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Farmers will face onerous transpo costs in post-Wheat Board open market

Harper already subsidising Churchill for loss of rail and port income from grain exports.

VP Lacey says that because of NAFTA, Canadians are stuck with this decision.by Peter Lacey, in the J. Goss & Associates blog

November 9, 2011: "Post-CWB 'adjustment' funding pledged for Churchill... The price tag to shut down the Canadian Wheat Board's wheat and barley marketing monopoly is to include almost $30 million in federal incentives and supports for the northern grain port of Churchill, Manitoba," reports the Manitoba Co-operator.

The story indicates as clearly as anything could that the Harper Government is perfectly aware of the drastic negative consequences of its decision to end the Canadian Wheat Board's monopoly. Yet they are going ahead as quickly and dictatorially as possible, to render moot any court finding that they are acting illegally as well as stupidly.

Churchill has, for its entire history, been a political creation. While it is true that its route to Europe is 1,000 kilometres shorter than any of the Great Lakes ports, its short shipping season has always worked against it. All the grain companies have built their own facilities on the Great Lakes and are quite naturally unwilling to use Churchill to the detriment of their own business. The CWB has consequently been the only grain shipper through Churchill for many years, and has found it necessary to give farmers a bonus for such a route.

  "Now that the CWB can't stick up for the farmers, the private grain companies will act as a cartel to set the prices as they wish."

The port, and the railway that serves it, have always been less than viable financially and have been in continuous need of subsidies of one sort or another. But the Conservatives' act seems almost certain to be the death knell of Churchill as a port, since the grain traffic was its main, almost complete, activity. On November 3, the Winnipeg Free Press speculated that the last, the very last, shipment of wheat has already left Churchill.

Other consequences flow. The railway to Churchill, deprived of its main traffic, will become even less viable. The local traffic, to Churchill and the little places along the line, along with the VIA tourist trains to Churchill, will not provide sufficient revenue to maintain the line. There is not and doesn't seem to be much prospect of much inbound traffic to make up for this. Omnitrax, the present owners, have impressed no one with their treatment of the line as it is.

This implies that the province will have to subsidize the line, or take it over, or build a billion-dollar highway to Churchill to replace the railway. In turn, this will likely kill the expensive plans for a road to Chesterfield Inlet, which has been in the works for years.

Further south in the world, all the short-line railways that depend on wheat shipments will be left hanging out to dry, as they will not have the influence to ensure a timely flow of grain cars for their requirements. Producer loadings along the main lines will suffer equally. The CWB has had the clout to force the railways to provide the service, but will no longer be able to do so. Thus the provinces will have to incur more expenses on their rural road systems.

Finally, the supposed raison-d'ĂȘtre for this whole action — to allow farmers to find the best deal for themselves on the open market — is a chimera. Now that the CWB can't stick up for the farmers, the private grain companies will act as a cartel to set the prices as they wish. Farmers will have no choice but to accept them, and it's a no-brainer that they won't be better than what the CWB, with its control of the supply, can get.

For those few farmers located close enough to shipping points to be able to get there easily, they may sometimes be able to benefit; but someone farming in the Peace River country will be kept out of the opportunity simply because of geography. And, being paranoid, what's to prevent the US grain industry from finding some reason to slap punitive tariffs on Canadian grain?

All this, supposedly to give a minority of farmers an opportunity to market their own grain! If ever an instance of the dangers of doctrinaire thinking was needed — here it is. The CWB can't be reintroduced by the provisions of the North American Free Trade Agreement, so Canadians are stuck with this decision to the end of time.

Peter Lacey is Vice President West for Transport Action Canada. He is based in Winnipeg.

Links and sources
  Ending CWB ends Port of Churchill and prairie shortline railways

Posted: November 16, 2011

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