Prepared by: CPCS Transcom Ltd
April 22, 2015
This report examines the Maximum Grain Revenue Entitlement (MRE) program, as provided for under sections 150-151 of the Canada Transportation Act. Specifically, it describes how the program works in respect of the movement of western Canadian grain, analyses the effect of the MRE on railway productivity and capital investment, and examines the potential consequences of its possible reform and/or elimination on producers, shippers, the railways, and other transportation stakeholders. The research shows that although the MRE offers a degree of freight rate protection for western grain shippers, a host of technical and policy-related issues have arisen since its introduction in August 2000 such as, for example, the disincentivization of railway investment in grain rail capacity, and unfairness in respect of the treatment of interswitching movements. Moreover, the grain sector has changed considerably over the last 15 years (e.g., popularity of containers; country grain elevator network rationalization, growth of high through-put elevators, etc.) and these changes are not currently reflected in transportation legislation and regulation. The report questions why the MRE program is limited to only grain shippers in western Canada for regulated grain movement outside the region – if the railways’ market power is no different than what shippers of other commodities (e.g., forest products, coal, etc.) are experiencing, there is no compelling evidence why grain shippers should be protected by this program and others not.