In a determination issued today, the Canadian Transportation Agency (CTA) ruled that revenues of both the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) were above their respective maximum grain revenue entitlements for the crop year 2021-2022.
· CN's grain revenue of $592,208,589 was $3,068,088 above its entitlement of $589,140,501.
· CP's grain revenue of $515,508,638 was $2,363,775 above its entitlement of $513,144,863.
CN and CP now have 30 days to pay the amount by which they exceeded their 2021-2022 revenue entitlements, in addition to a five percent penalty of $153,404 for CN and $118,189 for CP. Regulations require these payments to go to the Western Grains Research Foundation. This foundation is a farmer-financed and directed organization to fund research that benefits Prairie farmers.
Notable drop in volume of grain moved this crop year
In the 2021-2022 crop year, 28,383,726 tonnes of Western grain were moved. This represents a 46 percent decline in volumes as compared to last crop year which saw a record 52.3 tonnes transported. The notable drop in volume was due mainly to the drought conditions experienced in Western Canada during the 2021-2022 growing season.
Determining the Maximum Revenue Entitlement
The Canada Transportation Act (Act) requires us to determine each railway company's annual maximum revenue entitlement (MRE) and whether each entitlement has been exceeded. The revenue entitlement is a form of economic regulation that enables CN and CP to set their rates for services, provided the total amount of revenue collected from their shipments of Western grain remains below the ceiling set by the CTA.
See our guide on the Maximum Revenue Entitlement
