After decades of complaining about poor rail service for grain, western farmers and shippers say Bill C-49, the Transportation Modernization Act, is close to what they’ve been asking for.
Wade Sobkowich, executive director of the Western Grain Elevator Association (WGEA), which represents Western Canada’s major elevator companies, said it includes most of the changes it requested.
“While not perfect it’s really a big step in the right direction and is going to change the playing field for not only grain shippers, but all shippers in Canada.”
The bill includes provisions for railway penalties if they fail to meet commitments.
The maximum revenue entitlement (MRE) or ‘revenue cap’ on railway charges will remain, but will be modified to encourage railway investment.
Extended interswitching (allowing railways to use competitors’ tracks) will be replaced by a new option — long-haul interswitching.
While the railways have concerns, especially about long-haul interswitching, they welcomed changes to the MRE.
“The proposed changes to the maximum revenue entitlement should promote hopper car investments and that is good for the farmer, good for CP and for all Canadian exporters,” CP Rail president and chief executive officer Keith Creel said in a news release.
It said CP believes the proposed legislation to be “balanced and focused on what service level is reasonable given the specific facts and circumstances.”
Broad industry support
A long list of farm groups from the Keystone Agricultural Producers (KAP) and Canadian Federation of Agriculture, to the Western Canadian Wheat Growers Association and Canadian Canola Growers Association, say the bill, dubbed the ‘Fair Rail for All Act,’ should result in better service.
Shippers and farmers are getting the legislation they asked for because they had one voice, Sobkowich said.
KAP president Dan Mazier agrees. While not surprised by the legislation, Mazier said he’s pleased.
“This issue has been going on for decades,” he said in an interview.
The bill could have turned out differently. The former Conservative government appointed a panel to review changes to the act. Most farmers and shippers criticized its recommendations for not better balancing rail power.
The report also recommended phasing out the MRE.
Despite industry support for the bill, many say the proof will be in how the legislation works.
“We won’t know the outcome for sure until it is tested,” Sobkowich said.
“Time will tell how effective this is, but it certainly seems, on the surface, to provide the shippers with the tools they need to get grain to their customers in a timely way.”
Meanwhile, organizations, including Pulse Canada, want current legislation, which expires July 3, extended until C-49 is law.
The government hopes C-49 passes quickly.
“In the interim, farmers and grain shippers will continue to be protected by shipper remedies and the maximum revenue entitlement, and the government will closely monitor the performance of the grain-handling and transportation system,” a Transport Canada official said in an email. “If a similar disruption (to grain shipping) as occurred in 2013-14 were to emerge, the government would take action.”
The Crop Logistics Working group is being revamped, Agriculture Minister Lawrence MacAulay also announced last week. The committee, made up of grain industry leaders, representing farmers and shippers, exchanges views and identifies supply chain challenges and opportunities.
MacAulay also announced another three years of funding for independent monitoring of the grain-handling and transportation system.
Poor rail service came to a head during the 2013-14 crop year when a massive backlog in grain shipping prompted the Conservative cabinet to order the railways to meet a weekly shipping target or face fines.
Several agricultural economists estimated the debacle cost grain farmers several billions of dollars due to a wider basis — the difference between grain prices at country elevators versus at port.
The railways blamed the coldest winter in 100 years and a record harvest.
The incident prompted the federal government to launch a scheduled review of the transportation act a year early.