No. H 045/08For release - February 25, 2008
OTTAWA – The Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities, and the Honourable Gerry Ritz, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board, today welcomed the recent decision by the Canadian Transportation Agency (the Agency) regarding a downward adjustment to the revenue caps for Canadian National Railway (CN) and Canadian Pacific Railway (CPR) for the movement of Western Canadian grain.
"Farmers need an effective, efficient and reliable transportation system to remain competitive," said Minister Cannon. "I am pleased with the Agency's decision as it should result in lower freight rates for Western farmers shipping their grain to export markets and therefore more competitive prices."
"The Government of Canada is delivering real action for Canadian farmers by making sure they can quickly and efficiently move their products to markets all around the world," said Minister Ritz. "By reducing transportation costs, this Government is working with farmers and railways to keep our industry strong and competitive."
The Agency announced a final adjusted volume-related composite price index of 1.0639 for railway revenue caps for the movement of Western grain for crop year 2007-2008. This represents an estimated $72.2 million reduction (or about 8 per cent) to the 2007-2008 revenue caps, which translates to $2.59 per tonne based on forecasted tonnage of 27.85 million metric tonnes. While the adjustment is a once-only process, its impact will begin this crop year 2007-2008 and carry forward into future years.
Amendments to the Canada Transportation Act in 2007 gave the Agency the mandate, upon request by the Minister of Transport, to adjust the railways' revenue caps to align the maintenance costs embedded in the caps with the actual costs incurred by the railways for the maintenance of the hopper cars used in the movement of Western Canadian grain.
The volume-related composite price index is essentially an inflation factor that covers CN and CPR's price changes for railway labour, fuel, material and capital inputs. The revenue cap is a form of economic regulation that enables CN and CPR to set their own rates for services, provided the total amount collected remains below the revenue ceilings set by the Agency. The revenue caps are adjusted at the end of the crop year to reflect the actual volume of grain moved and the average length of haul.
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Contacts:
Karine WhitePress SecretaryOffice of the Minister of Transport,Infrastructure and Communities, Ottawa613-991-0700
Media RelationsTransport Canada, Ottawa613-993-0055
Margaux StastnyPress SecretaryThe Office of the Honourable Gerry Ritz613-759-1059
Media RelationsAgriculture and Agri-Food CanadaOttawa, Ontario613-759-79721-866-345-7972
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