The Frontier Centre for Public Policy today released a study by Mary-Jane Bennett, a Senior Fellow at the Frontier Centre for Public Policy. As the Crow Flies: Transportation Policy in Saskatchewan and the Crow’s Nest Pass Agreement studies the Crow rate, one of the terms of the 1897 Crow’s Nest Pass Agreement between the CPR and the federal government.
The Crow rate was a price guarantee for the transportation of Western Canadian grain on some CPR lines to Canada’s export port at Thunder Bay. In the 1920s, the federal government legislated large changes to the Agreement, expanding it to CN, to four times the agreed loading points, to all ports (as they became viable) and to a large number of grain products, including canola. The rate, however, remained unchanged. By the late 1940s, the lifting of wartime price controls created an inflationary period and the fixed Crow rate began causing economic harm to the railways, affecting not only grain transportation but the transportation of all commodities, as well as harming the economy.
Attempts in the late 1960s and 1970s to change the Crow were unsuccessful. In Saskatchewan, the Crow had become a “sacred trust.” By the 1980s, Canada’s Transport Minister, Jean-Luc Pépin, having commissioned an economic study on the extent of the Crow’s damage, reported to the federal Liberal caucus on how “to modernize” it.
While the Crow’s dismantlement was under consideration in Ottawa, its retention became a key plank in the 1982 Saskatchewan provincial election, creating unease for Grant Devine, leader of the provincial Progressive Conservatives. An agricultural economist by profession, Devine had earlier published in The Canadian Journal of Agricultural Economics that the Crow rate was causing considerable harm to the Saskatchewan economy. But as PC leader, drawing political support from a farm base, he reluctantly supported it. Devine won the election.
This paper reviews the history and politics behind the Crow Agreement. The study also looks at the Crow’s replacement legislation: the 1983 Western Grain Transportation Act and the 2000 revenue cap. The paper concludes by recommending that Canada move immediately towards a market-based grain transportation system, that the revenue cap on grain freighting is the new Crow and impairs the efficient movement of grain to export, impacting GDP growth. Devine’s academic argument— that the Crow’s fixed rate was causing considerable harm— notes Bennett was, in fact, the correct one.
Read the entire paper here: CrowsFly_F5