Thank you, Humphrey.
As Humphrey said, my name is Allen Oberg. My brother and I run a grain and cattle operation near Forestburg, Alberta. I have been a member of the Canadian Wheat Board's farmer-elected board since 2002 and was elected chairman of that board this past June.
Earlier this year, a broad coalition of farm organizations led by the CFA released an important study confirming what western Canadian grain farmers have known for some years: that we are paying way more than our fair share in rail freight.
This study was commissioned by the Canadian Wheat Board and conducted by a highly respected and highly experienced rail analyst, John Edsforth of Travacon Research. Mr. Edsforth examined rail freights in western Canada for the 2007-08 and 2008-09 crop years. Copies of that study are available for you here today.
I want to comment briefly on Mr. Edsforth's approach. Mr. Edsforth examined rail freights in terms of a particular benchmark. That benchmark is 20% of volume-related variable costs. This is the same benchmark for a fair and reasonable return to railways used by the former Western Grain Transportation Act, or WGTA. It is also the percentage that the Canadian Transportation Agency has determined is the average system contribution for rail movement. A 20% level is also what Travacon Research believes would be the maximum achievable in a competitive environment.
Using this benchmark, Mr. Edsforth concluded that for the two crop years 2007-08 and 2008-09, western Canadian grain farmers paid $123 million and $275 million over and above what would have been considered fair under the WGTA. On a per tonne basis, that works out to $4.61 per tonne too much during 2007-08 and $8.81 per tonne for 2008-09. On an average for those two crop years, we are talking about $6.87 per tonne above what was considered fair and adequate under the WGTA. That is not just on wheat and barley that's marketed through the CWB; it applies to all major grains exported by western Canadian grain farmers.
To illustrate what this means to prairie farmers, let me tell you about my farm. I'm 1,056 kilometres by rail from the Port of Prince Rupert. Over the last two crop years, I shipped an average of 3,660 tonnes of grain. At $4.61 to $8.81 per tonne, that means I paid anywhere from $17,000 to $32,000 more than I would have under the WGTA. And that's just me, that's just my farm, and that's just in one year.
In total, farmers are contributing $200 million over and above what was considered fair under the WGTA, and that's each and every year. Any farmer who wants to know what this study means for his particular farm can use a simple online calculator to figure it out. They simply fill in the tonnes they've delivered, and the calculator comes up with the range of money that could otherwise be staying on their farm. This calculator, by the way, is available through the Canadian Federation of Agriculture website.
How did we get here? Well, there's no great mystery about it. We got to this point because of a huge consolidation of rail infrastructure. More than 1,000 prairie elevators have closed since the 1990s. Today we only have 240 grain elevators across the entire prairie region.
The system needed to become more efficient, and it became so. Today, the railways are shipping more grain in bigger blocks. They were able to pick up more grain with fewer stops along the line, so they are saving money, and that's a good thing. We support the system becoming more efficient and we support the railways making a reasonable profit. But as one of the railways' largest customers, western Canadian grain farmers believe that some of those efficiencies should be passed on to us.
In fact, just the opposite has happened. Over the last 15 years, freight rates have continued to trend higher, and the closure of thousands of elevators means, of course, that we farmers are hauling our grain by truck for much longer distances.
Since 2000, we have had annual revenue caps on Canadian rail company income for grain movement. The revenue cap takes into account things like changes in the volume of grain shipped, changes in fuel costs, and inflation, but it does not factor in the railways' true costs. When railway costs go down because of increased efficiencies, farmers don't share in these gains even when farmers have contributed directly to these efficiencies. As farmers, we're losing millions every single year that we wait for the Canadian government to call for a rail costing review.
Let me repeat. No one is objecting to profitable railways in Canada, but farmers cannot continue to shoulder an unfair share of the load. Freight rates must be fair, both for farmers and for the railways. The question isn't, “Why should we have a costing review?” The question is, “How can we not?”
Thank you, Mr. Chairman.