Bill C-49, the Grain Modernization Act, has passed third reading in the House of Commons and now goes to the Senate for debate.
Farmers and grain companies hope if it becomes law the railways will be obliged to sign level-of-service contracts backed by financial penalties.
“It’s clear that the federal government has listened to our industry,” Alberta Wheat Commission (AWC) chair Kevin Auch said in a news release Nov. 2. “With Canada’s agriculture sector working to increase its export capacity, AWC has pressed hard to ensure a more efficient and accountable transportation system.
The AWC wants the Senate to make passing C-49 a priority, especially now when CN Rails grain service has slipped.
“While we didn’t get some key amendments we had asked for, including improvements to long haul interswitching, the legislation is still a major step forward for farmers,” Auch said.
The Western Grain Elevator Association (WGEA) has a similar view.
“We’re going to see if we can appear before the Senate… and inform it about some of the areas where the bill may not accomplish what was intended,” WGEA executive director Wade Sobkowich said in an interview Nov. 3. “But at the end of the day… we need to get it passed so that we can begin using the provisions.”
The bill would’ve been better if grain companies had been allowed to continue to move grain to a competing railway within 160 km of an interchange. That was an emergency measure introduced in 2014 to stimulate railway competition. It expired July 31.
Extending interswitching to 160 km from 30 worked, Sobkowich said, and it would’ve helped now if it was in place.
“The grain companies would be trying to get as much grain switched over to CP (from elevators on CN lines) as possible for the east-west movements and potentially to Burlington Northern as well for anything going south (to the United States),” he said.
Under C-49, long haul interswitching replaces extended interswitching, but it’s flawed because any elevator or processor within 30 km of an interchange isn’t eligible because they can do the short interswitch, Sobkowich said. The problem is that interchange may not be on a railway that services the grain company’s customer to the east, west or south. Under long haul interswitching a grain company has access to the nearest interchange that goes in the direction the shipper wants.
“Our concern is disadvantaging facilities that are either dual served, or within 30 km of an interchange that is no use to them,” Sobkowich said.
The WGEA is also disappointed C-49 does not add soybeans to the list of crops included under the maximum revenue entitlement (MRE). That means the railways can charge whatever they want to ship soybeans.
Under the MRE the railways can charge what they want to move grain, but the total revenue earned must not exceed an amount determined annually by the Canadian Transportation Agency, based on a formula that gives the railways a fair return and is adjusted to account for increased rail costs and the volume of grain moved.