April 10 2001
NFU TO TRANSPORT CANADA:
PAY RAILWAY OVERCHARGE DOLLARS TO FARMERS
SWIFT CURRENT, Sask. - "On March 24, Transport Canada published proposed regulations that would govern how railways would pay back money they overcharged farmers under the grain freight revenue cap. Transport Canada is proposing that railway overcharges and penalties would be paid to the Western Grain research Foundation (WGRF). There is a 30-day commitment period on the proposed regulations.
In a letter sent today by NFU board member Stewart Wells, the NFU criticised the proposal to pay the WGRF. "A much better approach would simply be to lower the revenue cap in a subsequent year by the amount of the overcharge plus the penalties. If the overcharge was $10 million, then the government should decrease the revenue cap by that amount, plus penalties, in the year following the calculation." said Wells' letter.
"While no plan can ensure that the reward to an individual farmer exactly matches the overcharge the farmer suffered, our plan does a better job of approximating that goal then does the governments proposal,"said Wells.
Wells cautioned, however, that there is a more important issue to consider. Under the revenue cap, railways are free to transfer money to grain companies in the form of multi- car loading incentives or infrastructure (sidings) payments. Such payments are deducted from railway revenues when determining compliance with the revenue cap.
"It is most certain that railways will with overcharging, not by turning that money over to farmers or the WGRF, but by turning it over to the grain companies to induce those companies to centralize facilities and foist increased trucking costs onto farmers and road costs onto taxpayers," said Wells. He continued: "Thus, grain companies, and indirectly railways, will become the beneficiaries of overcharging- not farmers or the WGRF. For this and other reasons, the revenue cap is vastly inferior to the rate cap it replaced."
Wells concluded: "Unless the government prevents revenue shifting between railways and grain companies, the government will be able neither to limit the amount farmers pay to move grain or to meaningfully control what happens to the amounts that railways overcharge. In light of this, the critical first step towards an effective mechanism to redistribute railway overcharges must be to ensure that railways are constrained in their abilities to pass farmers monies to grain companies for the ultimate goal of the railways."
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For More Information :
Stewart Wells, NFU Sask. Board Member: (306) 773-6852 OR 741-7694
Darrin Qualman, Executive Secretary: (306) 652-9465