The state of grain transportation dominated the recent Western Canadian Wheat Growers Association annual convention in Ottawa last week with producers calling on Agriculture Minister Gerry Ritz to take action.
In a brief presentation to the convention, Ritz said there had to be more accountability in the grain transportation network. Afterwards delegates peppered him with calls to end the revenue cap, consider running rights or require the railways to dedicate more locomotives and hopper cars to grain movement.
Many delegates complained the railways were only focused on measures that improved shareholder value with service to customers falling far behind.
Ritz said he would be meeting in mid-February with a committee of farm, grain company and railway representatives charged with finding a way to increase grain movements so Canada isn’t burdened with massive grain stocks next summer. “We need a lot more knowledge about what’s happening in the grain transportation system. We have to dig deeper than the revenue cap.”
Don Solman, vice-president of finance with Richardson International said grain companies can’t make sales if they can’t deliver.
“Rail is a big part of the pipeline and we have to make it perform better than it is today,” he said in an interview. This far, the railways “haven’t lived up to their obligation.” Grain companies “could sell more if the railways could deliver it. We can’t commit to sales because of the lack of service.”
The grain companies are being hit with hefty demurrage bills for ships forced to wait on the West Coast for grain to arrive, he added. “We’re working with the other companies to get vessels loaded as fast as we can.”
Initiatives by the grain industry to find short- and long-term solutions to the delays are welcome because “we have to become more efficient,” he added. “We need to find a way to deal with the situation the industry faces.”
Pressed by NDP MPs in question period about lost sales and hefty ship demurrage bills, Ritz said the railways “have dropped the ball. Going forward on this, through the winter season, we look to them to take up the slack.”
One frustration for the farm representatives and others in the controversy is the silence of Transport Minister Lisa Raitt and the rest of the Harper cabinet on the issue. Raitt was quick to impose new safety rules on the railways after the Lac-Megantic disaster last summer but has said nothing or done nothing about the grain transportation fiasco, farm representatives complain.
Transport Canada has the power to order the railways to take action while Agriculture Canada has none, they add. Neither she nor her parliamentary secretary participated in a late-night emergency debate in the Commons about the grain transportation problems.
Kicking off the emergency debate, Liberal farm spokesman Mark Eyeking said the Rail Freight Service Act passed last year was supposed to create balance between shippers and the railways but the grain situation shows the law doesn’t work. “Many Prairie farmers agree that the legislation needs to be amended to make it easier to hit the railroad companies with fines over these transportation bottlenecks.”
The railways claim to be providing 5,000 cars each a week. “However, that is not even half as much as we need… there are between 30 and 40 vessels waiting to be loaded in Vancouver alone,” he said. “We can see that there is a big problem. We have the crop. We have the customers. We have the ships. However, it is just not getting there. Canadian-based grain companies have been charged more than $20 million in fees for delays at the Port of Vancouver since August, according to the Western Grain Elevator Association.”
Malcolm Allen, the NDP farm spokesman, noted that when Hunter Harrison took over at CP last year, the railway “got rid of 11,000 cars and 440 locomotives. He took capacity out of the system right before a bumper crop. CP made more money, but it left farmers stranded.”
Kevin Lamoureux, Liberal MP for Winnipeg North, said the delays will amount to “a 30 per cent, 40 per cent, 50 per cent loss of revenue. Those are incredible losses. Let us imagine having our own business get hit with a 30 per cent to 60 per cent loss of revenue, and the impact that is going to have.”