The Crow Rate

Back at the time of Confederation, when the big push was on to put the railway through to the West Coast of Canada the Canadian government assisted with the its financing by a land-grant arrangement. In payment for the task of building the railway, the company was given rights to land ten miles on each side of the tracks right across Canada (the distance a farmer could move grain by horse in a day). They could sell such land and use the money to build the railway. There were other provisions in the agreement, which enabled the company to save up their land quota in the rocky eastern part of the country and collect it on the prairies, as well as holding onto mineral rights of the lands they sold. Needless to say, the company did not suffer under the deal.

Once the Railway was operational, a certain amount of dissatisfaction arose amongst the farmers about the way they were being treated by the railway. Therefore, when the Railway needed government money to put a line into the Crowsnest pass to bring out coal, the government felt they needed to appease the farmers. For this reason, the 1897 grant of 3.3 million dollars to the railway for their new line included a flat rate for raw grain of 1/2cent per ton- mile in perpetuity. It was known as the Crow rate. As time went on, the railway became more and more reluctant to provide service because actual cost was far in excess of cost (2x by 1950's, 3-4x by 1970's, 6x by 1980's).

Some people felt that the reduced rate was interfering with motivations for economic development in the interior of Canada, as it was simpler to ship cheap grain than to add value to the grain before shipping. For example, livestock owners were not pleased with the arrangement because the rate only applied to grain, so feed was being shipped cheaply to their competitors on the coast while they had to feed on the prairies and ship expensive end product to the coast.

Others felt that "a deal is a deal" and the low rates were to be in perpetuity. The final blow came with the signing of NAFTA prohibiting such subsidies...so much for perpetuity! In 1984 The Western Grain Transportation Act permitted future increases in costs, to a maximum of 10% of world price. In 1987 Government subsidies were up to 675 Million dollars to the railways. After a huge debate in the late 1980's and the Estie report, the government cancelled the Crow rate and paid the farmers $30 per acre to compensate for the amount land would drop in price due to the cancellation of the benefit.

Grain now costs 65 cents a bushel to ship 700 miles to Thunderbay. Under the Crow rate it would have been 10 cents. But some ask why it can be trucked to Thunderbay for 59 cents if Rail is a far cheaper method of transporting anything. ( )

Of course the move has made for a huge domino effect in Western Manitoba. The weight of heavy trucks moving grain is taking a huge toll on Municipalities as they attempt to keep them in good repair. Rail lines have been pulled up, and elevators consolidated to larger terminals with drastic effects on many small towns. Strong pressure is mounting to disband the Canadian Wheat Board and allow farmers to sell their own grain rather than sell it collectively, enabling farmers to truck it across the border to the northern States. The five large grain handling companies in the world, (primarily Cargill in this case) are exerting strong pressure here as in the rest of the world to get control of all grain handling (they make their money in the handling and transportation end of things) which many feel would further depress the prices farmers get for their product. And of course there's the pigs...bless their pointed little snouts...and all the controversy over confinement hog production in the Westman area.

Some Crow Rate Realted Sites

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