Aaron Stein joins the AFA from a career in agriculture and business, holding leadership roles across several sectors.

He founded and managed Alberta’s first commercial composting facility, and led marketing initiatives at Marketing Specialties, a firm that concentrated on the agriculture sector. He also managed a portfolio of biotechnology products tailored for agriculture.

“Aaron’s combination of leadership, business acumen, and a passion for agriculture makes him the perfect fit to lead the AFA,” said Lynn Jacobson, AFA president, in a media release. “We’re confident his expertise will be crucial in advancing our work in representing Alberta’s farmers and ranchers.”

One of Stein’s immediate priorities will be overseeing the development of a comprehensive five-year strategic plan for the AFA. This plan will guide the organization’s efforts to tackle important issues such as tariff threats, climate change, water security, farm business sustainability, labour shortages, and succession planning. As a member of the Canadian Federation of Agriculture (CFA), the AFA will continue to advocate for Alberta’s agricultural sector on both provincial and national platforms.

“I’m committed to ensuring that Alberta’s agricultural producers have a strong, united voice advocating for their needs, both locally and across Canada,” Stein said in the media release.

In addition to their new director, the AFA’s annual meeting will be held virtually on March 3, at 7 PM. Pre-registration is required.

The post Stein appointed to manage AFA appeared first on Manitoba Co-operator.

That’s the message Lynn Jacobson, president of the Alberta Federation of Agriculture (AFA) is trying to spread.

“This is coming and it’s going to cost you money,” Jacobson said in an interview July 23. “You should pay attention. What do you want to do?”

Last fall the federal government began consulting farmers on two new royalty options — trailing and end point — designed to collect more money from farmers to help private and public cereal plant breeders develop improved varieties.

The seed trade says either option will also encourage foreign, private investment into developing new varieties for Canadian farmers making them better off.

Why it matters: These proposals will mean farmers pay more towards the cost of new varietal research and could force farmers to pay a fee to save and reuse their own seed.

There was some opposition to both options, prompting some farmers to suggest others should be explored.

No decisions are likely before the federal election Oct. 21, giving farmers more time to learn about the options and provide feedback, including through a seed royalty survey launched July 15 by AFA and its sister general farm organizations — Keystone Agricultural Producers (KAP) and Agricultural Producers of Saskatchewan (APAS).

Meanwhile, the federal government has been asked to do an economic analysis of the royalty options for oats, barley and flax.

“So a decision has been taken to delay the online consultation (originally scheduled to have begun this spring) until AAFC (Agriculture and Agri-Food Canada) has an opportunity to conduct that economic analysis and then share it with the stakeholder community,” a government official said July 23.

A trailing royalty would compel farmers to pay an annual fee to plant seed saved from either crop.

An end point royalty would oblige farmers to pay a fee on included crops at the point of sale.

The AFA, KAP and APAS have been discussing other options. Jacobson shared some of the details at a seed industry meeting in Whistler, B.C. earlier this month.

Funds collected from an end point royalty would be distributed to private and public breeders, but a percentage would be managed by farm groups, he said last week in an interview.

Jacobson stressed that despite this newly proposed model, general farm organizations remain open minded about how to proceed.

“We’re trying to stay neutral on it,” Jacobson said. “We’re not suggesting our model at all. We’re asking farmers, ‘what do you think?’

“This is just a suggestion at this point in time. We really want to consult with producers and get more input. That is one thing that has been lacking.”

However, AFA, KAP and APAS have agreed on six principles for the option that’s used. They are as follows:

• Maintains and enhances public research, development and finishing of new varieties.
• Preserves or enhances current public funding.
• Is transparent with producer involvement.
• Maintains the privilege of farm-saved seed.
• Systems are administered in a fair and equitable manner.
• Ensures producers can remain competitive in the world marketplace.

Despite consultations in the fall, as well as presentations at Ag Days and CropConnect early this year, Jacobson said many farmers are still not well informed about what’s being proposed and the potential impact.

“Really, the farmer awareness on this is next to nil and farmer awareness really has to rise,” he said. “We’re basically saying whatever model does come down we need producer input into this. Conceivably people may say ‘no, we just want a little bit more money collected for research and the industry you do what you want, but you leave my public breeding system alone.’”

Some farmers fear proposed changes could undermine publicly funded breeding programs, which also get money through checkoffs collected from farmers, Jacobson said.

AAFC has said it will continue plant-breeding research, but will turn it over to private companies for commercialization if companies get more active in variety development.

“Well, we think that’s a big mistake for us as producers,” he said. “That’s one place we do not want to go.”

Only big companies have the resources to take on AAFC work and bring it to market, he added.

“Our opinion is the seed finishers like SeCan don’t have the dollars to do that.”

Currently the best cereal varieties are developed by publicly funded breeders, Jacobson said.

Many farmers fear without public cereal breeders providing competition to the private sector, new cereal varieties would cost more, he said.

