The Transportation Modernization Act has been a long time coming.
“For more than a decade the members of the WGEA (Western Grain Elevator Association) have worked alongside farmers and the full grain value chain to build a consensus around long-term solutions to the chronic capacity and performance efficiencies of the rail freight system,” WGEA executive director Wade Sobkowich said May 24 at an elevator near Stonewall, Man., celebrating the act becoming law. “Today that work has paid off.”
Morris farmer and Grain Growers of Canada vice-president Art Enns called it “a momentous occasion.”
The railways, which are capital-intensive businesses, are critical to the Canadian economy. As a result governments tread lightly for fear of discouraging investment.
The railways have a strong lobby in Ottawa too.
Western Canadian farmers are often divided, including in the past on grain transportation. But not this time.
“It’s just an indication of what you can achieve when everyone works together for a common cause,” Agriculture Minister Lawrence MacAulay told the event.
The Senate transport committee played an important role too. In hopes of quick passage, the grain industry settled with what the government proposed initially, even though some important features were missing. But the Senate said it would propose amendments anyway and asked for industry input.
The grain sector has been working for years to get legislation to force the railways to act in a more commercial way. But it came to a head after the 2013-14 grain shipping backlog, which cost farmers and grain companies millions of dollars in reduced and lost revenues.
It was so bad the former Conservative government ordered the railways to ship a certain volume of grain weekly or be fined.
The government introduced a review of the Canada Transportation Act a year early in 2014. A report released in early 2016, met with a mixed reaction, recommending phasing out the maximum revenue entitlement (MRE) and ending extended interswitching.
The latter was introduced in 2014 to create some railway competition for captive grain shippers.
The former was introduced in 2000 to protect farmers from the railways charging what the market would bear to ship grain.
Both the MRE and a form of interswitching are part of the new act. The grain sector supported both.
Western farmers and the railways have been fighting as long as they have existed.
Legislation giving farmers the right to load their own grain into rail cars — what we call producer cars — was introduced in May 1902 as an amendment to the Manitoba Grain Act of 1900.
It was sparked when elevator companies and the railways conspired to prevent farmers loading cars themselves. The amendment introduced the ‘Car Order Book’ — allocating cars on a first come, first served basis.
The Canadian Pacific Railway ignored the law, spotting seven cars for platform loading by farmers at Sintaluta, Sask., while the elevators received 60. The Territorial Grain Growers’ Association representing farmers, took the CPR to court and won.
Farmers and the railways fought for decades over the Crow rate, which when implemented in 1925 was compensatory, but wasn’t by the 1960s.
The railways stopped investing in grain shipping. The federal government paid to upgrade deteriorating branch lines, many of which were later ripped up and sold by the railways.
The Canadian, Alberta and Saskatchewan governments and wheat board also bought hopper cars for the railways to use. Many are nearing the end of their lifespan.
Crow critics said the subsidy discouraged efficiency in grain handling and transportation and distorted farm production, encouraging farmers to grow more grain for export than would otherwise be the case.
They also said the Crow discouraged processing and livestock production.
In 1984 the Western Grain Transportation Act replaced the Crow. Farmers paid a share of grain freight rates, plus inflationary costs above six per cent. Ottawa paid a portion of the cost of grain shipping directly to the railways — as much as $721 million some years.
Farmers fought about how the subsidy should be paid. It went to the railways, but some wanted it paid to grain growers.
The fight divided farm groups and even led to splits within groups, including the Manitoba Farm Bureau, ultimately causing its demise.
The debate proved moot. The subsidy ended in 1995 with a one-time $1.6-billion payment to western Canadian farmers.