REGINA, Sask. — The National Farmers Union (NFU) is appealing to Transport Canada to close a loophole that allows railways to bilk farmers.
The NFU is upset at the railway’s recent grain revenue cap increase, which means higher shipping costs for farmers. But they also say the revenue cap is flawed, since it is structured in a way that allows the railways to charge more to farmers while hiding the excess revenue.
Under the current revenue cap rules, money is exempt from the cap if it is paid by the railways to grain elevator companies for “industrial development” such as sidings or as freight incentives.
“That flaw is that while the cap can limit railways’ revenues, it cannot limit what railways collect from farmers,” the NFU said in a letter to Transport Canada. The organization noted that the rail company can avoid the cap by sinking excess revenue into infrastructure.
“It is almost certain that railways will deal with overcharging, not by turning that money over to farmers and the WGRF, but by turning it over to grain companies,” says the letter.
“It is a way to undermine the intent of the revenue cap,” says chair of the board’s transportation committee, Ian McCreary. “It is a huge problem.”
CN Rail officials say there is nothing wrong with the current setup.
“We don’t think that it’s a loophole at all,” Jim Feeny of CN Rail told local media. “The question is are we putting revenue back into the system, and the answer is yes. Such investments should quite properly be deducted from the cap.”