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April 21, 2008
Railways gouging farmers by taking more than $100-million annually in 'excessive returns'
A study commissioned by the Canadian Wheat Board (CWB) argues that CN and CP Rail, which own nearly all of Canada's rail lines, have taken more than
$100-million a year in "unreasonably excessive returns" for transporting Prairie grain to port.

"Farmers are being held captive by railway monopolies," Bob Friesen, president of the Canadian Federation of Agriculture said recently.  "They're victimized by
that monopoly and they're currently being gouged in what is being charged for moving that grain."  Friesen’s group say that a review on grain shipping costs
hasn't been done since 1992.  As a result, the revenue cap, which governs how much the rail companies are allowed to charge, doesn't reflect changes that
have made rail shipping cheaper and more efficient in the intervening 16 years.

Jim Feeny, spokesperson for CN, said CN disputes the CWB study and report, which was compiled from public sources and without input from the railways.  
"Rail rates to move grain out of the Prairies are among the lowest in the world, and they're considerably lower than for equivalent moves in the United States,"
said Feeny.

"What we believe is happening here is an attempt by the Wheat Board and these farm groups to re-regulate one sector of grain transportation."
A spokeswoman for federal Transport Minister Lawrence Cannon said the government has no intention of reviewing the cost of grain transportation, but will
commence a review of rail service in the coming months.

Glenn Blakley, president of the Agricultural Producers Association of Saskatchewan, said farmers have been concerned about freight rates for years, and the
latest study will raise a lot of eyebrows.  "It seems every year we're seeing a higher freight rate and we're not seeing any correlation to better service," he said.  
"The challenge is there's no real competition."

In a truly competitive market, prices would be driven down, according to Ian McCreary, a farmer-elected director of the CWB says that farmers would prefer to
see an industry where other rail companies were allowed to operate on CN or CP lines, in an arrangement similar to rules that opened the telecom industry to
competition.  "When Canada deregulated its transportation system there were no competitive disciplines put on the railways.  You have a deregulated industry
with no competition," McCreary says.

"We have to get a market discipline, either through competition or some regulatory framework."

From files of the Globe & Mail
 
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