Regulating Railways Finds Rare Consensus

The Canadian Wheat Board (CWB) and Western Canadian Wheat Growers Association (WCWGA) can agree on one thing – more regulation is needed to improve railway service for farm commodities.

The Grain Growers of Canada, Canadian Canola Growers Association and the Western Grain Elevators Association say the same.

All have sent that message to a panel commissioned by Transport Canada to review railway service in Canada.

The three-person panel issued an interim report last month and asked the public for its comments by Nov. 8. The panel hopes to submit its final report and recommendations to the federal government by year’s end.

In its interim report the panel, which has been researching railway service for two years, concluded it’s inadequate.

“In the panel’s view, the major cause of rail service problems is railway market power, which leads to an imbalance in the commercial relationships between the railways and other stakeholders,” the interim report released Oct. 8 says in part. “This, in turn, reduces the railways’ accountability for performance. As a result railways do not always face the consequences that come from offering poor service that occur in other sectors in which competition is more prevalent.”

Two of three panelists recommended the federal government prepare legislation to rein in railway market power, but implement it in 2013 if railway service hasn’t improved by then.

A third panelist opposed the recommendation saying the threat of legislation would discourage grain shippers from negotiating in good faith to improve rail service.

But the CWB, WCWGA, GGC, CCGA and WGEA all want legislation now.

“The wheat growers maintain that effective and long-lasting improvements in rail service will not occur unless there is ‘strategic public intervention,’” the WCWGA said in its response to the panel.

The GGC and CCGA say they are “frustrated” by the panel’s failure to recommend “immediate, concrete actions.”

The two groups also want the panel to recommend Ottawa establish an independent body to monitor railway performance – something the CWB has also recommended.

“The unpredictability of our shipping environment is causing unnecessary risk margins to be taken by exporters, which come directly off our grain prices,” GGC president Doug Robertson said in a news release. “We work hard as farmers to produce the grain and it is incredibly frustrating when we don’t see it get to market in a timely manner.”

CWB spokeswoman Maureen Fitzhenry said having an independent body to monitor and adjudicate disputes would be a big improvement. Now the only option when a grain shipper gets poor rail service is to launch a level-of-service complaint with the quasi-judicial Canadian Transportation Agency. It’s complex, expensive and time consuming even for a large organization like the CWB, she said.

“We want a timely dispute resolution system,” Fitzhenry said.

In separate emailed statements last month, Canadian National Railway and Canada Pacific Railway said more regulation isn’t needed.

“CP believes that commercial principles coupled with a stable regulatory regime is the best approach to promote supply chain co-ordination and investment,” wrote CP spokesman Mike LoVecchio.

More regulation would undermine railway investment in improved service, spokesman Mark Hallman wrote.

“Railways are crucial to the Canadian economy and its competitiveness in global markets,” he wrote. “And that economy cannot afford the risk of misguided and unwarranted rail regulation…” [email protected]

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– WCWGA

Thewheatgrowersmaintainthat effectiveandlong-lastingimprovements inrailservicewillnotoccurunlessthere isstrategicpublicintervention.’”

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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