Courtesy of Global Milling


Farmers aren't very impressed with the increased railway shipping costs.

The Canadian Transportation Agency announced the volume related composite price index will go up by 9.5 percent on August 1.  

The VRCPI is a key factor in the western grain revenue cap introduced in 2000 to replace the maximum freight rates for CN and CP.  

Lynn Jacobson, President of Wildrose Agricultural Producers says it isn't fair for prairie farmers to be constantly priced out of these markets because of increasing rail shipping costs.  

"The VRCPI takes into account, inflation and other costs of the railways and Transport Canada thinks that because of these costs they wont meet their maximum freight rate, and therefore have increased it," he explains.

"The rate of inflation is 1.6, which means they are taking between $70-90 million out of western producers pockets for extra freight costs and this is a freight cost on everything produced in western Canada. So it has a major affect on every commodity that we grow. We think a 2,000 tonne farm of grain, peas, granola or whatever, is going to take a hit of between $2.35-3.00 a tonne so it does add up to some major dollars."  

Jacobson says they have trouble with some of the reasoning behind the price increase. "We've been calling for a whole costing review on the transportation costs and the efficiency gains that have never been factored into the equation, so all of these costs and all of these percentages are figured off the old rate. We think we would have a major decrease in our grain related freight costs if we did a full costing review."

"Now with all the new formulas, they have shortened the review process and it's getting harder and harder for us to make submissions and comments on that type of thing. We need some major help to do analysis of these figures.  We used to get a lot of help from the Canadian Wheat Board because they did a lot of the cost and review formulas and we could use their information," Jacobson explains.  

The last review was done in 1999, so the WRAP wants the federal government to review the costs being used in the revenue cap calculations immediately.