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Bill C-49: Helping the railways farm the farmers

This legislation is flawed and will deregulate railways by stealth

Here we go again! Some Prairie farmers cannot ship their grain. Grain companies and their friends are blaming the railways for not getting the grain to port. After months of railway lobbying, the federal government is pushing new transportation legislation, claiming Bill C-49 will punish the railways for neglecting grain shipments.

Yet this legislation effectively deregulates those same railways. The railways are quiet and the grain companies are happy. Anyone paying attention should notice a lot wrong with this picture.

  • Read more: Get grain moving again, KAP says

Is it really true that Prairie grain is not moving to port? If you believe the grain companies and their friends in the Ag Transport Coalition, the railways are ignoring their rail car orders. Yet, the more grain the railways haul, the more money they make, so this claim does not meet the smell test.

Measuring grain movement is a fairly simple task. The Canadian Transportation Agency (CTA) and the independent grain monitor, Quorum Corp., are objective sources of information. Every December the CTA audits the railways and looks at how much export grain they move annually. As of Dec. 31, 2017 the railways moved 43.2 million tonnes of grain to port, up 6.9 per cent compared to 2016 — more grain than ever. Not bad for a fall and early winter with record rain and snow in the six mountain ranges between the Prairies and the West Coast!

On March 6, 2018 Quorum reported, “Year to date western Canadian shipments from port terminal elevators at Week 30 are five per cent lower than the same period last year and one per cent lower than the five-year average.” While almost rounding errors, one per cent less is still a lot of tonnage, however, remembering India imposed high tariffs on Canadian pulse exports, it is no surprise overall shipments are slightly lower.

The numbers show the railways are doing a good job of moving grain to port. That has not changed in the last three months, let alone the past year. Is the constant buzz from some farm groups that should know better simply a reaction to individuals who can’t deliver to their local elevator? Since the system is delivering enough grain to port, we must conclude that grain companies are ordering cars based on priorities other than meeting local farmers’ requirements.

Why? Grain companies can use local car shortages as an excuse to pay farmers less for their grain. They get away with it because almost two-thirds of Prairie delivery points are served by just one grain company, making farmers captive to the company at the closest delivery point.

More than one farmer has heard something like the following from an elevator agent shedding crocodile tears: “We’re so sorry the price is down and you’ve heard how the railways are not moving the grain, but I’ve got a little space in my elevator if you need the money and can live with the higher basis.” Dazzled by the pseudo-economic term “basis,” the farmer sells for less and the grain company pockets the difference.

When the farmer-controlled Canadian Wheat Board (CWB) was responsible for selling grain it optimized the system to return the maximum amount of money to farmers and organized grain shipments to maximize the shipping capacity of the overall system. The extra money was passed back to farmers. In the last nine years of the CWB-controlled system, demurrage charges were near zero and usually offset by despatch earnings for getting ships loaded ahead of time.

Without the CWB, the grain companies are in a “no lose” game with Prairie farmers captive to their delivery points. They use their local monopolies to maximize their own profits while blaming the railways and charging farmers basis for any extra costs they might incur.

By accepting the blame for plugged elevators, railways position themselves to lobby for further deregulation. Thanks to Ottawa, they may well be successful.

With Bill C-49’s amendments to the Transportation Act creating mile-wide loopholes for the railways, the idea any grain company is going to offend the railways with a reciprocal penalty or court case when they can just take it out of the farmer’s grain cheque is beyond stupid — especially when 90 per cent of Prairie delivery points are serviced by just one railway.

Instead of deregulating the railways via Bill C-49, the government should be clipping the grain companies’ market power over farmers through regulation.

Bill C-49’s amendments to the Transportation Act do nothing but add the railways to the list of businesses “farming the farmers.”

Since the CWB was killed, the grain companies are smiling all the way to the bank and the amended Transportation Act will soon let the railways join them — unless the Senate provides sober second thought.

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