The post Change is coming in the seed royalty debate, and it could cost farmers appeared first on Manitoba Co-operator.

The researcher from the South East Research Farm is back again with another crowdfunding research campaign. Shaw is asking for producers to give $200 to “adopt” one of 48 plots in Shaw’s flax-fababean intercrop trials in Redvers, Sask., this year.

“As I’ve been going around doing talks, I’m up in areas where our chickpea-flax is really a non-starter because it’s in the north; it’s in Edmonton or we’re in Grande Prairie or we’re in Prince Albert or things like that,” she said. “I wanted a good rotational intercrop that is probably two crops that people aren’t already growing that they can add into a rotation and that’s not going to cause difficulties in terms of pest and disease cycles.”

Why it matters: The “Adopt a Plot” campaign will provide baseline data for intercrop options that have, so far, been largely untested and therefore difficult to get funding for. It’s just one of several moves looking to give more direct research control to farmers.

Chickpea-flax has been among the research farm’s front-line intercrop combinations for the last few years. Initial research in 2014 found much lower chickpea aschocyta in intercropped plots — 17 per cent, compared to 51 per cent that year when chickpea was grown on its own.

This year, Shaw targeted flax and fababeans as flax is not a host for the root rot aphanomyces, unlike the peas and lentils that often appear in intercrop combinations and may build up spore loads. Likewise, both crops dodge the rotational problems that come with adding a brassica, such as mustard, into a rotation often already heavy on canola.

At the same time, she said, maturity should be complementary between the two crops and grain should be easy to sort, something that is always a concern when growing two crops on the same field.

“We’re at ground level in terms of whether this is really going to work,” she said. “I know of a few people who have tried it commercially that it did work and I have done fababeans with mustard before and it worked very well.”

The Saskatchewan trial plans to compare different seeding rates, treatments — including a possible product assessment on biostimulant treatments — on top of comparing monocropped and intercropped plots.

Shaw is also hoping that the public will help top off funding for her oat and pea trials this year. The study had already garnered support from General Mills and SaskOats when Shaw decided to add a sixth site at Prince Albert to expand the study’s geographical range.

A new way to fund research?

It is not the first time that Shaw has turned to the public to fill out funding. She made a similar plea last year to fund her chickpea-flax intercrop research.

Producers then received bimonthly emails updating them on the status of the project.

“It basically becomes a way of literally buying into the trial… it’s participatory research because they get an inside window on what’s happening in the trial,” she said.

Those farmers have since taken the role of a focus group on that chickpea-flax research, she said.

It’s a funding avenue that, so far, has come through for Shaw, and one that she says she expects to turn to more often for novel combinations that might otherwise be difficult to get funding for, but that she sees appetite for among farmers.

“Sometimes with these intercrops you have to be able to prove that it works before anybody will give you money to be able to prove that it works,” she said.

It is also not the first time in recent memory that farmers have been asked to take more ownership in research. Ag Days 2019 included a pitch for on-farm research by Greg Bartley of the Manitoba Pulse and Soybean Growers. Such research would provide tailored research results to a specific farm and would help farmers wade through the wealth of ag products on the market, some of which have little third-party research to support how well they actually work, he argued.

It’s the same concept that underpins companies such as Agritruth Research near Brandon, an otherwise normal commercial farm that also provides field-scale research on different management practices and products.

The Alberta Federation of Agriculture is also looking at ways to keep farmers in control of variety development, a concept sparked by current discussions on seed royalties. Advocates have pitched a partnership between breeders and farmers as an alternative to a trailing royalty or end point royalty, the two options so far suggested by the seed industry.

As for Shaw, it’s unlikely that her crowdfunding efforts will ever displace more traditional funding avenues. More likely, she says, data from her “Adopt a Plot” trials will underpin future projects, providing the baseline data needed for future support.

Producers wanting to support the project can email Shaw at lshaw.serf@gmail.com.

The post Research to go to a good home appeared first on Manitoba Co-operator.

At question wasn’t if royalties would be collected on cereals crops to fund varietal research. Rather, the debate centred around how they’d be collected, with two models discussed under the supervision of the federal government.

The options presented to farmers were a trailing royalty or end point royalties. Under the first option farmers pay a royalty when the buy seed, but also would sign a contract agreeing to pay a royalty in subsequent years on any saved seed. An end point royalty would be collected when the crop was sold and would be collected as a non-refundable levy.

Both models share one similar core trait — they are a mechanism to transfer funds from crop growers to variety developers with few strings attached. There’s no oversight mechanism built into either to ensure all, most or even any of the funds are sunk into further research and development.

At first, the opposition to the proposals was muted and limited to the list of ‘usual suspects,’ including the National Farmer’s Union, that was one of the earliest groups to register its opposition.

Cam Goff, a vice-president with that organization, wrote in January of an “… ongoing campaign by elements of Canada’s seed industry to push for regulations to allow them to seize control of our seed network and eliminate farmers’ historic co-operation and sovereignty over their use of seed. This campaign by corporate seed industry lobby groups has been titled ‘Seed Synergy’ and is being supported by Agriculture and Agri-Food Canada (AAFC) to the tune of nearly $500,000 in Growing Forward 2 money.”

