Despite assertions from the federal government that it is doing everything it can to ensure producers' grain makes it to market, one group representing the country's grain producers says it could be doing more.
Western Canadian Wheat Growers Association (WCWG) officials do say they see some positive elements in legislation tabled yesterday in the House of Commons.
However, Bill C-30 – the Fair Rail for Grain Farmers Act – which was introduced to Parliament on March 26, does not go far enough to address the serious breakdown in grain shipping capacity on the Prairies, according to WCWG president Levi Wood, who released a press release on the matter late last week.
“These measures do not adequately tackle the backlog in grain shipments,” said Wood. “They also do not position our industry to meet the long-term needs of prairie farmers or our customers.”
The bill, tabled late last month, would mandate Canada's rail companies to ship a million metric tonnes of grain per week – more than double what they were shipping even a few weeks ago – according to Pierre Lemieux, parliamentary secretary to the minister of agriculture, who spoke on the bill in the House of Commons on Friday, March 28.
The WCWG is disappointed the minimum grain shipping requirement remains fixed at one million tonnes per week from April 7 to Aug. 3, 2014, said Wood.
This means the grain carryout on Prairie farms will exceed 20 million tonnes heading into this year's harvest, resulting in the continuation of severe price reductions for the foreseeable future, he said.
The group had asked for the minimum grain shipments to be increased to 13,000 railcars per week – or about 1.2 million tonnes – instead of 11,000 railcars per week. The reason being that the backlog of grain orders is currently over 68,000 railcars, representing six million tonnes of grain.
“Grain prices to farmers will remain artificially depressed until the backlog is cleared up and the elevator system has the capacity available to offer competitive bids for our grain,” he added.
“As long as the elevator system remains plugged, price offers to farmers are likely to remain below market value.”
The WCWG had proposed several recommendations to expand rail shipping capacity in the longer term, including an incentive-based revenue cap and measures that would allow shortlines and other rail operators to add capacity to the network when CN Rail (CN) and CP Rail (CP) are unable or unwilling to meet customer demand.
These improvements were not included in the legislation.
The WCWG sees some positives in the legislation, including the proposed increase in inter-switching distances, and the potential for incorporating meaningful performance provisions, including reciprocal penalties in service agreements negotiated between grain shippers and the railways.
The implementation of a dispute resolution process in the Canada Grain Act should also help improve grain company contracts with farmers, although the WCWG notes that having adequate shipping capacity and restoring good working capacity throughout the elevator system is the best means of restoring balanced contractual relationships between farmers and grain companies.
“Having plenty of competition for our grain is the best way to improve contract terms,” said Wood. “That can't be achieved until we fix the underlying problems in our rail transportation system.”
The group will continue to press for changes in legislation that meet the needs of farmers and our customers and positions Canada to once again be a reliable supplier of grain in world markets, he added.
The massive backlog comes after a record harvest last fall, amounting to 76 million tonnes – 50 per cent more than average, according to Wild Rose MP Blake Richards, who spoke in a recent press release.
“As farmers know, shipping grain has proven particularly difficult this year, with a large backlog reported across the Prairies,” said Richards.
“Our government took swift action, ordering that the railways (CP and CN) each carry 500,000 metric tonnes of grain per week until June 7, or face stiff penalties of up to $100,000 per day. That was just the first step.”
Under Bill C-30, that deadline was pushed back to Aug. 7 of this year, and moving forward, the railway companies will be required to provide more timely data on grain movement, with the government having ability to mandate shipping volumes more efficiently if necessary, he added.
“Our ag sector now employs more than 585,000 people, and our country is the world's fifth-largest exporter of agri-food products….As our government continues working to open markets in Europe, Asia, and around the world, we see no reason why this growth will not continue,” said Richards.
“Of course, to take full advantage of these opportunities, we must ensure our ability to get our products to these new markets.”
Because of better technology and farming practices, the growth in yields will likely continue, which means the government needs to keep a close eye on shipping to ensure that producers are getting their product to buyers both at home and abroad.
Ed Greenberg, spokesperson for CP, told the Gazette Thursday that the company is in compliance with the Fair Rail for Grain Farmers Act.
“CP's grain movements have continued to be at strong levels in compliance with the federal government's order in council,” said Greenberg. “We are following the order. With the improved weather our railway moved 15 per cent more Western Canadian grain in February and 20 per cent more in March than in the previous year.
“We are continuing to respond to our shippers' requirements and we continue to be at strong levels of moving of Canadian grain.”
"As farmers know, shipping grain has proven particularly difficult this year, with a large backlog reported across the Prairies."Blake Richards,Wild Rose MP
