Legislation to improve grain shipped by rail isn’t perfect, but it still needs to be passed and made law before Parliament breaks for the summer, say farmers, grain companies and processors.
“Even though it (Bill C-49, the Transportation Modernization Act) isn’t perfect we’re clearly of the strong view that we need to lock these change in place otherwise we could get paralyzed in the pursuit of perfection and just never get any legislative change,” Wade Sobkowich, executive director of the Western Grain Elevator Association told reporters during a telephone news conference May 1. “We feel this is good enough to lock it into place and then time will tell.”
Sobkowich, along with Grain Growers of Canada president Jeff Nielsen and Chris Vervaet, executive director of the Canadian Oilseed Processors Association (COPA), praised Transport Minister Marc Garneau and the Senate Transport committee for ultimately delivering an amended bill that reflects what they’ve been seeking.
Given this crop year’s grain transportation backlog and the one in 2013-14, the three said it’s critical C-49 be law before the start of the new crop year Aug. 1.
“Again, we are calling on all Parliamentarians of all parties to not delay in getting C-49 passed,” Sobkowich said. “We cannot afford another year like this one. We’re anxious to turn the page to the next era of customer shipper relations in the rail sector. Accountability is the cornerstone of that relationship.”
The cost of the current backlog hasn’t been tallied because it continues, Sobkowich said. The 2013-14 backlog cost WGEA members $90 to $100 million due to vessel demurrage, contract penalties and defaults, he said.
There were also unquantifiable costs such as damage to Canada’s reputation as a reliable grain supplier.
Farmers cost depend on location and how bad rail service was, Nielsen said. When farmers can’t deliver grain they don’t get paid. Cash flow problems may force some farmers to borrow more money to pay bills.
Unfortunately whatever you have to apply for greater financing it generally comes at a higher cost,” Nielsen said.
When railway service is poor sometimes canola crushing plants, which operate 24/7, have to shutdown, Vervaet said.
“A larger facility in the West processing canola can do 3,000 tonnes a day,” he said. “If a facility is down for a day — and that has happened this year, and in 2013-13 as well — that amounts to about $2 million a day in lost production.”
If the amended C-49 becomes law it will compel the railways to reach level of services agreement with grain companies and make the railways subject to financial penalties when they breach the agreements.
More elevators and processors will also be able to take advantage of new interswitching rules designed to allow competing railways to service them even though they aren’t located on that company’s track.
The Canadian Transportation Agency (CTA) will also have more power to investigate rail transportation issues, but it’s not clear if the CTA will first have to get the Transport Minister’s approval, Sobkowich said.
“So it’s a gray area right now if whether the agency can can initiate an investigation on its own but needs ministerial approval before taking action, or whether the agency requires the minister’s approval before starting an investigation,” he said. “Either way I think we’re we’re comfortable with that…”
If C-49 becomes law as shippers and farmers hope, it could take five or six months before service contacts between the railways and shippers are in place, Sobkowich said.
That’s why it’s important to get the legislation into law quickly, he added.
“We need to do a lot of work in order to get the provisions enacted in a practical way,” Sobkowich said.