While that might seem slightly conspiratorially minded, it should be noted that the Seed Synergy Collaboration Project itself notes on its website that the group “… consists of six major national seed industry organizations: the Canadian Seed Growers’ Association (CSGA), the Canadian Seed Trade Association (CSTA), the Canadian Seed Institute (CSI), the Commercial Seed Analysts Association of Canada (CSAAC), the Canadian Plant Technology Agency (CPTA) and CropLife Canada.”

While that’s definitely a good representation of the seed sector, it isn’t necessarily representative of the crops sector as a whole. On this point, the NFU’s concerns are at least partially upheld. There is a bit of a whiff of the lobbyist writing the legislation to this approach.

Where the proposal has started to run into real trouble, however, is in the broadening and deepening opposition to the two models under discussion. At public meetings grain growers have fretted that they’ll simply offer seed companies a “blank cheque” with no guarantee of what they will receive in return.

No doubt those worries have translated into push-back onto their various commodity groups, culminating in a January 14 press release from the western Canadian cereal commissions including the barley, oat and wheat commissions of all three Prairie provinces and the Prairie Oat Growers Association.

In it they called “… for major changes in the Government of Canada’s current consultation process on value creation. In a letter to federal Agriculture Minister Lawrence MacAulay, the commissions say the likelihood of an industry-wide agreement on either of the proposed models is low and are asking for more consultation including consideration of other options.”

They also took issue with the characterization of the proposal as having been approved by the AAFC Grains Roundtable, noting “… the GRT has not approved these two models and had requested that AAFC conduct an economic analysis of the two options prior to any farmer consultations. To date, this analysis has not been done making it impossible for producers to make an informed decision on a path forward.”

They went on to chide the government saying the feds need to “… put the time and due diligence into this issue to ensure the results are in the best interests of producers.”

The opposition to the proposal got further fuel when the Alberta Federation of Agriculture (AFA) suggested a third path that would build a farmer-breeder partnership. The concept gained even higher priority when noted agriculture economist Richard Gray endorsed the concept.

The latest reaction to the proposal comes from the annual meeting of the Keystone Agricultural Producers.

As Co-operator reporter Allan Dawson reports, delegates there endorsed neither official proposal. Instead, they passed a resolution for KAP to lobby for a system similar to the AFA model.

The need to find new models for funding variety research has been on the table for a long time. The proposals presented may not be the final solution, but they’ve been helpful in getting the discussion focused on the core issues.

The post Editorial: Seed royalty proposal no slam dunk appeared first on Manitoba Co-operator.

The seed industry has proposed two models — trailing and end point royalties. Agriculture and Agri-Food Canada (AAFC) has been consulting farmers about them. But KAP delegates attending their 35th annual meeting in Winnipeg Feb. 6 endorsed neither.

Instead, they passed a resolution for KAP to lobby the Government of Canada to further research a “point of delivery checkoff system.”

Why it matters: Farmers are being asked to contribute more to cereal breeding through royalties, but they’re worried about the extra cost and possibly losing publicly developed cereal varieties seen as important competition to private seed companies. That’s prompting farmers to look at other funding options.

The seed industry says either one of its options will attract more private investment in variety development. But KAP’s Grain, Oilseeds and Pulse (GOP) committee says the proposal lacks detail, including the potential cost to farmers.

The committee was instructed by KAP members at their November advisory council meeting to analyze the proposals and present recommendations for discussion at KAP’s annual meeting. Committee chair Mitch Janssens delivered the committee’s ‘principles’ that need to be part of whatever system is implemented:

• AAFC must continue to develop and commercialize new varieties.
• Government funding of AAFC research and variety development must not be eroded.
• The system must be transparent and “involve considerable input from farmers.”
• It must make farmers competitive and be administered equitably.
• Farmers must be able to save and plant their own seed.

“While this lacks conclusion, no clear simple or clear conclusion seems apparent at this time,” Janssens said.

KAP isn’t the only group not to endorse the royalty options. In a Jan. 23 news release the wheat and barley commissions in Manitoba, Saskatchewan and Alberta and the Prairie Oat Growers Association, said farmer consensus in favour of either option is unlikely.

Following Janssens’ presentation, delegates passed a resolution calling on KAP to lobby the Government of Canada to further research a point of delivery checkoff system in place of trailing or end point royalties.

France has a similar system that funds private and public plant breeding, Janssens said after moving the resolution.

“I’ve been told it has limited the private investment, but has not excluded private investment,” he said. “It’s not something we’d want to jump in with both feet, but we’d want to get more information on it.”

Starbuck farmer Chuck Fossay said he was conflicted because he prefers a trailing royalty, which would apply to farm-saved seed.

