Arthur Kroeger has achieved near consensus among grain industry players.
Almost everyone with a vested interest in his report on grain handling and transportation has loudly denounced his recommendations.
Last week farm organizations, grain companies, the wheat board, the railways, two provincial governments and farmers protested Kroeger’s report to the federal transportation minister.
Kroeger began his letter to David Collenette by explaining his job.
His terms of reference state that if he does not achieve consensus on any particular matter, his job is to report to the minister how to resolve implementation issues.
Read Also
Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
Earning no consensus, he attempted to find the “middle course,” he said.
Middle does not equate with safe: grave consequences will be felt if his advice is adopted, particularly on reducing the role of the Canadian Wheat Board in grain transportation and replacing a rate cap with a revenue cap for railways.
To be fair to Kroeger, his job wasn’t easy. From his letter: “The problem of reaching consensus was exacerbated by a degree of fear and mistrust on the part of each stakeholder group vis a vis the others that exceeded anything I have encountered elsewhere in the private sector.”
His report will do nothing to assuage that fear and mistrust.
Be afraid. While they protest their victory, the big winners will be railways.
Kroeger recommends a 12 percent ($3.73 per tonne) reduction in railway revenue from the 1998 level, based on moving 30 million tonnes of grain. The revenue cap would be $838 million, $112 million below the 1998 level.
This ensures the railways’ constant costs are about 27 percent, which was the average under the Western Grain Transportation Act. “The overall result would be to provide a substantial saving to producers, while still leaving the railways with room to offer innovative service packages to shippers.”
Kroeger believes competition rather than regulation will cause railways to lower their rates in the future.
Increase mistrust. With such a large margin of profit for the railways, there will be less incentive to lower rates or to keep less profitable lines open.
As for the role of the CWB, Kroeger points out that if stakeholders had accepted Justice Willard Estey’s recommendation that the board be limited to issuing tender calls for markets, and then was involved at port, the task could have been completed in a couple of weeks. Instead, debate dragged through the summer.
Such dissension in the industry, fueled by Kroeger’s and Estey’s recommendations, should tell Collenette that this is not a satisfactory blueprint.
The Kroeger report has inflamed the prevalent fear and mistrust.
Terry Fries, Barb Glen, Allan Laughland, D’Arce McMillan and Elaine Shein collaborate in the writing of Western Producer editorials.
