Saskatoon Star Phoenix
August 3, 1995. p.C9
By D'arce McMillan of The Leader- Post
REGINA - Some farm groups worry continued government control of grain rail freight rates will slow development of a low-cost grain transportation system in the post-Crow era.
But others say total deregulation would leave some farmers who don't have transportation alternatives with no protection against soaring freight bills.
The latest controversy is about "incentive rates."
In the past, CN and PC offered large incentives to elevators that loaded blocks of rail cars, thus encouraging construction of large inland terminals. But this year, the railways have cut the incentives in half.
"It sends the message to those who built high-throughput concrete elevators: Why did we do it?" said Dwayne Anderson, president of North East Terminal Ltd. at Wadena.
He said smaller incentives will mean a revenue drop of $150,000 to $200,000 for his company.
It's the worst of all worlds for farmers, said Les Saelhof, chair of a committee building a terminal near Watrous.
"We are not going to be able to capture any of the efficiencies of a deregulated system - all we managed to do was double our freight rate," he said. "If we want to go to a deregulated system - one that rewards efficiency - we should move to that as quickly as possible so we can compete with other countries that sell grain."
The railways say Ottawa is to blame. It imposes a permanent cap on grain freight rates as part of new legislation that deregulates much of the grain transportation system.
The original draft legislation automatically ended the rate cap in the year 2000. Instead it will remain until the government decides to end it.
CN official Jim Feney said the cap prevents the railway from charging inefficient elevators high rates and rewarding efficient ones.
Prairie Pools wanted the cap to continue until it can be proven total deregulation will benefit farmers.
"It allows for protection of producers and shippers in outlying areas to have a maximum (rate) for the railways to bump up against," said Leroy Larsen, Saskatchewan Wheat Pool president.
The railways are lowering incentive rates because the high discounts of the past were not sustainable, he said.
Anderson said a rate cap was politically necessary to get support for rail deregulation but it should have been a little higher to allow more flexibility in rate setting.
The meagre incentive rates probably are designed to pressure government to end the rate cap, he added.