“I believe a trailing royalty is easier, cheaper and probably a fairer way to deal with the royalty system and advance research,” he said.

However, the resolution will help KAP develop a policy on cereal funding, he added.

Minto farmer David Rourke said he was told by the head of an Australian seed company AAFC’s wheat-breeding program is among the top three or four in the world.

“What I don’t want to see in the future is we lose that option to have a competitive public system,” he said. “It has served us very well. This resolution may not tackle that completely but it keeps the discussion going… and making sure that they know we are not happy with just the value creation, seed synergy, at this point.”

Manitoba Wheat and Barley Growers Association (MWBGA) general manager Pam de Rocquigny said she wanted more clarity about the resolution’s potential impact on checkoff-funded commodity groups, like the MWBGA.

Janssens said the intent is to have an option giving farmers more say in what they contribute to variety development, instead of only the private seed companies deciding.

In an interview later, de Rocquigny said additional mandatory royalties or levies could hurt cereal associations that rely on checkoffs collected from farmers.

“We’re funding beyond variety development,” she said. “We’re also funding research, on-farm trials, we’re funding market development, agronomy — those types of things, which is a whole package. We don’t want to see a system that would negatively impact or cause collateral damage in terms of having a decrease in funding because producers are asking for (checkoff) refunds.”

Meanwhile, other cereal development models are bubbling up. The Alberta Federation of Agriculture (AFA) is suggesting farmers partner directly with public and private breeders through an existing, or new farmer-controlled entity. That way farmers would determine how much they invest, as well as ensuring their money goes to its intended purpose and earns a return on their investment, which would be reinvested in more variety development.

AFA has proposed that farmer entity be funded by levies deducted from the sale of delivered grain — a ‘point of delivery checkoff’ — which KAP’s resolution refers to.

University of Saskatchewan agricultural economist Richard Gray says farmers should consider an end point levy and farmer-breeder partnerships. They work well in Australia, he said.

The Canadian Wheat Research Coalition, formed by the wheat commissions in Manitoba, Saskatchewan and Alberta, to co-ordinate and streamline regional and national wheat research, could be that ‘farmer entity,’ Gray said in a recent interview.

It’s not something the coalition has discussed, its president Harvey Brooks, who is also general manager of the Saskatchewan Wheat Development Commission, said in an interview Feb. 8. He said any new role for the coalition would require the approval of its founding members — the Saskatchewan Wheat Development Commission, Alberta Wheat Commission and MWBGA.

There would have to be a strong consensus among wheat farmers too, he added.

KAP has also discussed the AFA’s concept, KAP president Bill Campbell said in an interview Feb. 6. Asked if KAP might endorse it he replied: “Our grains and oilseeds committee has presented six points that it would like to see addressed. I think we will follow those points and see where that leads. I don’t think Agriculture and Agri-Food Canada’s two suggestions address all of those concerns.”

The post KAP carefully considering seed ‘value creation’ appeared first on Manitoba Co-operator.

Both say a farmer ‘entity’ should be formed to collect a levy — probably mandatory — from farmers at the point of sale and then funnel that money to breeders — public and private — through partnerships.

Not only would farmers ensure their money went to its intended purpose, but they’d benefit from improved varieties and earn royalties, which, after administration costs, would all be reinvested in developing more new varieties.

“There are some good potential returns here,” Gray said in an interview Jan. 31. “To ensure the additional money flowing into the system actually ends up with better varieties you need that institution in place.”

Its structure is up for discussion, AFA president Lynne Jacobson said in an interview Jan. 30. It could be a co-operative or a not-for-profit organization, he said.

“Keep it pretty simple on the administration part — collection (of levies), a board of directors — and that group would distribute the money,” he said.

But isn’t that reinventing the wheel? The Prairie provinces already have cereal commissions collecting checkoffs to fund variety development and other research.

“These are all things that need to be talked about,” Jacobson said. “We’re not saying, no, ‘this is the model you’ve got to use.’

“Whatever entity is created we want a lot more than just certain people involved and open it up a bit more and be like (the) Western Grains (Research Foundation) that has more people sitting around the table from different organizations other than the grain commissions.

“Then they think of not just one commodity but the industry as a whole. A lot of the infighting that goes on in agriculture goes away when we sit around those types of tables.”

The proposal, like the other two on the table, won’t win over every farmer, Jacobson said, especially those opposed to paying anything more for seed.

Speaking at Ag Days, Deleau farmer Ian Robson sparked applause when he said: “Encourage the Government of Canada to add more money and do more research on our behalf so when we pay for those seeds we don’t have to pay anybody a royalty.”

Canada can learn from Australia’s system, Gray said. It collects funding for variety development and agricultural research two ways. One, is through an end point royalty, which raised $50 million to $60 million a year for variety development. The money goes to breeding companies owned by farmers and breeders.

In addition, there’s a one per cent levy collected on 27 crops sold by farmers. The government matches the farmer contribution, at 0.5 per cent. That raises about $200 million.

