Gatineau, QC — The Canadian Transportation Agency (CTA) has announced a 2.8 percent increase in the Volume-Related Composite Price Index (VRCPI), which is used in determining the maximum revenue entitlement for the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) for the movement of western grain.
Determination No. R-2018-80 sets the index at 1.4197 for the 2018-2019 crop year beginning August 1.
Essentially an inflation factor, the VRCPI reflects a composite of the forecasted prices for railway labour, fuel, material and capital purchases. The VRCPI is one of the numerous factors included in the formula used to calculate the grain revenue entitlement. In determining the annual VRCPI, the CTA examines and verifies detailed railway submissions and collects and analyzes various data to develop the forecasts. The VRCPI of 1.4197 will be applied when the CTA makes its grain revenue entitlement determinations by December 31, 2019 for the 2018-2019 crop year.
The 2.8 percent increase stems from two main sources:
a 0.4 percent decrease attributable to the effect of replacing last year’s forecasts of price changes for railway inputs for 2017 with actual (preliminary) data and incorporating revised forecasts for 2018 (from this year’s exercise); and,
a 3.2 percent increase in forecasted price changes for railway inputs for the 2018–2019 crop year.
The projected escalation in railway prices reflects modest increases in labour and material components with projected increases in fuel and railway investments contributing more robustly to the overall 2.8% increase.