Western Producer staff
One of the enduring mysteries of the grain freight rate debate is why so many Thunder Bay/Seaway boosters believe with the fervor of theological conviction that a change in the Crow Benefit method of payment would help revive the grain trade through their port.
It is a belief based on the assumption that the Western Grain Transportation Act has unfairly favored West Coast ports by not recognizing that it is cheaper to ship grain east over the Canadian Shield than west through the mountains.
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If the WGTA costing formula recognized real costs of moving grain, more would be attracted east, the True Believers argue.
The problem is that the facts don’t seem to back this up, at least according to the National Transportation Agency.
NTA economists have produced costing figures, supported by both railways, that show West Coast movement is cheaper.
Still, the demonization of the WGTA by Seaway boosters continues. Last week, the Commons Seaway committee bought into their belief system.
“All of the Seaway users believe that one of the primary reasons for this decline (in grain shipments east) is the WGTA,” said a committee report on the future of the Seaway.
“What is required is a more market-driven grain handling and transportation system that will reduce costs and create efficiencies.
“The WGTA prevents market forces from operating properly because the act is artificial.”
This led to a demand that “a major and immediate overhaul of the WGTA” be undertaken.
The all-party recommendation adds weight to the growing political frenzy in favor of changes to the subsidy system.
So what specifically does the all-party committee think should be done?
Committee chair Joe Comuzzi, a Thunder Bay Liberal MP, said the committee did not have a blueprint on how the subsidy system should be changed.
At the very least, though, it would involve paying the Crow Benefit to farmers and forcing the railways to price their freight rates based on actual costs.
This would give the Seaway a “level playing field” to compete for grain traffic, he said. It could attract more business.
But what about the NTA calculations?
Last June, Neil Thurston, NTA director of costing, rates and payments, told the committee that because of economies of scale, the Rogers Tunnel and efficiencies at Prince Rupert, westward grain movement is now more cost-effective than eastward movement.
“Our findings were somewhat different from what was expected,” he told MPs.
None questioned him on the conclusion. But last week, Comuzzi said the NTA findings are not credible and real costs favor Thunder Bay.
“I was not happy with the NTA evidence,” he said. “We think he started from some wrong assumptions.”
So the committee concluded that Thunder Bay would benefit from a removal of the “artificial” WGTA rates.
They likely will see their prayers answered.
They may live to regret it.
