"The measures we are announcing today will increase competition and cutcosts. It will result in a stronger system -- one that is more commercial,competitive and accountable," Transport Minister David Collenette toldreporters.

The long-awaited plan, expected to be passed into law by the end of June andto take effect on August 1, will loosen the wheat board's grip on transportof Prairie grains by forcing it to tender for services to ship wheat andbarley.

The reforms, sought by the lowliest farmer to the biggest grain company,also cap railway grain-handling revenues, resulting in a revenue cut torailways of about 18 per cent, or C$178 million ($120 million) in 2000/01.

"The CWB will operate through commercial, contractual, competitivearrangements with the railways, grain companies and farmers," said RalphGoodale, minister responsible for the CWB, which has the mandate to exportall wheat and barley grown in Canada's Prairie provinces.

The reduction in what can be charged by railways, mainly Canadian Nationaland Canadian Pacific, would see farmers save C$5.92 a tonne in transportcosts in the 2000/01 crop year.

Canadian National on Wednesday expressed "deep dissatisfaction" with thegrain transportation reform package. The reforms impose significant ratereductions on the railways, but only partially phase in industryderegulation, it said in a statement.

"This unbalanced approach will have serious consequences for CN's existingrate and service packages offered to grain shippers," said Paul Tellier, CNpresident and chief executive. "It will also reduce the amount of capital wehave available to invest in our grain business."

Earlier, Agriculture Minister Lyle Vanclief said: "Farmers told us and havecontinued to tell us, and rightfully so, over the last number of years thatit is too costly under the current system to move grain to port and thatthere must be some ways to make some changes to do that more efficiently andcost effectively."

Canadian farmers, struggling with falling incomes due to low world commodityprices and high transportation costs, annually produce millions of tonnes ofgrains and oilseeds that must be ferried by road or rail to eastern andwestern ports. The reforms, following several years of study, attempt tostreamline the system and to balance the widely disparate views of thousandsof farmers, private grain-handling companies, the railways and the CWB."This is a very controversial area...there are traditions, emotions and allof those things that go with that discussion," Vanclief said.

But he said the mandate of the CWB as the marketer for grain grown inwestern Canada would not change.

Under the new rules, the CWB must tender with grain companies at least 25per cent of its wheat and barley shipments in 2000/01 and 2001/02, and halfof shipments in 2002/03.

"Hopefully, this will result in competition for those tenders, that bringscosts down," CWB president Greg Arason told Reuters, adding that the reformsstill allowed the CWB to control the supply of rail cars and negotiate withrailways.

Arason said producers would gain from te reduction of rail rates but saidthe government had failed to provide a mechanism to increase railcompetition on the Prairies -- a key reform sought by the CWB.

"The overall result is it (the reform package) is largely favourable forfarmers," Arason said.

The railways had also opposed any cap on revenues, which are due to takeeffect at the start of the next crop year on August 1. Goodale said theamount of grain to be tendered for transport by the CWB could be increasedafter 2003.

The reforms included a federal grant of C$175 million over five years tomitigate damage to rural roads that will result from an increase in roadtransportation seen as a result of the changes. The ministers said anindependent third party would monitor the success of the reforms.

Saskatchewan Wheat Pool, Canada's largest publicly traded agri-businessco-operative, said on Wednesday that the measures announced to improveWestern grain handling and transportation system will benefit Prairiefarmers. "The Pool has been saying all along that Ottawa had opportunity tokeep money in the pockets of our members by implementing the lowest revenuecap possible," said Pool vice-president Gary Wellbrock. "We're pleased thatthe federal government has supported the Pool's position with today'sannouncement of an estimated saving of C$178 million dollars for Prairiefarmers."