The Grains Research and Development Corporation, an Australian Crown corporation, administers those funds.

Some Canadian seed growers oppose the Australian model, fearing it would destroy Canada’s pedigreed seed system. But Gray says the decline of Australia’s pedigreed system was due other policy changes.

An end point royalty on all grain sales is more efficient than a royalty charged on certified seed, according to Gray.

“In fact, I’m pretty sure it will stimulate the purchase of certified seed because you’re no longer paying a big royalty,” said Gray, who also farms. “Right now if I look at purchasing certified seed versus saving my own there’s a $2-a-bushel cost to that certified seed that’s a royalty. If you lowered certified seed by two bucks a bushel I might buy a lot more of it. I think it would actually benefit the (pedigreed seed) industry a lot to move to an end point royalty.”

According to Gray, the proposed trailing royalty is a non-starter. Most farmers oppose the idea of paying to plant their own seed so won’t.

“You’ll get 10,000 (not paying) the first year,” he said. “And if you get away with it once why would you bother? You’d tell your neighbours and they would want to free ride the next year.

“One of the things that makes the farm-saved seed royalty model so ridiculous is there isn’t enough money there to sue people for. You can’t sue someone for 500 or 1,000 bucks.”

That makes enforcing royalty collection uneconomic, he said.

The post Taking a closer look at a farmer-breeder partnership on seed appeared first on Manitoba Co-operator.

A letter to shippers’ groups dated April 27 said the minister would present a motion in the Commons to amend Bill C-49 “to reflect changes the Senate has proposed.”

They include giving the Canadian Transportation Agency power to investigate rail service issues, amend the long-haul interswitching to better suit shipper requests, and include soybeans and related products in the maximum revenue entitlement program.

“This bill represents historic gains for those who depend on Canada’s freight rail system,” the letter said.

He also promised more useful waybill and transportation performance data for shippers to assist in negotiating confidential contracts. Transport Canada will work with the Agriculture and Natural Resources departments to organize a meeting with shipper groups “before the summer to discuss these provisions and how you may be able to use them to their maximum effectiveness.”

As well, there will be a ‘data workshop’ to collect shipper views under the transport bill to ensure “that regulations are developed in a way that meets the needs of interested parties.”

Fast response

The minister’s letter came within hours of a call by the Canadian Federation of Agriculture and its three Prairie members, echoing an earlier statement from Grain Growers of Canada, for the government to accept 19 Senate amendments to the bill so it will become law before Parliament’s summer break in June.

There are five scheduled weeks of parliamentary sittings left with the option of two more before Parliament begins its summer recess in June until Sept. 17.

The transport bill is just one of the government’s legislative headaches. It’s still trying to get its hefty budget bill approved by the Commons so it can be passed on to the Senate. It’s also committed to bringing in legislation to ratify Canada’s membership in the Comprehensive and Progressive Trans-Pacific Partnership trade deal. A wide swath of agri-food groups want that measure passed quickly so Canada enjoys the full benefits of membership in the trade alliance.

On top of those issues the government is struggling to find a solution to the dispute over the Trans-Mountain pipeline expansion including possible legislation to authorize the project as well as ongoing uncertainty over its marijuana legalization plans.

CFA was joined by the Alberta Federation of Agriculture, the Agricultural Producers Association of Saskatchewan and Keystone Agricultural Producers of Manitoba in its call for the government to accept the amendments “to help avert railway shipping backlogs, like the one grain farmers have been struggling through over the last five months.”

Cash crunch

Railway service delays have led to major cash flow concerns, steep financial penalties, and risks to farmers’ international customer base, CFA president Ron Bonnett said. Farmers need assurance this summer’s crop will be reliably delivered to grain terminals in ports as well as other customers.

“Seeding season has already started, and producers need certainty to plan for delivering next year’s crop. We are hopeful that the amended bill will be passed into law without further delay.”

Grain Growers president Jeff Nielsen said the Senate “heard farmers’ voices and did its job and provided sober second thought.” The amendments “will provide meaningful tools that the shippers need to hold railways to account, increase competition and bring better rail service to the grain industry.”

The CFA’s letter to MPs said, “For the second time in less than five years, grain elevators across the Prairies have been overflowing with quality products that can’t be shipped to customers overseas. Once again, railways were unprepared to carry the available grain to port. If grain doesn’t move, farmers don’t get paid. This leads to a cash flow crunch and enormous stress due to systemic flaws that are outside farmers’ control. Farm groups estimate that more than 45,000 grain producers have been affected in the last year, either directly or indirectly.

How can Canada build a reputation as a world-class grain supplier “when its rail transportation systems are repeatedly unreliable? In 2013-14, a rail backlog cost western grain farmers and the rural economy more than $6.5 billion, a terrible loss to national prosperity overall.”

The post Garneau agrees to Bill C-49 amendments appeared first on Manitoba Co-operator.

