national
farmers union
national
farmers union
SASKATOON, Sask.-"Justice Estey's recommended repeal of the current freight rate cap, if implemented, would mean higher costs for farmers and almost total elimination of branchline service," predicted Terry Boehm Chair of the NFU Transportation Committee.
Justice Estey's Final Report, released today, recommends (recommendation #7) that "...the rate cap be repealed and that the agreement proposed by CP be adopted by appropriate legislative action." The CP agreement to which Justice Estey refers proposes that in return for the repeal of the rate cap, the railways will slowly lower aggregate freights with an eventual saving of $40 million annually by the sixth year.
Boehm points out that there are at least three problems with this proposal: "First, it would allow railways to substantially raise rates on branchlines in return for modest reductions on mainlines. They will use this power to make branchline elevators "uncompetitive." Second, it provides no provision for rates past the sixth year. Finally, the 1992 suspension of quadrennial costing reviews and productivity-sharing mechanisms have allowed the railways to increase rates $144 million above and beyond the annual level that they would have been if those reviews and mechanisms had continued. In light of this $144 million undistributed windfall, farmers should be far from satisfied with a mere $40 million in promised rate reductions. This is a transparent ploy by railways to buy farmers off with their own money and, in the process, escape the regulation which is prudent and necessary when dealing with huge, non-competitive railways."
The Estey Report also states that "apart from sales and marketing, it is recommended that the [Canadian Wheat] Board have no operational or commercial role in the handling and transportation of grain...." (recommendation #14).
Boehm commented: "No exporter can function effectively without significant control over the sourcing, logistics, and scheduling of its product. Removing the CWB's transportation authority would adversely affect its marketing ability. Relegating the CWB to port-buyer status would also diminish equity and erode farmers' power within the transportation system. Estey has recommended removing the cooperative and coordination elements of the system - CAPG, CWB coordination, and information sharing. These are the mechanisms which allow a constrained system to function."
"This report fails to recognize the fundamental market power imbalance between railways and grain companies, on the one hand, and farmers, on the other. This report, if implemented will accelerate the process of deregulation that has proven so costly to farmers so far. If you liked the results of the termination of the Crow Benefit, then you're going to love this," concluded Boehm.
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