+ RMA Rural Municipalities
of Alberta

Resolution 44-03F

Farmer Rail Car Coalition Support

January 1, 2003
Expiry Date:
December 1, 2006
Active Status:
Vote Results:

WHEREAS in February 1995, the Government of Canada announced its intention to sell its remaining fleet of 13,000 grain hopper cars; AND WHEREAS the Farmer Rail Car Coalition (FRCC) has been working diligently since its inception in 1996 to acquire the fleet of hopper cars for the benefit of prairie producers; AND WHEREAS since 1972, farmers, railroads and in fact all of Canada have benefited from the federal fleet of hopper cars, and the FRCCs proposal would continue this benefit for decades to come; AND WHEREAS the FRCC would reduce maintenance costs on the hopper car fleet by at least 66%, a savings of more than $40 million annually for farmers; AND WHEREAS the FRCC proposal requires no federal legislative or regulatory changes; AND WHEREAS Alberta municipalities, like Saskatchewan municipalities, should have a place at the bargaining table to advance rural Albertans interests;

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties endeavour to join the efforts of the Farmer Rail Car Coalition.

Member Background:

In the early 1970s Canada lost major international grain sales because as a country our grain car fleet was obsolete and did not have the capacity to get our products to export position. For a variety of reasons, the railways were not prepared to invest in modernizing the fleet. It was because of this situation that governments began to purchase hopper cars for use in the grain handling and transportation system in Western Canada. The Farmer Rail Car Coalition (FRCC) believes that above all else, the situation that arose in the 1970s must never be allowed to happen again. Grain handling and transportation costs must be kept as low as possible so that Canadian producers can compete effectively on world markets, or we will soon find that Canadas traditional markets will be lost to the subsidized grains of our competitors. FRCC is a leasing company with a difference. Private leasing companies have the primary goal of maximizing profits for their shareholders. As a not-for-profit organization representing grain producers, FRCCs goal will be to minimize the costs of hopper car leasing that will be embedded in freight rates, ensuring that Canada has the grain car capacity needed to meet its export commitments and a fleet that meets the most modem standards. FRCC believes that these objectives can all be accomplished while realizing a net reduction in the statutory revenue cap. FRCC and the producers it represents have devoted considerable resources to developing a comprehensive business plan that will ensure that Canadas grain producers will continue to be able to compete internationally. Moreover, FRCCs business plan has been designed to address the interests of all stakeholders: FRCCs plan will improve the net revenues and enhance the competitiveness of producers while transferring the risks of asset ownership, replacement and maintenance in a transparent and accountable manner. FRCCs plan will meet the federal governments policy objectives of eliminating direct government ownership of major transportation assets and improving Canadas global competitiveness while avoiding trade and competition law challenges, including challenges associated with NAFTA and the WTO. This plan also eliminates any future pressure that may require the federal government to replace the existing fleet at an estimated cost of $1.3 billion. FRCCs plan will benefit foreign and domestic consumers of Western grains by ensuring capacity to deliver products to export position and by improving the cost-effectiveness of the grain handling and transportation system through the replacement of existing hopper cars with cars that meet the most modem and efficient standards. FRCCs plan will shelter the Class 1 carriers from the risks associated with the ownership of the federal fleet and from the costly obligation to replace the fleet over time. FRCCs approach will potentially provide grain shippers with a source of cars so that they can better manage their delivery capacity, costs, and capital employed. FRCCs plan will benefit all parties by promoting a more commercial approach to grain handling and transportation in Canada.

RMA Background:

The AAMDC has no resolutions in effect with respect to this issue.

Federal Ministries and Bodies:
Transport Canada,
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