We were surprised by the one-sided perspective of a recent story (“Railway efficiency up, costs down, but farmers don’t get share of pie,” July 30) on the effects of railway rationalization and the end of the Western Grain Transportation Act.
Had the subject of the story (the railways) been asked to comment, your readers could have had some additional insight.
For instance, under pressure from some groups of farmers, the Canadian Wheat Board rejected a proposal during the Senior Executive Officers’ process in 1995 that would have indeed seen producers get a “share of the pie.”
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That proposal, the Minaki Agreement, called for a formula that would see productivity gains (all but the first one-half percent, which was to be directed to railways) shared evenly by grain companies, farmers and railways.
We also would have pointed out the productivity-sharing program under way via the rail line rationalization process on the prairies.
While B.C. economist Jim Vercammen rightly pointed out that, under the Canada Transportation Act, rates are allowed to rise in line with inflation – no great gift in light of the effect of inflation on the cost of running a 25,000 km railway – the story failed to point out that the opposite also is true.
Yes, rates can go down. And they do. Under the terms of the CTA, $10,000 is deducted from the cost base of the freight rate formula for every mile of grain-dependent rail line that is discontinued.
As a result of that measure and other factors, prairie farmers will see a 1.2 percent decrease in the maximum rate scale for the movement of prairie grain to the west coast and Thunder Bay during the 1998-99 crop year (as the Canadian Transportation Agency pointed out in an April news release).
That is a direct cost saving to those who ship grain – a saving they are realizing today.
As the number of low-volume, high-cost elevators and branch lines declines, the average rail car turnaround time can also decline, reducing the number of cars needed in the fleet.
This is also a direct saving for farmers as fewer leased cars are required to supplement the government fleet.
Incentive rate discounts are also available to those taking advantage of the efficiencies that come with high-speed loading of multi-car blocks at high-throughput terminals. As more high-throughput terminals come on line, the savings will continue – for all.
Your headline writer got it half right – railway efficiency is up and costs are down (we consider that success). But let us correct the other half: “Farmers do get share of pie.”
We all need to strive – on the farm, at the elevator, on the rail line and at the terminal – for continued productivity gains as we seek to deliver Canadian grain to the world. With the Estey review underway, it is important that we keep the discussion open so that we truly can get a better, lower-cost system.
– Dennis Apedaile,
Assistant Vice-President,
CPR, Calgary
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