THE FEDERAL government announcement that it had reached new agreements with Canada’s two national railways over management of 11,900 hopper cars was pitched publicly as a deal that makes the railways responsible for car maintenance and replacement.
However, farmers will end up footing the bill.
While it is true that Canadian National and Canadian Pacific railways are writing the cheques, they will recover the cost of car repairs and replacement through the grain revenue cap.
The railways’ annual revenue from hauling grain is limited based on an agreed formula. If their revenue exceeds their respective caps, they must refund the excess to the Western Grain Research Foundation.
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When it comes to buying new hopper cars, critics estimate that $4.50 per tonne of grain moved will be assessed against the revenue cap. That is why they say farmers, in effect, will pay for rail cars they will never own.
The government turned down a better option. Two years ago, the Conservatives pulled out of a deal arranged by the previous Liberal government to sell the cars to the Farmer Rail Car Coalition, a group of farmers and farm groups that represented a broad range of political ideologies. That arrangement would have seen farmers pay for the cars, as well as maintenance and replacement when necessary. Crucially, farmers would have owned the cars.
A deal with the FRCC would have provided farmers with a much-needed place at the discussion table in the grain transportation business. With centralization of the grain industry, and two national railways operating in a near monopoly, that could prove important.
There are review measures in the latest deals, but past monitoring has not been stellar.
For example, when the FRCC was bidding for the hopper cars, it discovered the railways were spending less than $1,700 per car per year for car maintenance, while they received an allowance of $4,329 per car under the revenue cap formula.
Ottawa’s latest deal removes any option for farmer control in rail car management. That places increased importance on another Conservative initiative.
Last week, the government said it would reintroduce shippers’ rights legislation that was in process when the last session of Parliament ended. It will require agreement from all parties to fast track the bill, but given its widespread support, it is difficult to imagine much opposition.
The bill promises more oversight over railway services and fees, as well as new protection for shippers.
The government decision on the future of the hopper cars makes additional shippers rights even more important as farmers seek to have their voices heard in the grain shipping business.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
