian Pacific Railway. In return for land and money from the government, the railway turned over coal-bearing land to Ottawa and agreed to fixed freight rates on settlers’ goods moving to the West and western grain moving to the East.
The Crow rate, which established a tariff of 20 cents a hundredweight on grain shipped from Regina to Lake Superior, became a powerful icon for western farmers.
They came to view it as their political birthright, as their half of the bargain that brought Western Canada into confederation.
Other than a brief suspension from 1918-22, the Crow remained in force for decades, leaving the railways increasingly upset by the losses they incurred hauling grain at such a cheap rate.
As the decades rolled by, the railways refused to invest new money in their grain hauling infrastructure, arguing that the artificially low rate meant they were losing hundreds of millions of dollars a year in the grain business.
In the 1980s, a sympathetic Liberal government, under the leadership of transport minister Jean-Luc Pepin, finally tackled the politically explosive issue. After a tumultuous political debate, the government legislated an end to the Crow in November 1983.
The government attempted to soften the blow by creating the Crow Benefit, an annual payment of $658.6 million made to the railways to keep farmers’ freight rates down.
The Crow Benefit was abolished in 1996, making western farmers responsible for the full cost of shipping grain to market for the first time since the introduction of the Crow rate almost a century earlier.
In 1997, the federal government announced plans for a wide-ranging review of the grain handling and transportation system. Its fate was put in the hands of retired Supreme Court justice Willard Estey.
After several months of public and private consultations with prairie farmers and grain industry groups, Estey released a report in December 1998 that recommended, among other things, that the Canadian Wheat Board no longer be involved in grain transportation, that rail car supplies and grain movement be negotiated directly between railways and shippers, and that the maximum cap on freight rates be removed in return for a guarantee by the railways that the total freight bill would decline over the next three years.
The report triggered yet another contentious debate. Rather than implement Estey’s proposals, the government appointed retired civil servant Arthur Kroeger to head up industry consultations on which, if any, of Estey’s recommendations should be adopted.
Kroeger’s October 1999 report, issued after lengthy discussions with farm groups and industry officials, recommended replacing the maximum freight rate scale with a cap on railway revenue from hauling grain, taking unspecified steps to increase competition between the railways, setting up a system of final-offer arbitration to resolve disputes between railways and shippers, and turning the day-to-day logistics of grain transportation over to the railways and companies, with no direct role for the wheat board, with a three year phase-in of commercial tendering for the shipment of CWB grain.
Needless to say, that report generated more dispute among industry players, with the CWB and most farm organizations lining up against grain companies and railways in a debate over issues like tendering, rail competition, the need for joint running rights, the revenue cap and sharing productivity gains between the railways and farmers.
All those issues remain unresolved to some degree or another, and in many ways the issues surrounding grain handling and transportation will probably never be resolved once and for all. No matter what the rules and no matter what the system, there will be those who want changes.
The system’s past 80 years have been dramatic indeed and it’s hard to imagine that the next 80 could bring as much change.
But then again, those farmers sitting in the line-up of horse-drawn wagons at their local wooden elevator in 1923 could probably never have imagined the grain handling and transportation system of 2003.
