Newsroom
2000
May 15, 2000
Farmers can see through railway gripes
Winnipeg --The CWB Board of Directors today said that reactions by
Canada's main line carriers to the federal government's
transportation reform announcement should be interpreted as pure
saber rattling.
"I don't think CN and CP are fooling anyone by suggesting that
lower revenues must force them to reduce investment in grain
transportation," said CWB Director Ian McCreary. "If actual return
was the driving criteria, they would be putting more money into
grain transportation than any other business area."
"The railways had no trouble making investments in grain
transportation during the WGTA era when the contribution rate was
set at 20 per cent," McCreary added, "and our calculations indicate
that railway contribution rates for western Canadian grain movement
will be between 32 and 37 per cent next year. "
Contribution rates are anticipated to rise further in the future
because increased flexibility in the railways' ability to set
freight rates is projected to result in lower costs not captured in
the annual revenue cap calculation.
"While we are glad to see that railway revenues from grain movement
will be more in line with the cost of moving grain, we should not
forget that the railways have benefited by excess freight rates for
nearly a decade," McCreary said.
"The complaint about a lack of deregulation, made first by the
railways and then echoed by their supporters, is totally
unfounded," CWB Director Art Macklin added. "The move from a rate
cap to a revenue cap is a fundamental change in how transportation
services are priced and totally alters the basic relationship
between shippers and carriers." Macklin said, "What is ironic about
this complaint by the railways is that the whole revenue cap
proposal was CP's idea in the first place."
"The biggest gap in the announcement pertains to railway
competition and, as we have said, we hope to close that gap in the
Canada Transportation Act review," Macklin said. "If the railways
move investment out of grain transportation and reduce grain
service, it will be only because they are not afraid of losing
volume to a competitor. That is the root of the problem we have to
address."
The CWB is the world's largest farmer-controlled wheat and barley
marketer. Headquartered in Winnipeg, Manitoba, it is one of
Canada's biggest exporters and the largest net earner of foreign
currency. Marketing Prairie-grown wheat and barley to over 70
countries around the world, the CWB returns all sales revenue, less
the costs of marketing, to farmers in Western Canada.