June 1, 2017

Unreliable grain transport – the case for good policy

Art Enns

This week we narrowly avoided a labour disruption at CN Rail. Once again, shippers in Canada were left in limbo on the future reliability of one of our two major railways. The panic that strikes the shippers in a situation like this is a symptom of the inherent problems with our rail system. What should be a mutually beneficial partnership is one that is strongly impacted by the fact that there are only two major railways in Canada. They have to work for their own commercial interests which does not always work in the favour of grain shippers.

This came to a head in 2014 when a combination of high yields, competition for trains, and severe weather led to backlogs in grain shipping that cost farmers millions in lost revenue. Importantly, the backlogs at port also put a dent in Canada’s reputation as a reliable grain exporter. As an export dependent industry, any damage to our ability to ship product on time has an effect that can be felt across the agriculture industry.

I myself saw this first-hand when east-west rail routes were prioritized and I was unable to ship my oats south to the US where our high-quality product was in high demand. Three years later we have yet to re-capture market share.

All this to say, when farmers hear about potential disruptions to rail service, even early in the grain year, we get worried. Grain is shipped all year and any delays now will create a further backlog later during harvest.

Unfortunately, it took government intervention in 2014 to get our grain moving. Bill C-30, the Fair Rail for Grain Farmers Act put in place mandatory weekly shipping volumes and interswitching to allow shippers to change lines and increase competition. The success of these emergency measures demonstrates how effective good government policy can be.

The introduction earlier this month of Bill C-49, the Transportation Modernization Act, proposes sweeping reforms of all transportation industries in Canada. Significantly, the changes to grain transportation reflect many of the proposals put forward by GGC and other industry groups. Seeing reciprocal penalties, data transparency and sharing, and the maintenance of the Maximum Revenue Entitlement (MRE) included in this legislation is a significant first step towards meaningful change for the long term.

At the end of the day, all farmers want is a strong commercial relationship between equal partners. It’s just good economics.

Art Enns
Vice President, GGC

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