Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada

In 1995 the Canadian Government abolished an export subsidy on railway shipments of grain from the Canadian Prairies known as the Western Grain Transportation Act (WGTA). This decision marked the end of one of the longest-running agricultural subsidies in the world, first known as the Crow's Nest Pass Agreement of 1897 and commonly referred to as the “Crow Rate.” The removal of this transportation subsidy increased the cost of exporting grain from the prairie region of Canada by $17–$34/tonne, equivalent to 8%–17% of its value. These increased transportation costs translated into lower grain prices at the farm-gate.