national
farmers union
SASKATOON, Sask- In 1983, the federal government called the Crow Rate "a long standing barrier to economic growth and diversification in Western Canada." In a February 1, 1983 news release announcing the end of the Crow Rate, the government predicted: "The revised freight rate structure will remove disincentives to ... food processing in Western Canada" and "generate much needed jobs and spin-off activity to stimulate economic recovery and development throughout this decade."
Since that announcement, freight rates have increased seven-fold: from $4.85 to over $35.00 (Saskatoon example). This steep rise is a significant cause of the current farm income crisis.
While increased freight rates have placed a large burden on farmers, they have done nothing to increase food processing. In 1984, 260,000 Canadians were employed in the agri-food processing sector. Today, 257,000 are employed. The graph below compares freight rate increases and their effects on employment in the processing sector.
Grain freight rates and Canadian agri-food processing employment: 1984-97
Sources: A Profile of Employment in the Agri-Food Chain, Agriculture and Agri-Food Canada, April 1999
StatFacts, Saskatchewan Agriculture and Food, April 22, 1999
Not only has the termination of the Crow Rate in 1983 and the Crow Benefit in 1995 failed to provide promised increases in agri-food processing employment or commodity prices, deregulation and free trade has turned the Canadian agri-food processing sector over to U.S. transnationals.
American companies own 78% of Canadian flour milling capacity. One company,
Archer Daniels Midland (ADM) owns 52% (ADM's market share is up markedly from 30% in 1995 and 0% in 1985). U.S. companies own 93% of our malt plant capacity: ConAgra alone has 64%. Two U.S. companies, Cargill and IBP, own 66% of Canadian meat-packing capacity. "Rather than growth in agri-food processing over the last 15 years, we have seen stagnant employment numbers, wage cuts, and the loss of Canadian ownership of this vital sector," said NFU President Cory Ollikka.
In addition, despite being one of the world's largest producers of food, Canada is a net importer of processed food. In 1998, Canada exported $9.1 billion in processed food and imported $11.2 billion.
"The benefits predicted by the Liberal Government when it terminated the Crow Rate in 1983 and when it terminated the Crow Benefit in 1995 have not materialized. These changes have not benefitted farmers, workers, consumers, or the Canadian economy. To the contrary, all have suffered," said Ollikka.
Ollikka concluded: "The federal government has a dismal track-record when it comes to predicting the costs and benefits of its transportation 'reforms.' Farmers should keep this in mind when they read Minister Vanclief's assertions that implementing Estey's recommendations will 'improve reliability and lower costs' and 'benefit farmers and other stakeholders' and Minister Colenette's assurances that implementing the Estey Report will "improve the grain transportation system'."
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