CN’s vice-president of bulk commodities made the comment as the group’s boat cruised by the Lynnterm break bulk terminal on the north shore of Burrard Inlet, where G3 hopes to erect a state-of-the-art facility.

The farmers, members of the Alberta Federation of Agriculture, the Agricultural Producers Association of Saskatchewan and Manitoba’s Keystone Agricultural Producers, were in Vancouver to meet with CN Rail to discuss improvements to grain transportation.

The farmers also visited Cargill’s grain terminal and toured the port courtesy of CN and the Port of Vancouver.

The 60-acre site G3 has selected east of Cargill’s grain terminal is mostly empty now, but if a terminal is built it will have almost 200,000 tonnes of grain storage and a loop track able to accommodate three 134-car trains.

The trains will only stop to let G3 staff take over from CN crews, Brett Malkoske, G3’s vice-president of business development and communications, said in a phone interview.

“What that allows — and the railways really like it of course — we can clear the congestion off the north shore (rail line),” Malkoske said. “We can bring in those trains and house them directly on site and keep it intact the entire time.”

G3’s terminal is designed to unload 134 cars in 10 hours. Assuming 90 tonnes per car that’s 1,206 tonnes per hour.

“Our whole model translates back to our new facilities in the country,” he said. “It’s about throughput. It’s about moving things faster, not having them sit longer.”

G3’s four new country terminals at Glenlea and Bloom in Manitoba and Pasqua, and Colonsay in Saskatchewan, also have loop tracks and those trains move continuously at very low speed while loading grain.

“We’ve loaded the train as quickly as 11 hours, but we are probably averaging in the neighbourhood of say in 14 to 16 hours, which is still very fast,” Malkoske said.

Typically the railways want trains filled in 24 hours.

“Our goal is to turn the trains as fast as we can,” he said. “The more fluid we keep our system — and again it takes some co-ordination with the farmers and the railroads — the more grain we can handle, the more options we can provide for our customers in terms of markets for their products.”

G3 will have more space than some of its Vancouver competitors, but it’s still tight. A similarly designed terminal at Longview, Washington sits on 200 acres of land, he said.

“We are very, very proud of what our engineers have done (with the plans),” Malkoske said.

G3’s proposed Vancouver terminal received most of the necessary permits in May. But there are still many details to work out. Malkoske declined to say how much the terminal would cost, but left no doubt it will be expensive, describing it as a “mega project.”

“There’s just a heck of a lot of detail to take care of and a lot of moving parts that we need to very carefully manage here to make sure that the project, if we decide to go ahead, will be a successful one,” he said.

While G3 is excited about its proposed terminal, it’s still not a done deal.

“As you can probably appreciate with something of this magnitude, with this complexity, there are an awful lot of details with various stakeholders that need to be ironed out,” Malkoske said. “We are in the process of doing that. Until we are through that process there is really no way of saying whether or not we actually have a legitimate project here. We will work our way through the details. Assuming that we can get it to a positive conclusion we are quite confident at that point we could receive the go-ahead from our board.

“Hopefully in the not-too-distant future we can bring this across the finish line.”

And if the terminal is built will it be the most efficient in North America?

“We certainly believe what we have on paper, and should we proceed with the project, we would be very proud to put it up against any other facility that exists today on the west coast of Canada,” Malkoske said. “The types of efficiency that we are designing for are world class, there’s no doubt about it.”

G3’s board consists of its owners — Bunge Canada, SALIC Canada Ltd., a wholly owned subsidiary of Saudi Agricultural and Livestock Investment Company and the Farmers’ Equity Trust.

Farmers who have delivered grain to G3 and its predecessor, the Canadian Wheat Board, since Aug. 1, 2013 earn equity by receiving units in the trust. The trust owns 499,900 Class B shares in G3.

G3 received 50.1 per cent of government-owned wheat board July 31, 2015 by agreeing to invest $250.5 million into the new company leaving the Farmers’ Equity Trust with 49.9 per cent.

However, since then G3 has received additional Class A shares, reducing the percentage owned by Farmers’ Equity Trust, the Farmers’ Equity Trust website says.

The post A look at G3’s proposed new Vancouver grain terminal appeared first on Manitoba Co-operator.

“I was impressed with the openness of CN,” Keystone Agricultural Producers (KAP) president Dan Mazier said in an interview (watch a video interview further down).

“I think they were genuine today.”

Mazier and representatives from the Alberta Federation of Agriculture, Canadian Federation of Agriculture and Agricultural Producers Association of Saskatchewan (APAS) took part.

The Manitoba Co-operator also attended the two-day event, which included a visit to Cargill’s grain export terminal, a tour of the port and a meeting with Canadian Grain Commission officials.

“The (grain) transportation file has been on people’s mind since 2013-14 and we really haven’t had a chance to talk to the railways and hear their side of the story,” Mazier said.

CN welcomed the chance of the meeting, said Kate Fenske, regional manager of public and government affairs. CN is planning more farmer outreach at events like Agribition, she added.

