Government's Rail Service Review report justifies need for a review of grain shipping costs

OTTAWA -- The Canadian Federation of Agriculture and its railway coalition members have again renewed their demand that Transport Minister Chuck Strahl instruct the Canadian Transportation Agency to immediately conduct a full costing review of railway grain shipping. In light of the interim report released last week by the federal government's rail service review panel, this request is justified. The panel report has recognized the many problems faced by western Canadian grain growers, especially the market power held by rail companies.

"The federal government must act now," said Ron Bonnett, CFA President. "Their own review panel has confirmed what we have been saying for the last two years. CP and CN operate in a dual monopoly system and continue to possess market power over many of their customers. The railways have historically fought off competitive measures such as open running rights and opposed regulations to maintain this monopoly."

The panel also concluded that there have been significant service problems within the system. "Clearly, excessive costs to farmers are a concern to us when the report identifies service problems, and at the same time railways maintain healthy profits," Bonnett concluded. The Canadian Transportation Agency is responsible for establishing railway revenue caps for western grain transportation, but hasn't completed a full cost review in nearly 20 years

A recent study by rail analyst John Edsforth identified that western grain growers are paying $4 to $8 per tonne too much to ship their grain by rail. The federal government must act now. There is an imbalance due to railway market power and it's the federal government's responsibility to ensure that western grain farmers are not overcharged for shipping their grains to export positions.

The interim report states that "stakeholders raised a number of issues that the Panel considers to be beyond its mandate." These include: the rail revenue cap and freight rates. Therefore, CFA asks Minister Strahl  to immediately initiate a full costing review of western Canadian grain transportation.