Yes, thank you, Richard. And thank you to the committee for providing an opportunity to talk to you about some of these topics.
First of all, I would like to change the focus of the discussion here a little bit to the broader issue of competitiveness. As growers, we need an efficient, effective, and affordable rail transportation system to keep us competitive in the global market.
There are two components to rail transportation in general that affect our competitiveness as growers in that market. The first one is timely service. This has been a problem for a very long time. However, there has been some progress on this front with the passage of Bill C-8, giving shippers more negotiating power and options to hold the railways more accountable in providing service. In addition, there is a formal review of railway service currently being undertaken by the government. We fully support that initiative and look forward to its completion and the implementation of the recommendations that will emerge. We're optimistic on the service issue.
The second component of rail transportation that affects our competitiveness is the price we pay to transport our grain. If rail freight charges are too high, we cannot compete in the export market, or, at minimum, our competitiveness would certainly be reduced. We are fortunate to have a legislated revenue cap in place for the movement of western Canadian grain, and we certainly need that cap to remain in place in the future. The revenue cap is effective in allowing the railways to have pricing flexibility to reflect proper market signals, and at the same time, it protects farmers to some degree by limiting the overall yearly revenues earned by the railways from the movement of grain. While the existing regulation governs maximum railway revenues, nonetheless, it is still cost based, where the costs are historical railway costs. In fact, the current revenue cap is based on the costs of railways established by the WGTA way back in 1992, almost 18 years ago. We all know that a lot has changed in railway operations and infrastructure over the years, and we're talking about some of those changes even at this meeting today.
We believe the time has come for the federal government to conduct a costing review of the railway revenue caps to re-establish and update the base year to the current operational environment. This recalibration is required to ensure that the revenue cap remains relevant and fair to the industry, and to ensure our competitiveness in the future.
In very quick summary, we support SARM's proposal to amend the Canada Transportation Act to ensure that sidings go through a fair abandonment process. Secondly, we strongly support the level of service review that is currently under way and ask members of all parties to act swiftly to implement the recommendations when they come forward next spring. Last, we feel the time has come to conduct a costing review of the railway revenue caps, and we would encourage this committee to support us in that endeavour.
Thank you again for the opportunity to be here. We look forward to your questions.