A long-sought compromise on the Crow

Suzanne Zwarun July 12 1982

A long-sought compromise on the Crow

Suzanne Zwarun July 12 1982

A long-sought compromise on the Crow


Suzanne Zwarun

The farmer and the cowman should be friends/ Oh the farmer and the cowman should befriends —Oscar Hammerstein il (Oklahoma!)

The songwriter may indeed have been correct. After decades of debate over the Crowsnest Pass freight rates—under which grain farmers can ship their crops at a cost level established in the last century —federal negotiator Clay Gilson has forged a compromise acceptable to most of the West’s previously feuding farm groups. Two umbrella organizations representing some 70 farm groups with a combined membership of more than 100,000 have joined CP Rail in accepting, “with reservations,” Gilson’s Report on Western Grain Transportation.

The Manitoba and Alberta governments are, so far, noncommital in their attitude to the agreement, and Canadian National views the report with “serious reservations.” And opposition seems limited to the Saskatchewan government and the National Farmers Union’s 8,000 families. “Now it’s in the political arena and it’s a sure thing, something’s going to be done,” says Ivan McMillan, chairman of the Prairie Farm Commodity Coalition (PFCC), a blanket organization taking in 20 groups. “There’s no turning back.

The country, the producers, the industry can no longer afford the present system.”

For his part, Transport Minister Jean-Luc Pepin says he will introduce legislation in the Commons this fall. And that could set in motion the most crucial development in Canadian agriculture since the stalwart men in sheepskin coats began arriving in 1896 to turn a subarctic semidesert into the breadbasket of the Empire. According

'Now it’s in the political arenay something’s going to be done. The country can no longer afford the system’

to its detractors, the Holy Crow, as grain farmers have long referred to their cheap rates, helped keep westerners as the country’s hewers of wood and drawers of water. If that role disappears with the Crow, the ripples will be felt from California supermarkets to Ontario packing plants.

If Gilson’s report is implemented, it will effectively clip the wings of a bargain struck in 1897 when the federal government was persuaded to subsidize

a railway line through the then lucrative mining area of the Crowsnest Pass and set permanent rates at a level that was reasonable for the turn of the century. Gilson’s 11 major recommendations would phase in a system under which grain growers and the federal government would pay Canada’s railways the difference between the halfcent-a-ton-per-mile Crow rate and actual rail costs. The current arrangement is costing railways $350 million annually, and, since 1974, the deficit has risen at an average rate of 15.5 per cent a year. Farm groups hammering out the compromise with Gilson could not agree on whether the subsidy should go directly to the railways or the producers until 1989-’90, when producers will receive 81 per cent of it.

Gilson, a University of Manitoba agricultural economics professor, also recommends that the government’s promised $612-million contribution to the shortfall this year should be increased by $644.1 million annually. Not only that, but he says that canola (formerly “rapeseed”) and linseed meals and oils should be brought under the wing of the Crow and that a stabilization fund and adjustment payment system be set up to protect producers. At the same time he called for a replacement of the Grain Transportation Authority so that producers, industry and transportation representatives could join the federal

bureaucrats currently allocating rail cars for grain transport. If the Crow remains, the railways’ deficit is predicted to reach $2 billion by 1986. Gilson calculates that, by then, the cost to the government, without Crow, will be $3.5 billion. Under Gilson’s scheme, all Canadians, in effect, share the burden of getting Canada’s wheat to world markets—a burden that the railways say they can no longer carry if they are to maintain a viable shipping system.

On the eve of the report’s June 28 release (moved up a day to escape the new budget fallout), Gilson and Pepin met with most of the 50 representatives of farm groups that have been negotiating the Crow since the professor’s appointment by the minister on Feb. 8. There were few queries and no complaints from those at the meeting, but representatives now have to run Gilson’s golden mean past the grassroots. And even though farmers are in the middle of their summer harvest, “we’ll get a response,” says Howard Falkenberg, chairman of the Western Agricultural Conference, the second big umbrella organization. “It’s large enough and it’s important enough” to warrant immediate attention, he says.

Falkenberg believes that Canada’s 150,000 grain producers will start out paying 18.5 per cent of rail costs and that by 1991-’92 they will be paying 38.7 per cent on constant volume. Meanwhile, a complex system of sharing annual inflation costs up to six per cent has been recommended by Gilson for producers and the government. Doubledigit inflation, if it continues, seems to be entirely the government’s problem. “We’ll pay more only if they guarantee that prices of our products will escalate, and there’s no guarantee of that,” says Falkenberg.

