national
farmers union
national
farmers union
SASKATOON, Sask.-Canadian propane prices rose 35% to 63% in the fall of 1996. Due to poor fall weather that year, many farmers had harvested damp grain and needed to dry it in propane-fired grain dryers. Propane companies raised prices and took advantage of farmers who had little choice but to pay.
Now Canada's two big propane companies, ICG and Superior, want to merge. The merged corporation would be a virtual monopoly with 73% of the Canadian market. ICG and Superior argue that their merger will not significantly restrict competition because there will be competition from other fuels: natural gas, electricity, heating oil, coal, and wood.
The matter is now before an Industry Canada Competition Bureau Tribunal. Earlier this week, NFU Executive Secretary Darrin Qualman testified before the Tribunal in Calgary. He told the Tribunal that for farmers needing to dry grain, alternate fuels are rarely an option.
Natural gas is an obvious alternative for farm grain dryers if propane prices rise. Qualman pointed out that the majority of farmers do not have the high-capacity natural gas lines to their farms that they would need to run a grain dryer. Installing such lines would cost tens-of-thousands of dollars.
Turning to electricity, Qualman again pointed out that most farmers do not have the high-capacity electrical services they would need to use electricity as a heat source in a grain dryer. Further, electricity is seldom an economical heating choice. Heating oil is similarly non-economical. And coal and wood are clearly not realistic alternatives for a farm grain dryer.
For farmers with grain dryers, the ICG/Superior argument that competition will come from alternative fuels is wrong. The merger will create a monopoly, dramatically reduce competition, and lead to higher prices for cash-strapped farmers.
The NFU continues to work to draw attention to high input costs and lack of competition. The most recent federal government move regarding input costs was to cut the funding Statistics Canada used to collect and publish input price data. "In the midst of the current farm income crisis, input costs are of vital importance to farmers. The government record on this issue should be embarrassing to them," said Qualman.
The Tribunal will release its decision on the merger proposal in the new year.
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