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Martin wants Ottawa to intervene on grain shipment costs
OTTAWA — Manitoba NDP MP Pat Martin is demanding the government intervene to stop prairie farmers from being gouged to ship their grain on the nation’s railways.
During question period Wednesday, Martin likened the railways — CN Rail and Canadian Pacific Railway — to "modern-day robber barons" and alleged they are charging two and three times what the fair rate would be to ship grain.
"The rail magnates are making out like bandits," Martin thundered in the House of Commons.
He was referring to a study released in June by a group of agricultural associations including the Keystone Agricultural Producers in Manitoba and the Canadian Federation of Agriculture.
Grain movement costs on railways used to be managed by the Western Grain Transportation Act, which was eliminated in 1995. The study says in 2008-09, prairie farmers paid $275 million more to ship their grain than would have been deemed reasonable had the WGTA still been in effect. The year before that it was $123 million more.
Shoal Lake grain farmer William Nicholson said for his 5,000-acre farm, the shipping overages cost him between $30,000 and $40,000 a year.
"That’s the difference between having a bottom line or not," said Nicholson, who is also an elected director on the Canadian Wheat Board.
Nicholson said the problem comes because the two railways generally have different catchment areas and do not compete with one another. Each of them essentially have a monopoly on the farmers they serve.
"There is no incentive for the railways to cut their prices," he said.
The agriculture groups want the government to launch a full-scale review of grain shipment costs and set caps for what farmers can be charged.
The last time a grain shipment cost review took place was 1992.
Since then, the number of grain elevators has shrunk from 1,500 to 240, which means fewer stops for the railways to go collect the grain. It also means many farmers have to spend more to truck their grain to the elevators.
At the same time, the railways have added cars to each train, another efficiency for the railways, which farmers argue should allow them to pass on savings to the farmers.
"We’re being assesses on a nearly 20-year-old formula when we had all those elevators," said Nicholson.
Transportation Minister Chuck Strahl said the government is in the midst of a rail service review which allows farmers to argue their case to the government.
"The objective of the review is to increase services, not only to farmers, but to all users of the rail services across the country," Strahl said.
His spokesperson didn’t respond to a request for more information on that review. Nicholson said the service review is not specific enough to farm issues.
Martin said the government's ignoring this issue is taking $275 million a year right out of the prairie economy.
"People look to their government for help when they are being gouged," he said. "They have a monopoly. A monopoly has to be regulated or reigned in or it can’t be allowed to exist."
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