Farmers should get $68M overpayment back, Wheat Growers says

The Western Canadian Wheat Growers Association is the latest farm group to ask the federal government to get involved in a $68-million dispute over freight rates.

Last year, the Canadian Transportation Agency discovered the railways had exceeded their revenue caps for the 2007-2008 year, meaning they overcharged farmers about $60 million in freight rates.

Under an agreement that has been in place for years, the Canadian National and Canadian Pacific railways have been ordered to pay that money, plus more than $8 million in penalties, to the Saskatoon-based Western Grains Research Foundation.

However, the Wheat Growers Association says the money should go back to farmers more directly.

"This was farmers' money that was overcharged on freight rates and it belongs to farmers," Wheat Growers chair Mike Bast said.

The Canadian Wheat Board has taken a similar stance.

But University of Saskatchewan agricultural economist Richard Gray says farmers should think twice before lobbying too hard to get the money back.

The administrative costs of paying out that money to individual farmers would be very high and it would be difficult to distribute it equitably, Gray said.

With 60,000 farmers in Western Canada, farmers likely wouldn't get more than $1,000 each, if the money were paid to them, he said.

On the other hand, studies have shown that research pays high dividends, Gray said, and for every dollar invested in research, farmers will see $20 in future returns.

"This money will go back to producers. It will go back, in this case, to future grain producers."

The Western Grains Research Foundation made similar arguments after the $68-million order was made.

"We realize these are farmer dollars," Lanette Kuchenski, the foundation's executive director, said in a news release.

"We're often asked why the excess railway funds can't be returned to individual producers. WGRF is not in a position to change legislation and I don't believe it was ever envisioned when this legislation was passed that the excess revenue cap dollars would ever be this high."

The $68 million is by far the largest payment ever ordered to be paid by the railways, the foundation said.