national
farmers union
SASKATOON, Sask.-"Does any farmer really believe that in a deregulated grain handling and transportation system, railways and grain companies will cut their rates by 2/3?" asked NFU Transportation Committee Chair Terry Boehm.
A recent insert in the Western Producer, Manitoba Cooperator, and other papers paid for by the Prairie Farm Commodity Coalition states that: "Transport system improvements could save you up to $1 per bushel." That claim is based on the widely-discredited Parsons and Wilson (Organization for Western Cooperation) report. Total system costs now are approx. $1.50 per bushel.
"That dollar per bushel that Wilson, Parsons, and the Commodity Coalition hope to save is currently going into the coffers of the railways and grain companies. That dollar represents 2/3 of their revenues and includes all of their profits. It is extremely naive to assert that simply deregulating the system and handing the key to the railways and grain companies will result in that dollar going into farmers' pockets," said Boehm.
The Wilson and Parsons study contains several flaws in methodology which causes it to incorrectly state relative U.S. and Canadian price levels. These errors include:
As an example, Wilson and Parsons adjusted the 1993-94 U.S. farmgate price by approximately $17.02 (Cdn)/tonne. The authors of the Kraft, Furtan, Tyrchniewicz report estimate an average EEP expenditure during that year of $76.42 (Cdn)/tonne. Wilson and Parsons also use a Canadian basis point that is over 300 kms further from the port than the one chosen in the U.S.
Boehm concluded: "Farmers have a big decision to make: Do we turn the system over to CN, CP, Cargill, etc. or do we retain the safeguards for farmers currently built into the system? The effects of this decision will affect the profitability of our farms and will be with us for decades. We must not make such a decision based on the bad math propagated by the Wilson, Parsons, and the Commodity Coalition."
For More Information: