Canada still struggling for market freedom

by Leo Quigley
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Canada
Money-losing transportation rates for grain led to a long period in which railways were reluctant to upgrade lines servicing the grain industry or purchase equipment used for moving grain.
 
Western Canada’s wheat export industry has traveled a rocky road for decades. Located over 1,000 kilometers from the nearest export terminal, grain farmers and the railroads that moved their wheat to market have had to struggle not only with Prairie blizzards, but with constant government meddling in their industry.

 

Major intrusions came with the implementation of the Crow’s Nest Pass Agreement in 1897 when Ottawa gave Canadian Pacific Railway (CP) a subsidy of C$3.3 million and permission to build a rail line into British Columbia’s rich mining territory. In return, CP agreed – in perpetuity – to reduce rates on grain and flour traveling to Eastern Canada and settler’s effects traveling West.

The reduction in rates was suspended during the war, but reinstated on grain and flour in 1925 and then only on unprocessed grain in 1927.

As might be expected, railway transportation costs, including fuel and labor, gradually increased and Canadian railways, including then government-owned Canadian National, eventually reached a point where they were losing money moving wheat and the Western Grain Transportation Act was brought into effect in 1984 that gave the railways the ability to gradually raise transportation rates.

In retrospect, the so-called “Holy Crow” helped Europeans in settling the Canadian West, building communities, establishing a coast-to-coast railway and growing crops. In fact, during this era railway cars were frequently used as traveling classrooms for immigrants wanting to learn about growing wheat and livestock in a Prairie environment.

However, the money-losing transportation rates for grain led to a long period in which railways were reluctant to upgrade lines servicing the grain industry or purchase equipment used for moving grain.

During that period, Western Canada’s grain industry suffered from the lack of initiatives by the railways to build badly needed infrastructure to move grain, such as longer sidings at grain elevators.

The other intervention in Western Canada’s wheat growing industry was the establishment of the Canadian Wheat Board (CWB).

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