Supporters of the Gilson report will move to the next plateau only over the rallying bodies of the National Farmers Union (NFU). The federal NDP quickly

tabled petitions in the Commons containing 12,000 signatures protesting changes to the Crow. Now Ted Strain, president of the NFU, promises more petitions and summer protest rallies opposing a report that he calls “devastating.” The NFU computer has spat out preliminary figures, but Strain says that the farmers’ current shipping cost of $4.89 per tonne (vs. the railways’ $18 cost) will soar by 1992. Calculating a 10per-cent inflation rate and projected production increases (instead of constant volume), it will cost $63.57 a tonne to ship grain by then. And, with the government’s subsidy fixed, farmers will have to pay at least $28.10 and, says Strain, “probably a lot more than that.” The only winners if Gilson’s report is implemented, Strain declares, will be the railways, “which will get a tremendous amount of money—5% times the present rate” and a green light to start abandoning branch-lines—“hidden costs that will be thrown right back on the farmer and municipal governments.”

Prime Minister Pierre Trudeau infuriated a Saskatchewan audience in March with a jibe that farmers have no more right to be protected against rising prices than any other group. “Now it happens to be the Prairie farmers. Big deal,” he said. Western farmers are more likely to think it is a big deal that they must pay to ship their grain to market at all, when, in the case of manufactured goods from Central Canada, it is the purchaser who pays. The Crow has gone hand in hand with that anomaly, making it cheaper to ship raw products east, refine them there and return them—at western expense— rather than process them in the West. “The western hog industry is already gone,” says Chris Mills, manager of the Alberta Cattle Commission, and if Crow is not amended now, “the livestock and rapeseed-crushing industries will be gradually destroyed.”

Conceding that cattlemen did not get^ all they wanted, Mills says that Gilson| “did a tremendous job of pulling gether as much consensus as possible. ï It’s as close as you can get to providing a| solution to Crow that most farm organig zations can go along with.” The historic implications of Gilson’s report were not lost on Mills. After its release, he promptly flew to the United Kingdom to peddle Alberta cattle. Mills also has been eyeing the California market, which imports 1.4 billion pounds of beef, more than Alberta produces annually. Alberta is closer to California than is the U.S. Midwest, which supplies its beef, and California is closer to Alberta than Montreal, the province’s traditional market. “This is a mega-project with a lot of downstream benefits to the economy,” says Mills, pointing out that “neutralizing the Crow” would allow producers to decide what to produce and where to sell it.

Grain producers agree that higher freight rates and lower farm gate prices will transform the Prairie agricultural scene. It is long overdue, says the PFCC’s Ivan McMillan. “We now have five million acres of saline soil from trying to grow one kind of crop,” he contends. “Every wheat farmer knows you can’t grow wheat year after year. If you have a transportation system that removes the discrimination against added-value [processed] crops, the beneficial effects on all crops are going to be good.”

If some farmers are already contemplating a switch to oilseeds and specialty crops, the Saskatchewan government is vowing to fight Gilson to the end. Agricultural Minister Eric Berntson instantly fired out a Telex of protest to Pepin arguing that, with rising costs and falling prices, producers can’t afford further expenses. Gilson urges a comprehensive solution to the Crow rather than more of the Band-Aids al-

ready applied, but his supporters fear that the federal government’s own rising costs and deficit might torpedo attempts to change the Crow.

It has taken more than 30 years to get this far. In the 1950s CP Rail confirmed what it had long suspected—it was losing money on the Crow—and, as inflation widened the gap, CP has attempted both carrot and stick techniques to get the farmers to assume more of the costs. If the Crow goes, the railway promises western expansion that will cost as much as the original transcontinental railway. If it stays, there will be shipment rationing that will affect Canada’s balance of trade.

With farmers declaring the Crow to be the Magna Carta of the Prairies— their price for entering Confederation— the railways did not get far with their lobbying until the grain-handling system disintegrated into near chaos. But the farmers’ realization that service would continue to decay as long as the Crow losses continued, combined with the agricultural processing aspirations of a New West still dependent on declining energy resources, finally convinced most westerners that something had to be done. In 1981 Trudeau handed Pepin the chore of finding a solution to the Crow problem, saying he would not have “the folly or the courage” to tamper with it until the West agreed.

Westerners have suggested that the federal government was only willing to tackle the Crow tangle because the Liberals have nothing left to lose in the West—except money. But, with the West more or less agreed, the Crow has landed back in the political arena. It remains to be seen whether Gilson’s report will fly or whether, like four other commission reports since 1949, it will simply plummet back to earth.