Cam Goff, a Hanley, Sask., farmer, says grain transportation matters require serious review. Goff is also a director for the Canadian Wheat Board.
It seems to me that it’s time for farmers to take stock of their transportation situation.
There are a number of converging issues that require our attention, and decisions to be made that will affect our businesses for a long time to come.
Most farmers are aware that rail transportation costs have a significant impact on their bottom line, since about one-third of the value of export grains goes to getting it into terminal position, and that cost is reflected in domestic prices.
Rail transportation and grain handling have undergone tremendous restructuring and deregulation in the last 20 years, with farmers being increasingly marginalized in both courses.
The processes that saw these changes evolve, Hall, Kroeger, Estey, and elevator system “rationalization,” were viewed as efficiencies from elevator to port. There was always the assumption that the financial benefits would flow down to the farmer.
Unfortunately, that assumption works against the most basic business principle: maximize profit.
It is naive to expect your business associates to look after your interests ahead of theirs, or to earnestly take them into account.
This brings us to the issues that are towering on the horizon like thunderheads on a hot and humid summer afternoon.
First to hit will be the matter of CN’s delisting of 53 producer car loading sites last summer.
Combined with the removal of 55 sites since 2006, that’s the loss of more than one-third of the sites farmers have to access local rail transportation to move their production to market.
These sidings also provide competitive pressure on area grain handlers and maintain the option of community rail service.
There is no reason to expect these delistings to stop until the legislated right for farmers to order a rail car is rendered meaningless by the lack of access to a loading site. Within a matter of months, if no action is taken, thousands of farmers will be stripped of rail service as CN dismantles the 53 sidings.
Racing behind this is the issue of multi-car incentives and trucking premiums, a cash-grabbing sleight-of-hand put on by the railways and major grain companies to line their pockets at the farmers’ expense.
A loophole in the revenue cap formula allows the rail companies to take the amount that they discount freight rates to the grain companies (multi-car incentives), and use it to increase the total amount they are allowed to charge farmers to move their grain (the revenue cap).
The grain companies then have the option to offer the farmer a portion of the multi-car incentive as a trucking premium, thereby returning some of our own money to us.
Independent studies have shown this practice costs farmers about $100 million per year, money split between railroads and grain companies.
Then, looming above the others, is the need for a costing review. Unique to the grain industry, when the Crow Rate’s successor, the Western Grain Transportation Act, was replaced by the Grain Freight Revenue Cap in 2000, it was decided that the railways would be guaranteed a minimum return on investment of 20 percent, and rates were set accordingly.
Since that time, this return has risen to a staggering 54 percent. The Farmer Railcar Coalition’s work in saving farmers more than $70 million annually in overcharges on railcar maintenance, and benchmarks that have not been reset since 1992, shows it is possible that a full costing review may save farmers additional tens or hundreds of millions of dollars annually.
Now, after years of promising a costing review would take place, the federal government has announced it no longer feels that the review is needed.
So, what do these issues have in common? The link that binds them is the need for legislative change to curb the power of the rail companies, and make sure that transportation policy in this country works in the best interests of its citizens.
The federal government has the authority and the responsibility to ensure that the good of Canadians is placed ahead of the profits of CN and CP shareholders.
When farm groups approach the government with their concerns over these issues, they are politely dismissed with the comment, “it’s good to know your opinion, but what do farmers think?”
It’s time for all farmers to speak up by writing, e-mailing, and phoning MPs and MLAs and the provincial and federal ministers and opposition parties to let them know what’s on your mind.
The loss to the farm community of hundreds of millions of dollars annually will continue unless we stand up for ourselves.
We must insist that legislation and processes be enacted by the federal government that protects farmers’ interests.
Failure to advance our own cause will result in the railways and others continuing to set the agenda.
We can’t expect our politicians to read our minds, but we can expect them to read our letters.