The federal government is extending emergency grain-shipping provisions for another year.
The provisions, which included weekly mandatory minimum grain-hauling levels, compensation to shippers for failing to provide service and extended interswitching that encourage competition, were set to expire August 1 with the end of the current crop year.
Transport Minister Marc Garneau and Agriculture Minister Lawrence MacAulay said in a joint statement the move will allow the government more time to consult stakeholders, including farm groups and “… allow the various participants in the commodity and railway system to plan for the upcoming year under predictable conditions.”
Gary Stanford, Grain Growers of Canada president, welcomed the move because it will give “both government and producers appropriate time to reassess the bill, while a long-term solution for improving Canada’s rail transportation system is developed.”
Cereals Canada added its voice to the chorus of approvals, with president Cam Dahl noting the ability to reliably move grain to market is a key part of Canada’s reputation as a supplier.
“The interswitching provisions have proven to be an effective tool for shippers,” Dahl said. “The provisions were brought into place on an urgent basis during the transportation crisis of the 2013-14 crop year. It is appropriate that these measures remain in place until we have a permanent solution to the conditions that led to that crisis.”
C-30 had extended interswitching rights up to 160 km for grain and all other commodities moved by shippers in the three Prairie provinces.
Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul. The CTA otherwise allows shippers to use interswitching for only up to a 30-km radius.
Pulse Canada, which represents Canada’s pulse producers and processors, had recently said the “most common” freight rate cut, in areas where expanded interswitching is available, has so far been around 20 per cent.
About 150 grain elevators on the Prairies are able to make use of interswitching with the 160-km radius, up from just 14 under the 30-km limit, the previous government said after introducing C-30 in 2014.
The government will have to pass a motion through the Commons and the Senate before the summer recess in June to make the postponement official. The provisions were enacted in 2014, after a record-breaking crop followed by a brutal winter threw the Prairie grain transportation system in chaos.
The one-year delay will also give Garneau badly needed time to study how to respond to the sweeping recommendations in the report from David Emerson on the Canada Transportation Act review.
A wide array of Prairie farm groups has been calling on Ottawa not to implement Emerson’s grain recommendations.
Garneau said the government needs more time “to fully assess the freight rail transportation system for all commodities. It wants to develop “a long-term plan for the sector.”
CN said the extended provisions are burdensome regulations that are unnecessary. They “were never justified and should sunset this August,” as Emerson recommended.
“CN hopes the government will see the wisdom of extinguishing the unnecessary provisions,” the company said in a media release. It warned continuing extended interswitching will discourage railway investment in branch line networks.
CN said it “transported record volumes of western Canadian grain in the 2014-15 crop year – more than five per cent greater than during the record 100-year crop year of 2013-14. CN is proud of its grain-hauling achievement, and the nation’s grain supply chain remains fully in sync in all corridors.”
However, Stanford said extended interswitching provides Canadian grain producers with alternative options for rail services. The rule has already made for more competitive freight rates and service, and has directly benefited farmers, he said.
“Not only have farmers noted reduced costs, they have also gained more leverage in getting rail car capacity where needed,” said Stanford. “Bill C-30 also ensures producers will be reimbursed for any expenses incurred as a result of the railway company’s failure to comply with its level-of-service obligations, giving Canadian grain farmers a more predictable and stable source of revenue.”
Henry Vos, director with the Alberta Wheat Commission, said “long-term solutions to Canada’s grain transportation system continue to be important for farmers.” The Emerson report “fails to provide specific recommendations that farmers feel will improve Canada’s transportation system.”
Cereals Canada’s Dahl added that the group felt the critical issue that needs to be addressed through any future solutions was the lack of any true commercial accountability for performance.
Chris Warkentin, Conservative agriculture critic, blasted the government for failing to indicate which provisions the Liberals intended to support, if any.
“This may be more of the same Liberal record on Canadian agriculture: all talk, but no action,” he said in a release.
He added, if the Liberals wish only to extend C-30, they could do so simply through an order-in-council rather than take a new resolution through months of discussion and debate in Parliament addressing specific aspects of the bill.
The question, he said in an interview, is “what specifically do (the Liberals) intend to change (from C-30) and are the changes they envision going to address the needs of farmers and farm families?”
(with files from Dave Bedard)