The Rural Voice, 1982-11, Page 24OFA REPORT
by Merle Gunby, Regional director
The CrowsNest Pass Act of 1897
established statutory freight rates for
shipping grains for export from western
Canada.
In the original agreement, CP Rail
agreed to lower freight rates for certain
commodities, at a fixed (statutory) rate in
return for construction subsidies and
major land grants. Later, CN Rail also
came under the statutory rates. These
rates apply to all named commodities
whether moving east or west.
Until the 1960's, the crow rate provided
a stable rate to the industry for shipping
export grain. At the same time, the
railways were adequately compensated.
As the cost of transportation increased,
uncertainties increased and a general
deterioration of the rail system occurred.
The government and grain industry
responded to these growing problems with
various ad hoc programs such as major
purchases of grain cars, major repair
programs, upgrading branch lines, port
improvements etc. The cost of these
actions have been enormous and continue
to grow without solving the underlying
problem.
In February, 1982, the federal govern-
ment established a consultative process to
recommend a framework for a compre-
hensive approach to the western grain
transportation system.
Participants in the consultative process
have included two railway companies, a
group of processors and nine farm
FARM NEWS
organizations. This group drew up a list
of broad principles to be applied when
making specific proposals to improve
western grain transportation. The report
of this consultative process has become
known as the Gilson Report.
Both the Union des producteurs of
Quebec and the Ontario Federation of
Agriculture have made submissions to the
federal committee charged with evalu-
ating the Gilson Report, warning of the
major implications the Gilson Report has
for eastern agriculture.
To illustrate the impact of removing the
Crow Rate, let's take a hypothetical price
of grain at Thunder Bay of $100/t. The
western producer pays the crow rate of
$5.00/t to ship his grain giving him a net
farm gate price of $95.00/t for his grain.
If that farmer paid the actual cost of
shipping that grain ($25.00/t approx.), he
would receive a net farm gate price of
$75.-$80./t for it.
We can readily see, by this illustration,
that the western feeder will have a feed
cost advantage over the eastern livestock
feeder if the crow rate structure is
removed.
It is apparent that the Crow Rate will
have to be eliminated. The Gilson Report
recommends ways to accomplish this,
however, it was prepared without due
consideration of how the recommenda-
tions would affect eastern agriculture.
In its presentation to the federal
government, OFA demonstrated the
problems with the Gilson Report and
suggested some changes that would make
the recommendations more equitable to
farmers in all parts of Canada at much
less expense to government.
The report recommends the current
crow benefit of 644 million dollars
continue to be paid out gradually changed
from the railways receiving it to the
western producers receiving it on the
acreage basis; plus any future increases in
cost would be shared by the government
and the producers.
OFA has recommended in part the
payments to go to the railways in
perpetuity and all further cost increases be
borne by the producers.
Any solution to the crow issue will
involve a shift in livestock feeding
advantage to the west. The federal
government should make provision for
adjustment assistance to eastern pro-
ducers in the event the transition in
feeding advantage causes disruption in
eastern Ontario.
F.C.C. lowers rates
Agriculture Minister Whelan also an-
nounced a decrease in the interest rates
charged by Farm Credit Corporation
Canada.
"The new rate on Farm Credit Act
loans will be 153/4 per cent as of October
I. That is three quarters of a percentage
point lower than the rate set last April,"
Mr. Whelan said.
FCC interest rates, which are reviewed
twice a year in April and October, are
based on the average of the previous six
months' yield of government bonds.
In addition to a decrease in interest
rates for loans under the Farm Credit Act,
interest rates for loands under the Farm
Syndicates Credit Act will also be reduced
to 153/4 per cent from 161/2 per cent.
��p�OWAY FARMS
it,
'YORKSHIRES
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Ukase Fear and Sn7M1S
PERFORMANCE TESTED
Quality swine, performance tested, health
approved gilts and boars from a herd with
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Landrace gilts open or bred available on a
regular basis. York, Landrace, Duroc, Duroc
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Contact
Wayne Fear
MONOWAY FARMS
1 mile east of Highway 4 on Huron Hoad #16
Brussels Phone 887-6477
PG. 24 THE RURAL VOICE / NOVEMBER 1982