POP: Freight Overpayment Allocation

POP: Yes
Res #: POP 2-09A
Number: 2
Year: 2009
Midterm: No
Expired: Yes
Responses Received: No
Departments: Transport Canada

WHEREAS Agriculture Producers directly pay their own freight rates; and 

WHEREAS a freight overpayment of $68 million was recognized in 2007/2008; and 

WHEREAS that overpayment was to be directed back to the Western Grain Research Foundation; 

BE IT RESOLVED that SARM lobby the Federal and Provincial Governments to find a fair way to allocate that overpayment back to producers, such as via a pool account or other feasible option.

Response from Honourable John Baird, Minister of Transport, Infrastructure and Communities:

The railways are legally required to pay revenues in excess of their revenue caps, plus penalties, to the Western Grain Research Foundation. Repaying excess railway revenue to individual farmers would be so administratively difficult and costly that doing so would significantly cut into the amount of money put back into farmers' pockets. By directing the money to research, we can ensure that famers’ money is not wasted on administration, but rather is benefiting all grain producers. 

The Western Grain Research Foundation is a non-profit producer-led research body that invests annually in public plant-breeding programs and research to create new market opportunities for western grain farmers. Because new, better-yielding varieties have big implications on farmers' bottom lines, producer groups continually call for more investment in grain research. Research is also extremely valuable in maintaining and improving producers' competitiveness in international markets. 

Farmers have told the government that rail service in Western Canada is not meeting their needs. In June 2007, the government responded to these concerns by changing the Canada Transportation Act to give the Canadian Transportation Agency the authority to adjust the revenue caps of railways to take into account the actual costs for Canadian National and Canadian Pacific Railway to maintain their hopper cars. The Agency reduced the railways' revenue cap by 8%, or approximately $2.59 per tonne. It was because of this adjustment that the Agency found the railways to be in excess of their revenue cap and ordered that the money be paid out to the Western Grain Research Foundation. The federal government also initiated a freight rail service review to identify and address shippers' concerns about rail service.