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3/26/2008



Rail News: Shippers

Canadian government needs to review rail rates in wake of 'excessive returns,' grain farmers' groups say


Large railroads make more than $100 million a year in “unreasonably excessive returns” at the expense of Canadian farmers. So say officials at the Canadian Federation of Agriculture, National Farmers Union, Keystone Agricultural Producers (KAP), Agricultural Producers Association of Saskatchewan (APAS), Wild Rose Agricultural Producers and Canadian Wheat Board, who held a joint press conference yesterday to call for a federal review of rail rates and release the results of a grain market study conducted by rail analyst John Edsforth.

The study estimates that railroads in crop-year 2006-07 earned $175 million more than what was considered “fair and reasonable compensation” for moving grain under the previous Western Grain Transportation Act, the officials said in a prepared statement. This year, the Canadian Transportation Agency determined railroads are generating revenue that’s triple their rail-car maintenance costs and reduced the grain revenue cap by about $72 million per year — but a gap of at least $100 million remains while the railroads appeal the ruling, they said.

“This study … clearly show that something is not right with the revenue cap and the freight rates farmers are paying,” said KAP President Ian Wishart. “Mechanisms like the revenue cap were meant to protect farmers. We need the government to step in, run the numbers and see if those mechanisms are serving farmers or if they need fixing.”

Railroads continue to charge farmers a rate based on a cost picture that was taken 17 years ago, said APAS President Glen Blakley.

“Railway profits have gone up while the level of service to farmers has gone down,” he said. “It’s time to bring railway costs back to reality and rebalance the equation for farmers.”


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