SASKATOON – Within two weeks, a coalition of farm groups trying to derail proposals to sell the government-owned hopper cars to the railways hopes to come up with a specific plan on how farmers could own and administer the cars.
At a meeting in Saskatoon last week, about 25 representatives from eight farm organizations set up a committee to work out details of how a producer-run agency or corporation would work. That committee will report back to the larger group at a meeting in Regina Feb. 2.
Sinclair Harrison, president of the Saskatchewan Association of Rural Municipalities, said with the federal budget expected in February, the group has no time to waste.
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“Out of that meeting we hope to agree on a set of goals and objectives and narrow it down to one option,” he said in an interview after the Saskatoon meeting. “Then certainly we’ve got to put together a business plan very quickly.”
Harrison said agriculture minister Ralph Goodale has indicated no decision will be made on the fate of the cars at least until the group has a chance to submit its proposal.
Meanwhile, a member of the senior executive officer’s committee that came up with the controversial proposal to sell the grain fleet to the railways now fears the federal government will decide to keep the cars itself, at a net cost to farmers.
Gordon Cummings, chief executive officer of Alberta Wheat Pool, said the industry’s inability to agree plays into the government’s hands, especially those in the department of finance whose only concern is the bottom line.
Higher freight rates
“What I’ve heard being floated is the government of Canada would retain the cars, lease them to the railways for $75 million a year and that over five years would give them $375 million.” Cummings said that’s more in line with what Ottawa wants to get for the cars than the $100 million purchase price suggested in the SEO report. And it would also mean a bigger increase in freight rates than the $1 a year for five years agreed to by the SEOs.
While the SEO proposal has been criticized by some farm groups as a sweetheart deal for the railways, Cummings said grain farmers would be the real beneficiaries.
“We were trying to get the low price, not give the railways a gift, but to get a lower freight rate for the farmer and I think that’s gotten missed in a lot of the discussion,” he said. “Would farmers be happier if the railways got them for $350 million?”
He said the car ownership issue has become a lightning rod for the frustration and dissatisfaction many farmers feel about changes in grain handling and transportation.
There are two reasons to own cars, Cumming said: To control freight rates and control service, and both of these issues are addressed by other parts of the SEO report.
There are many practical problems with farmers owning the cars, including the fact that they will have to be replaced in about 10 years. Replacing 13,000 cars at today’s prices would cost about $800 million, he said.
