Skepticism should accompany the Farmer Rail Car Coalition’s request that it get the federal fleet of grain hopper cars for the good of farmer-shippers, say the railways and prairie inland grain terminals operators.
Canadian National, Canadian Pacific and the Inland Terminal Association used a Nov. 16 appearance before the House of Commons agriculture committee to question the coalition’s claims of freight rate savings and increased farmer power.
Federal transport minister Jean Lapierre has said he wants to recommend to cabinet late this year what to do with the 12,000 government-owned hopper cars. Turning them over to the coalition to be owned by a non-profit corporation is one option.
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CPR vice-president Marcella Szel said the government should retain ownership and continue to lease the cars to the railways. She said the FRCC proposal is too risky.
“The FRCC would acquire the asset for free without legislated car supply responsibilities, which railways currently have,” she told the MPs. “Overall, we believe there is a significant element of risk associated with the proposal. They don’t have any experience owning or operating a large fleet of essential rail cars, nor do we believe there are contingencies for liabilities in the event that the venture fails.”
CN vice-president Ross Goldsworthy said coalition ownership would add another layer of bureaucracy to an already complex system. CN has offered to buy the 6,000 government-owned cars it now uses.
The railway executives suggested the coalition is underestimating how much it would cost to maintain and upgrade the aging cars.
Several officials said a gift of the cars, worth an estimated $200 million, could be challenged under World Trade Organization rules as an export subsidy.
Robert Davies, chief executive officer of Weyburn Inland Terminal Ltd., appeared as a representative of inland grain terminals across the Prairies. He said the terminals’ preferred solution would be to keep the cars in public hands with rules to make sure the railways provide the services needed.
He said a key foundation of the coalition pitch is an assumption that if the cars are turned over for nothing or next to nothing, freight rates could be lowered and farmers would save tens of millions of dollars.
“Quite simply, there is no proof that freight rates will come down for farmers,” he said.
