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Western Canadian farmers have been paying $200 million more per year for rail service than was considered fair under former federal legislation, according to an independent study recently released by several Canadian farmer groups.

Conducted by rail analyst John Edsforth, the study found that farmers have paid more per ton than grain rates considered fair and reasonable under the former Western Grain Transportation Act. The study was released by the Agricultural Producers Association of Saskatchewan (APAS), Canadian Federation of Agriculture, Canadian Wheat Board, Keystone Agricultural Producers, National Farmers Union and Wild Rose Agricultural Producers.

Rail costs for grain movements have not been reviewed since 1992, the groups claim. Since then, the number of elevators has dropped from 1,500 to about 240 and railroads have transitioned to multi-car blocks with at least 50 rail cars, group officials said in a joint statement.

"We need a full costing review to determine fair costs for freight,” said APAS President Greg Marshall. "No one is saying the railways shouldn't earn a profit, but we are saying farmers should be paying a fair and reasonable amount."

The federal government caps revenue that CN and Canadian Pacific can generate from grain moves. For the 2010-11 crop year beginning Aug. 1, the index used to calculate the revenue cap will increase 7 percent primarily because of higher fuel prices.

CN and CP dispute the farmer groups' overcharge claims and underscore their efforts to improve the efficiency and reliability of grain moves. For example, CN is setting certain days to deliver cars to grain elevators for later pick up, while CP continues to upgrade grain-handling facilities (including 50 during the past decade).