national farmers union

SEPTEMBER 26, 2000

SASKATOON, Sask.--"Canadian Grain Commission figures released last week demonstrate that the industry contention--that competition and deregulation will result in increased efficiency and lower costs to farmers--is a transparent fiction," said NFU Transportation Committee Chair Terry Boehm.

The CGC published licensed primary elevator maximum tariffs for the 2000/01 crop year. Each grain company is required to file with the CGC the maximum amount that the company will charge for elevation (receiving, elevating, and loading out), cleaning, storage, and other services. (Companies can charge less than the maximum.)

Few, if any, of the grain companies' maximum charges decreased and many increased. For wheat elevation, Agpro, Sask. Wheat Pool, Pioneer, Agricore, and Louis Dreyfus all posted sharp increases, some up to 14%. (see attached backgrounder) Many of the major grain handlers also increased elevation fees for Canola. Increases in elevation charges for barley were nearly matched by decreases.

In a memo explaining the increases, one company justified its actions by claiming:

"Given today's increasingly competitive environment, we must adjust our tariffs to provide us with the opportunity to enhance the Pool's fiscal performance while providing our members with competitively priced services."

Boehm commented: "It is a bizarre interpretation of economics to use 'competition' to justify raising prices. But this is exactly what farmers have seen: in Orwellian fashion, the companies talk competition and efficiency and then increase their charges to us."

Storage charges also rose steeply at some elevators. Charges at UGG rose 17%, but storage charges at Sask. Wheat Pool and Agpro elevators rose between 109% and 201%. At these elevators, storage charges on a tonne of wheat went from 4.5" per day to 12".

"Fifteen years ago, when this deregulation experiment got underway, a farmer paid approximately $7.76 per tonne for handling, elevation, and cleaning. This year, that farmer will pay almost $14.00 for the same services," said Boehm.

He concluded: "On top of higher handling and storage fees, farmers are paying increased trucking bills as a result of branchline abandonment and elevator closure, additional costs to build granaries for storage, and higher taxes to fix roads. It is extremely hard to find the savings promised to farmers. To the contrary, costs are rising sharply."

-- 30 --

For More Information:

Terry Boehm, NFU Trans. Committee Chair: (306) 255-2880 or 257-3689

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

Backgrounder to the NFU's September 26, 2000 news release