Government of Canada welcomes grain revenue cap decision

    OTTAWA, Feb. 25 /CNW Telbec/ - 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.

For further information:

For further information: Karine White, Press Secretary, Office of the
Minister of Transport, Infrastructure and Communities, Ottawa, (613) 991-0700;
Media Relations, Transport Canada, Ottawa, (613) 993-0055; Margaux Stastny,
Press Secretary, The Office of the Honourable Gerry Ritz, (613) 759-1059;
Media Relations, Agriculture and Agri-Food Canada, Ottawa, Ontario, (613)
759-7972, 1-866-345-7972; Transport Canada is online at
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