Canada’s railways are doing an “adequate” job moving this year’s record crop to market, Agriculture Minister Gerry Ritz told an industry conference last week.
“The increase in volume means the logistics system must fire on all cylinders to ensure farmers’ products are making it to market on time. To date our system is proving effective in handling the workload,” Ritz told the Canadian Seed Trade Association’s semi-annual meeting.
But he said the government will continue to monitor the situation through its Crop Logistics Working Group.
However, owners of plugged grain elevators disagree.
The 5,000 cars a week CP and CN Rail are shipping to export ports is close to their best historical performance, Western Grain Elevator Association WGEA executive director Wade Sobkowich, said in an interview Nov. 15.
“But when you compare it to what the industry needs, then it falls short of what we need. So we’re in the process of communicating our issues to the ministers of transport and agriculture.”
As of week 16, CN had committed to deliver 5,289 cars, but orders for almost 8,400 cars went unfilled and added to the thousands of unfulfilled orders from past weeks, Sobkowich said.
CP Rail is even further behind, he said.
Country elevators are, on average, 92 per cent full across the West, while export terminals have lots of space, Sobkowich said.
After speaking to the Canadian Seed Trade Association’s semi-annual meeting in Winnipeg Nov. 13 Ritz told reporters the railways could always do better. But when asked if they’re doing a good enough job Ritz replied: “I think it’s adequate to this point.”
When asked about the growing backlog of grain shipments Ritz said: “They’re running at peak capacity. I’m not an apologist for the railways but I do agree with Claude Mongeau (CN president and chief executive officer) when he says putting more cars on the freeway during rush hour really doesn’t make it more efficient.”
Sobkowich said that since most grain shippers are captive the railways have no incentive in surge capacity, because they are guaranteed to get the traffic anyway.
The federal government promised its new legislation forcing the railways to give shippers service agreements would address rail service complaints. But Sobkowich said grain companies haven’t signed agreements because the legislation lacks teeth.
That was news to Ritz. If the legislation isn’t effective the government is willing to look at it, he added.
Ritz said the cap on how much the railways can earn shipping grain could be a factor.
“I’ve never been a cheerleader for the revenue cap,” he said. “I think in a market-driven economy that’s something that needs to be looked at. When you’re looking at competing with oil, with potash, with coal, with timber on the rail lines and then you have a cap on one commodity, guess which ones the railways aren’t going to haul?”
But Sobkowich defended the cap, which some say should be called an “entitlement.”
“I think removing the revenue cap is a very risky proposition because when we look at other industries that don’t have a revenue cap they’re negotiating with the railways to get good rates and to get better service. We’re negotiating with the railways to get better service,” he said.
Western Canadian general farm organizations are also worried about the grain backlog, Doug Chorney, president of the Keystone Agricultural Producers (KAP), said in a news release. KAP, the Agricultural Producers of Saskatchewan, Alberta Federation of Agriculture and the British Columbia Agriculture Council discussed grain transportation and other issues when they met Nov. 14 in Abbotsford, B.C.
“This is unacceptable,” Chorney said. “Farmers have been asking for better rail service basically since farming began on the Prairies and now this situation underlines the fact that nothing has really changed.”
Ritz said he is loath to add more regulations.
“Unless someone wants to start laying double track across Canada, which I don’t see happening in the near future, we have the system that we have. When I compare it with others around the world, it works as well as can be expected. There’s (sic) always more things that can be done.”
Examples include shipping more through Churchill and the United States and processing more grain in Western Canada, Ritz said.
During his formal address Ritz said the United Nations Food and Agriculture Organization predicts the world’s farmers will have to produce more than one billion tonnes of cereal grains over the next 40 years to feed the growing population.
Sobkowich agreed but he said a properly functioning transportation system is equally pivotal.
“We can’t be left with product in our system and on our farms year over year. It’s not going to do,” he said.