What role, if any, should the government play in regulating the grain handling and transportation system?
Would less government involvement help the industry work better and if so, would the benefits filter down to all its players?
In a nutshell, those will be core questions at issue when the government-organized, industry-led review of the grain handling system starts later this year.
Already, there is a strong lobby inside the industry for a dramatic move toward a “commercial” system, dominated by contract arrangements, commercial negotiation and market forces.
Read Also
Crop insurance’s ability to help producers has its limitations
Farmers enrolled in crop insurance can do just as well financially when they have a horrible crop or no crop at all, compared to when they have a below average crop
For proponents of deregulation – whether the railways, grain companies, some farm leaders or politicians – the benefits of less government are evident. The mantra dominates political debate in the 1990s. Government regulation stifles the economy and adds costs. Market forces allow the efficient to prosper.
It is the argument that will be used to get rid of the grain freight-rate cap. It is the argument that will be advanced to get the Canadian Wheat Board out of the grain-car allocation business.
Those arguments may well win the day. Perhaps they should.
However, farmers watching the debate unfold should be under no illusion that deregulation will create nothing but winners. If they ship grain from lower-volume branchlines, they will pay more.
There would be increased pressure to get rid of those lines.
The railways, of course, would benefit. “If regulated grain rates were to cease at the end of crop year 1999-2000 … the general expectation is that total rail revenue from the currently-regulated grain movements will increase,” concludes a report on grain system efficiencies prepared by the prairie provinces.
The grain companies likely would win, allowing them increasingly to concentrate their business on high volume terminals and elevators along the main lines or busy secondary lines.
Farmers near those main lines likely would benefit through access to lower freight rates.
Farmers further away, and the provinces responsible for maintaining the rural roads they will use to haul further to larger terminals, may not find “efficiency” to be such a blessing.
Of course, there is nothing new here. Arguments about winners and losers in any rationalization of the grain handling system have been around since rail line abandonment picked up steam in the early 1980s. It is just that they are not often heard these days.
To question deregulation and efficiency is to defend “inefficiency” and who could do that? Perhaps no one but the farmer who finds that the injection of efficiency merely loads a cost on him that once was more evenly shared.
Agriculture minister Lyle Vanclief has said a strong federal presence is needed to make sure that agricultural policies contain an element of “equity”.
When the spotlight is on grain handling and transportation, that should mean the voices of those who could be hurt by change are listened to as closely as those who stand to make more money.