Leaving the script

Doug MacDonald, CN’s vice-president of bulk commodities, peppered with farmers’ questions, quickly abandoned his prepared presentation.

Did you cut locomotives in 2013? No, that was the other railway.

What went wrong? Record cold and a record crop.

Didn’t the grain companies warn you about a monster crop? Not until the end of September, which was too late. [Western Grain Elevator Association (WGEA) executive director Wade Sobkowich said in a phone interview later the railways were warned verbally in June 2013. This year the warning was in writing.]

“As producers, inefficiencies between the railroads and grain companies is what costs us money because we pay the demurrage on it,” Moose Jaw farmer and APAS representative Terry Anthony told MacDonald. “We’d like to see you guys fine-tune your end of it a little better and it looks like you’ve started doing that.”

There have been improvements, but disruptions can still happen, MacDonald said.

He explained CN’s new contract system, which includes ‘reciprocal penalties.’

Under the program launched in May, CN is offering 72 per cent of its car supply — about 5,500 cars a week in the fall and 4,000 in the dead of winter — to companies to contract. Contracting ensures a shipper will get a car in a specified week or the railways pay a $100-a-car penalty. Grain companies pay the same fine if they don’t take the car within a specified week.

• Read more: Western Canada’s publicly owned grain cars need replacing

About 50 per cent of available cars are being contracted weekly, MacDonald said. Cars that aren’t contracted go back to the spot market pool. If spot orders exceed supply they are divided up equally.

“So if I can only supply 90 per cent of the cars for the remaining orders everyone gets 90 per cent of what they asked for,” MacDonald said.

Just a start

Some farmers were puzzled. Had CN given the WGEA the reciprocal penalties it wants legislated into service-level agreements? No, Sobkowich said. Once the car is spotted grain companies are still subject to railway penalties if the car isn’t loaded or unloaded during a specified time, but the railways are not penalized if they fail to deliver that car to a port terminal during a specified time.

“Overall, the introduction of reciprocal penalties on the part of railways is just that — an introduction,” Sobkowich said. “There is a long way to go for the relationship to be truly balanced.”

The maximum revenue entitlement (MRE), doesn’t fairly compensate the railways, MacDonald said.

The MRE is a government regulation that allows the railways to set rail freight rates how they please. However, if revenues earned from shipping grain exceed the total set annually by a formula adjusted for inflation, the volume of grain hauled and distance, the excess is clawed back and the railway fined.

CN wants more clarity on how the MRE will be adjusted to reflect its investments and an amendment so when a grain company does buy cars it gets the full benefit through a higher entitlement. Currently the benefit is split between the railways — a flaw many, including most farm groups, agree needs fixing.

After hearing from CN, farmers were left confused about the railways’ role in maintaining and replacing government-owned hopper cars destroyed or retired from duty and whether the railways are being fairly compensated properly for interswitching.

An agreement the railways signed with the federal government in 2007, allowing the railways to continue using their cars for free, states the railways are “responsible to maintain (the) cars,” and “responsible for replacing cars that are retired or destroyed, which is consistent with their obligations under the Canada Transportation Act.”

Under the MRE, there are several mechanisms to encourage the railways to invest, including in cars, the Canadian Transportation Agency (CTA) said in an email.

“The Canada Transportation Act requires the agency to make adjustments to reflect costs incurred by the railways when they replace government-owned hopper cars,” the email says. “As a result, when the railways replace the older cars with newer, more efficient cars, the costs of these investments are returned.”

The MRE also compensates the railways for leasing and maintaining cars.

Asked to clarify its position CN said the following: “CN has been replacing hopper cars as they become damaged and taken out of service. Going forward, it is difficult to justify the large-scale investment required to replace the aging fleet under the current regulatory framework. While railways receive adjustments to the revenue cap (MRE) for replacing government hopper cars, the revenue cap formula does not assure adequate compensation.”

CN and CP Rail say they want the MRE removed. Following the meeting Mazier hadn’t changed his mind in favour of keeping it.

“It is a rates governor, so the railways can’t take the rates and all of a sudden jack them right up,” he said. “What it does is offer stability to the freight market in Canada.”

Interswitching costs

According to MacDonald CN isn’t properly compensated for interswitching either.

Interswitching is a regulation to encourage competition by allowing one railway to move grain off of a competitor’s line.

The CTA says the railways are properly compensated.

“Regulations set the rates to be charged for interswitching services provided by the terminal carrier, thereby establishing a predictable and fair pricing regime…” the CTA said in an email.

“Following the prescription in the act that any rate established by the agency must be commercially fair and reasonable to all parties, the agency develops the rate for the extended distance to cover railway operating expenses, capital assets consumed, interest payments on the capital used, and the federal, provincial, and municipal taxes incurred in performing those activities, plus an appropriate contribution to the railway’s fixed costs and an adequate profit for the railway shareholders.”

Meanwhile, CN is having a good year.

“Our job is to try to do what we can to get as much revenue as we can under that (MRE) system,” MacDonald said.

