May 10, 2006
Tory government cancels plan to sell hopper cars to grain farmers
The new federal Conservative government has scrubbed a long-anticipated sale of 12,000 grain hopper cars to a coalition of farm
groups.  Western farmers had struck a $205-million agreement-in-principle with the former Liberal government just before the federal
election.  But Transport Minister Lawrence Cannon announced Thursday he will not proceed with the deal, which had been 10 years
in the making.

The government will maintain ownership of the cars instead, and will cap the amount rail companies can charge farmers for
maintenance.  "A decision had to be made. We made a decision," Cannon said outside the Commons.  "I think it's in the best
interests of Canadians. It's also in the best interests of the people that are involved."

Initial reaction from farmers was lukewarm and the opposition Liberals said farmers would have been better served under their plan.  
But Cannon said the move will allow the government to hold on to more than $10 million in annual revenue from the railways that
currently operate the cars.

He also tabled legislation Thursday to lower the revenue cap that Canadian Pacific and Canadian National railways can charge for
maintenance costs.  He says farmers could save $2 per tonne under the move.

A coalition of 17 farm groups sought to buy the cars, which are used to transport grain to maritime ports.  The government transferred
them to the railways in the 1996 budget.  Farm groups later said it would be more cost-efficient just to buy them instead of paying the
railways what they considered inflated maintenance costs.

Sinclair Harrison, president of the Farmer Rail Car Coalition, which negotiated the sale with Ottawa, said he felt betrayed by the
announcement.  "It knocks the wind right out of you," Harrison said.  "I think there is going to be a significant negative reaction from
farmers right across Western Canada.  Pretty well all the seats in Western Canada are Conservative so if they listen to the people
they represent, they should reverse their decision."

The National Farmers Union said Thursday its members wanted some ownership stake in the transportation of their products.  
"We're disappointed not to have that stake," said Terry Boehm, the group's vice-president.  "However we are pleased that the
government of Canada retains ownership of the cars.”  "If farmers can't own them, it's far better that the government of Canada owns
them rather than the railways."

Farmers became worried after 1996 that if the railways purchased the cars, the price tag would be off-loaded to them through higher
freight rates.

The other problem, Boehm said, was that farmers had a plan to replace aging cars.  The government made no mention in its
announcement of how it will ensure that railways maintain the same-sized fleet.  "We are concerned about fleet renewal," said
Boehm.

Liberals say the government has missed a golden opportunity to transfer ownership to farmers, who would have made the best use
of the cars.  "The farmers have it pretty tough. They're struggling to make ends meet," said Belinda Stronach, the Liberals' transport
critic.

"We should look at ways that allow them to be more productive. If they're saying they could be more productive, more competitive by
owning these rail cars and getting better rates . . . we should do it."

Source:  Alexander Panetta, Canadian Press
RTop