Crow Rate

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The "Crow Rate" or "Crow's Nest Freight Rate" was a subsidy offered to the Canadian Pacific Railway ("CPR") by the Canadian government. The subsidy was instituted by an agreement between the CPR and the federal government made in 1897. The purpose of the subsidy was to enable the CPR to expand westward over the Canadian Rockies through the Crow’s Nest Pass while reducing the transportation costs for farmers in the Canadian Prairies.

[edit] Origin

In the late 19th century, the CPR wished to build a line from Lethbridge, Alberta to Nelson, British Columbia through the Crow’s Nest Pass to develop coal deposits in the Elk River valley and to protect Canadian (and CPR) sovereignty from American railways. At the same time, western farmers were anxious to reduce the costs of shipping their products to market. As a result, the government and the CPR signed the "Crow's Nest Pass Agreement", dated September 6, 1897.

In exchange for cash and perpetual title to the CPR over the lands which the railway would run, the CPR would reduce shipping rates for listed agricultural products "forever".

[edit] End of "forever"

With time, the subsidy was not cost-effective for the railway, but it came to be a critical cost-reduction for farmers. By the early 1980s, the government attempted to resolve the problems between the competing interests by altering the agreement. The Western Grain Transportation Act, which the federal government passed in 1983, allowed shipping rates to increase, but never more than 10% of the world price for grain. In addition, further cash payments were made by the government to the CPR.

With the 1993 election of the new Liberal government of Jean Chrétien, the government took steps to eliminate the subsidies altogether. This was implemented in 1995 through the Western Grain Transition Payment Program, which provided one-time payments to farmers to assist them in making the transition away from subsidized shipping.