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The Rural Voice, 1991-02, Page 14VENTILATION i / AXIS -AIR BLENDER Uniform Temperature — o Reduces Drafts —0 Automatic System — o Easy Maintenance — o Corrosion Resistant — o SERVICE for Martin -Air See re al the Penn Courcy Farm Show. Feb 19-2191. Srrailoro PHONE 519-345-2258 AXIS PRODUCTS LTD., 5 Main Street, Brodhagen, Ontario Canada NOK 1B0 Dealer enquiries welcome CANADIAN CO-OPERATIVE WOOL GROWERS LIMITED ACCEPTING WOOL CLIPS ON CONSIGNMENT • rarer * Skirted Fleeces * Well Packed Sacks For more information contact: RIPLEY WOOL DEPOT John Farrell R.R. 3, Ripley, Ontario 519-395-5757 10 THE RURAL VOICE SOLVING THE WESTERN "CROW RATE" DEBATE Robert Mercer is editor of the Broadwater Market Letter, a weekly commodity and policy advisory letter from Goodwood, Ontario LOC 1AO. Why should farm families in Onta- rio be concerned over how grain and oilseed producers in Western Canada pay for their grain freight costs? If the present system of paying the total "Crow freight rate benefits" of $720 - million directly to the railroad chan- ges, so too will the structure of agri- culture and the value added industries built on it. And that will affect Onta- rio beef, grain and oilseed producers. Although there are some strong vested interests in the west who do not want to see the method of payment change, the forces of change are heat- ing up discussions at national, provin- cial, and local levels. The first major indication of the potential for change in the near sacrosanct freight rate for western grain came with the report of the committee of inquiry on the Crow benefit payment in 1985 under Justice Gordon Hall. Since then, the western farm press has carried articles, papers, reports, commissions, and resolutions on the debate almost weekly. The recently failed GATT talks were also crucial to the debate since the total cost of the Crow freight rate subsidy is considered part of Canada's payments to farmers when calculating national subsidy levels. If changes were made in the method of payment it is hoped that the countervailability of the subsidy would be reduced. In 1984, the Western Grain Trans- portation Act (WGTA) was establish- ed to replace the Crow rates in effect since 1897. It is believed, especially in Alberta, that the current freight rate structure and method of payment dis- courages expansion, competitiveness and diversification of western Cana- da's agriculture and food industries. In 1984, the western Canadian rail transportation system was suffering from the effects of years of neglect. The old fixed Crow rates, negotiated in 1897 and fixed into statute in 1926, eventually made hauling grain a money losing proposition for the railways. Now, under the WGTA, the cost of shipping grain is divided into a share paid by the producer and a share paid by the government. The price the far- mer receives for his grain is set by the world market less transportation and other costs. On average, an Alberta producer's share of the cost of trans- porting export grain in 1989/90 was about $9 per tonne and the govem- ment's share about $21 per tonne — a total of about $30 per tonne. Because the Crow benefit is paid only on export grains, the price local grain users must pay for grain is artificially distorted by amounts which could equal the government's share of export grain transportation costs. The result? Domestic users pay more than is reflected in world market prices for their grain. The only way to ensure all users are treated equally is to pay the Crow benefit on all grain and pay it directly to the producers, or so the argument goes in the West. One other group deeply concerned with the pay -the -producer proposal is the Canola Crushers of Western Cana- da. They say in their policy statement that they want to see the effective eli- mination of all elements of the WGTA which discriminate against processing and shipment of processed canola pro- ducts in western Canada and a solu- tion in a manner consistent with new international trade rules for agriculture commodities. Payment of the Crow subsidy to the railways is negative to crushing on the prairies. A pay -the - producer or other similar solution would eliminate this disadvantage. Finally, if the method of payment is changed and therefore the costs of local feed grains are reduced, the eco- nomics of producing beef in the west, compared to the east, improves even further, hurting Ontario producers.0