News release: Western farmer’s voices heard on grain transportation
November 3, 2016 (Saskatoon, SK) – The Saskatchewan Wheat Development Commission (Sask Wheat) is optimistic for the future of grain handling and transportation following the announcement of the Strategic Plan for the Future of Transportation in Canada by Minister of Transport Marc Garneau.
Minister Garneau announced several changes to the Canadian Transportation Act (CTA) and indicated that extended interswitching and the Maximum Revenue Entitlements (MRE) will be addressed. In a follow-up teleconference with agriculture groups, Minister of Agriculture Lawrence MacAulay outlined a commitment for legislation to be put forward in the first quarter of 2017 that will include reciprocal penalties for inadequate railway services and provide a clear definition of adequate and suitable service.
“This was a positive and encouraging first step to reforming the CTA,” says Sask Wheat Chair Bill Gehl. “The Ministers of Transport and Agriculture met with Western Canadian farm groups two weeks ago and the message was clear from the producers in the room: The MRE must be retained and any adjustments must come only after a full costing review is complete. It is good to hear that the concerns of Western Canadian producers were heard and that we will have an opportunity to help shape the grain transportation system.”
Sask Wheat is part of a producer coalition that includes the Saskatchewan Barley Development Commission (SaskBarley) and the Agricultural Producers Association of Saskatchewan (APAS). The coalition produced submissions for the CTA Review Panel in February 2015 and in September 2016. Each submission recommended a full costing review, the maintenance of the MRE and called for mandatory reporting on grain handling and transportation system functionality. The submissions also recommended that a rail oversight/planning group that includes producer representatives be created to assess ongoing operations of the railways.
A study by University of Saskatchewan agricultural economists Richard Gray and Mohammad Torshizi in 2016 showed a clear need to retain the MRE. Under the MRE, the railways can increase their revenue by moving more grain. Removing the MRE, however, will create a perverse incentive for the railways where they can increase their revenues by moving less grain and charging more for their services. Without MRE regulation, the railways can maximize their profits by reducing their grain transportation services to 25 MMTs, which is the revenue-maximizing level for normal production years.
“Farmers depend on the railways to get what we grow to market,” says Gehl. “We saw clear signals from the federal government today that they are willing to work with farmers to find fair solutions for transporting and exporting grain that works for every party involved.”
The full submission to the CTA Review Panel and the transportation studies can be found at saskwheat.ca/reports-presentations/.
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