CFA presents to Commons ag committee: Farmers need a rail cost review
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OTTAWA--Leaders of the Canadian Federation of Agriculture (CFA) were at the House of Commons Standing Committee on Agriculture and Agri-Food this past Thursday calling on the government to immediately launch a review of costs associated with shipping grain by rail. The committee heard from witnesses Humphrey Banack, CFA director and President of Wild Rose Agricultural Producers, and Allen Oberg, CFA National Council member and Chair of the Canadian Wheat Board.
The CFA representatives highlighted to committee members how transportation is a major expense for grain farmers, underlining that farmers have no alternative but to use rail to ship their grain to export positions. This situation has led to inadequate performance and excessive costs to producers.
"Our message is clear. We need the Canadian government to put a rail costing review into motion right away - not a year from now or two years from now," said Banack. "Freight rates need to be based upon actual costs, not annual revisions to outdated formulas."
"Minister Strahl has committed only to begin thinking about the possibility of a costing review after the current rail service review is completed. Somehow, we've got to get our elected representatives to understand that these are separate issues, involving entirely different groups of analysts and experts," said Allen Oberg.
The CFA reviewed the Interim Report of the government's Rail Service Review panel and raised concern over the Report's observation that poor service levels are due in part to the rail companies' monopoly. "The report portrays an accurate reflection of the problems grain farmers face," said Banack.
Banack also stated that CFA recognizes the service review panel's mandate explicitly excluded cost- or price-related issues including: freight rates, the revenue cap, ancillary charges and competitive access rates. He noted however, that the review panel did outline many problems with railway costs and, for grain farmers in Western Canada, this is of paramount importance.
In an official response to the Interim Report, CFA recommended that the panel recognize the deficiencies in the current revenue cap calculations and call on the Minister of Transport to immediately initiate a full railway costing review. As well, CFA advised that its members are not prepared to endorse a proposal that would give railways until 2013 to improve their services in a near monopoly environment.