CONQUEST, Sask."Yesterday CN announced a $254 million profit for the first three months of the year. Today, Minister Collenette tells near-bankrupt farmers that they must pay higher freight rates in order to cover the railways rising costs. Unbelievable!" stated NFU Transportation Committee member Wendy Manson.

CNs net income for the first three months of 2000 was $254 millionup 76% from the same period last year ($144 million). CNs revenues for "grains and fertilizers" were up 26%the largest increase of any category. CP Railway also announced large first-quarter profits last week of $85 million, up 39% over the same period last year.

In the wake of these announcements, Transport Canada announced today that it would increase farmers freight rates by 4.5%, or approximately $1.45/tonne on a 975-mile haul.

The rate increase is a result of a statutory requirement to raise rates each year to take into account inflation in railways costs. Prior to 1992, however, there was also a mechanism that decreased rates to reflect reductions in railways actual costs due to productivity gainscuts in staff, the elimination of cabooses, more fuel-efficient locomotives. Productivity-gain sharing was eliminated in 1995. Thus, railways have been allowed to keep all the gains since 1992approximately $700 million in total.

Transport Canadas announcement cites "large increases in fuel prices" and "existing and anticipated labour contract settlements." Because there have been no costing reviews, Transport Canadas inflation adjustments are extrapolated from the 1992 data. In 1992, CN had 33,341 employees. On a comparable basis (excluding the Illinois Central purchase), they have approximately 21,000 today. "Not only are current freight rates based on the cost of paying 12,000 CN workers who no longer exist, todays announcement effectively provides raises for those non-existent workers," said Manson. She also noted that the fuel price increase was based on fuel usage rates in 1992 and did not take into account the increased fuel efficiency of newer locomotives.

"Minister Collenette and his predecessors have chosen not to measure railways actual costs and not to require railways to share productivity gains with farmers. The result has been constantly-escalating freight rates and a huge transfer of money from farmers pockets to railways coffers. Todays announcement is another example of the Ministers failure to properly regulate Canadas near-monopoly railways," said Manson.

For More Information:

Wendy Manson, NFU Transportation Committee: (306) 243-4811

Darrin Qualman, Executive Secretary: (306) 652-9465