WINNIPEG – Railway officials say farmers have nothing to fear from the transportation reforms agreed to by the grain industry.
The proposed changes will lead to a lower cost system, they say, and so should be welcomed by farmers, shippers and railways alike.
“It will result in better car utilization, greater car availability and lower rail costs for farmers,” said Rick Sallee, a vice-president of CP Rail, as he urged delegates attending last week’s annual meeting of Manitoba Pool Elevators to support the proposal.
“We strongly believe this is the best that can be done under the circumstances,” he said.
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A committee of senior grain industry officials has agreed to a series of reforms that would further deregulate the grain transportation system. The proposal is now awaiting approval from the federal government, although some industry officials say it’s doubtful the new system could be implemented by next crop year even if it gets a quick go-ahead.
Its major points include selling the government-owned rail cars to the railways, turning over day-to-day car allocation to the railways, reducing the Canadian Wheat Board’s role in deciding where cars go, capping freight rates for 10 rather than five years and letting grain companies and farmers share in cost savings achieved by the railways.
CN Rail vice-president Sandi Meilitz acknowledged the proposed changes may lead to a shake-out in the handling and transportation system, with inefficient rail lines and elevators getting the axe.
But that shouldn’t be seen as a negative development, she said.
“One very direct purpose of this is to drive more efficiency into the system,” she told reporters last week. “To the extent that you do have very inefficient facilities, over time they’ll have a harder time.”
She said the proposal to share some of the money the railways expect to save with the changes should ease the pain and give all stakeholders an incentive to work together.
The railways will keep the first half-a-percent reduction in the costs of hauling grain. Any savings beyond that will be shared equally among the railways, grain companies through incentive rates, and farmers through a lower base rate.
Both railway executives emphasized the rail companies didn’t get everything they wanted in the reform package.
They don’t like the idea of having to share productivity gains with other players in the system.
Nor do they like the idea of extending the ceiling on freight rates for another five years.
However, they like the fact that the ceiling would then be permanently eliminated and grain would then be treated like any other commodity.
They also like the fact they’ll have more control over where rail cars are sent to pick up grain, even though they’ll have to follow broad policy outlines established by a new industry committee.
