Canadians should not think railways are losing money because they cannot charge as much as they want to haul grain, the president of the Canadian Wheat Board said last week.
Greg Arason told the Senate agriculture committee the maximum freight rate clause in existing legislation should stay, despite a strong lobby by the railways that the rate cap be abolished.
“We should not be too concerned about the revenue adequacy that railways have had,” he said. “The fact that there is a cap does not necessarily mean that the railways are going to be in an environment where they do not recover their costs or have an ability to reinvest in the system.”
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He said the rate cap provides some security to farmers and shippers that the railways will not crank up the rates to “whatever the traffic will bear.”
Arason acknowledged railways have argued they would not charge excessive freight rates because it would not be in their interests to drive customers out of business.
“But I also believe they will take you close enough to the cliff that you will get a good view of what it looks like below,” he said. “We need to be sensitive to that.”
Arason also advocated more money from Ottawa to fund the Canadian Grain Commission.
Alberta Liberal senator Nick Taylor asked Arason if he had concerns about CGC proposals to increase user fees in order to cover the growing commission deficit.
Arason said he had concerns about the “level of funding and the ability of the system to adopt a user-pay philosophy for the grain commission services.”
Taylor wondered if the CGC deficit could not be addressed another way, other than hitting farmers with higher costs and changing services.
“Our view would be that if the government saw fit to provide a higher level of funding, it would certainly have significant paybacks to agriculture and significant paybacks to the ability to continue to provide a quality product,” said the wheat board chief executive officer.
He would “not discourage” the government from picking up the CGC deficit through higher commitments of public funds.
