The Canadian Wheat Board has emerged relatively unscathed from more than two years of transportation policy review.
Reports by both Willard Estey and Arthur Kroeger recommended ending the board’s role in transportation planning and logistics.
But under the federal government’s policy package released last week, the board will continue to have a pivotal role in getting grain from prairie farms to waiting export vessels.
“The idea of being a port buyer has been totally put to bed,” said board director and transportation specialist Ian McCreary.
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Many details of exactly how grain will be moved remain to be worked out.
One thing known is that the board will negotiate directly with the railways for the overall car supply needed to meet its shipping program over a prescribed period of time, along with a basic single car freight tariff.
The board will then be required to issue tenders to grain companies for a minimum of 25 percent of its shipping program. Those tenders will carry with them the capacity guarantee and the single car tariff, leaving the companies and railways free to negotiate other special freight packages.
As far as the board is concerned, its ability to negotiate directly with railways for cars is at the heart of the transportation issue.
“Controlling car supply is critical, because our customers want grain when they want grain,” said board chair Ken Ritter.
Not only does that involvement give the board the ability to meet its customers’ demands, he said, but it should result in a lower freight bill for farmers.
“We’re pretty confident that with our ability as a major shipper in this country, we will be able to negotiate rates that are attractive to farmers.”
If transportation was left completely in the hands of the railways and elevator companies, a bid system would soon develop and during periods of peak demand the price of transportation would increase accordingly.
“The question is who would pay that bill, and the answer is farmers would pay that bill,” Ritter said.
Agricultural economist Richard Gray agreed that keeping the board directly involved in negotiating car supplies and rates is vital to gaining financial benefits for farmers.
“The board is the only player with enough power to deal with the railways,” he said.
“Because they control so much grain, they can actually deal with the railways and use commercial transactions to lower costs and encourage competition.”
However, not everyone is happy with the board’s continuing role in transportation.
Railways, grain companies and some farm groups lobbied hard for a fully commercial system. They wanted the board to take possession of grain at port and for all transportation logistics to be negotiated between the railways and grain companies.
Hurt grain handlers
Those groups say the board’s continuing involvement will prevent railways and grain handlers from negotiating the most efficient transportation arrangements.
“The CWB’s regulatory controls over grain transportation will remain largely intact, and will continue to distort accountability and limit efficient asset utilization in the sector,” said CN Rail’s prairie vice-president Peter Marshall.
The Western Canadian Wheat Growers Association said the government is making only “cosmetic changes” to a regulatory system that repeatedly failed in the past.
Agricore president Neil Silver said that if the wheat board negotiates the overall car supply and basic single car freight rate before the tenders are issued, grain companies won’t be in a position to extract any financial benefit from the railways.
“Really there’s nothing left for us to negotiate with railroads and we really haven’t put the railroads head to head with each other in that process,” he said.
Saskatchewan Wheat Pool vice-president Gary Wellbrock said the pool also wanted grain companies to be given more opportunity to negotiate freight arrangements directly with the railways, but recognizes the political realities facing the government.
“We would have liked to see it go a little farther,” he said.
“But there were a lot of strong lobbies and strong opinions throughout the grain industry and they’ve tried to come up with a workable balance.”