CN’s second quarter net income of $858 million, is down slightly from $886 million during the same period last year, CN’s website says.

In 2015 CN had an operating ratio of 58.2 per cent — “one of the lowest operating ratios among Class 1 railroads.”

It was even better during this year’s second quarter at 54.5 per cent.

Operating ratio is a company’s operating expenses as a percentage of revenue.

“In railroading, an operating ratio of 80 or lower is considered desirable,” says Wikipedia.

“The smaller the ratio, the greater the organization’s ability to generate profit. The ratio does not factor in expansion or debt repayment.”

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But some farm groups are uneasy about the future of the maximum revenue entitlement (MRE).

Speaking to the Chamber of Commerce of Metropolitan Montreal Nov. 3 Garneau announced legislation in the spring will establish reciprocal penalties between shippers and railways in service-level agreements, better define adequate and suitable service, improve access to the Canadian Transportation Agency (CTA) and improve the timeliness of CTA decisions.

He also said the government would “address the future of the maximum revenue entitlement and extended interswitching.”

Some observers have speculated that if Garneau intends to scrap the MRE, as was recommended in a review of the Canada Transportation Act, the MRE would have no future.

Many, including most farm groups, are not opposed to tweaking the regulation to address some of its shortfalls, including how the MRE reflects car purchases by the railways.

“We will continue to work with stakeholders to ensure there’s a proper balance in place — one that supports rail customers and delivers continued investments in the system,” Garneau said. “That’s how we will create a freight rail system that is even more competitive and efficient in the long term.”

Garneau’s circumspection left the Canadian Federation of Agriculture and its Prairie affiliates, the Keystone Agricultural Producers (KAP), Agricultural Producers of Saskatchewan (APAS) and Alberta Federation of Agriculture (AFA) uneasy.

“It remains unclear what the government’s intentions are for the (MRE) regulation that protects farmers, who lack competitive options when it comes to shipping grain,” they said in a release.

Agriculture Minister Lawrence MacAulay didn’t offer any more detail about the MRE when he spoke to farm leaders by telephone Nov. 3, KAP president Dan Mazier said in an interview.

“MacAulay also said we need to keep his feet to the fire,” Mazier added.

The MRE allows the railways to charge whatever rate they want so long as total annual grain-shipping revenues don’t exceed the amount determined by the Canadian Transportation Agency through a formula created in 2000, which gave the railways a 20 per cent contribution to grain-shipping revenue over variable costs.

The MRE was a railway idea to ease farmers’ fears a lack of competition would allow the railways to overcharge them.

University of Manitoba agricultural economist Derek Brewin has said because grain shippers are captive to the railways, farmers would see their average grain-shipping costs at least double from around $36.60 a tonne to $78.52 without the MRE, but under certain conditions they could jump 150 per cent to $109.97.

KAP, APAS, the AFA, the Saskatchewan Wheat Development Commission and Saskatchewan Barley Development Commission also want the government to study how much it costs the railways to ship grain so the MRE formula can be updated. The groups suspect the railways are making much more now than intended because the system has become more efficient.

Garneau couldn’t have been clearer though on reciprocal penalties and adequate and suitable service, which everyone in the grain industry, except the railways, have been seeking for years.

“He touched on all of the key WGEA (Western Grain Elevator Association) asks,” its executive director Wade Sobkowich said in an interview. “Of course the devil will be in the details.

“We are very, very pleased with the announcement.”

Rick White, CEO of the Canadian Canola Growers Association, said in a release: “Incorporating reciprocal penalties into service-level agreements has the potential to elevate the accountability in the supply chain to include the railways.”

The WGEA agrees.

“In a true commercial environment, competition motivates a service provider to meet their clients’ needs,” Sobkowich said in a release. “Without competition, the railways feel no such obligation. Clarifying the definition will remove any uncertainty about railways’ obligation to provide ‘adequate and suitable’ accommodation for all traffic. The definition must be clear that decisions on assigning cars, crew and locomotive power are to be based on what customers need not on what best suits the railways’ business.”

The railways have opposed such changes, arguing regulations impede investment, which in turn results in less efficiency.

“We continue to review the full content of the minister’s agenda and look forward to working collaboratively with all stakeholders on key issues, such as the MRE, interswitching and reciprocal penalties,” CP Rail said in an emailed statement.

CN welcomed the $10.1 billion in infrastructure investment Garneau announced, but didn’t comment on level of service agreements or the MRE.

“We need a supportive, predictable regulatory environment that encourages innovation and efficiency and takes an end-to-end view of the entire of the supply chain,” CN said in an email. “We are confident the Minister recognizes this as well.”

CN also supports the safety initiatives Garneau announced.

Sobkowich said his association expects the railways will lobby hard to try and block Garneau’s changes.

“It will be very important that we are vigilant,” he said. “There are a hundred ways this thing could still go sideways.

“His speech was more specific than we thought it would be and we find that very encouraging.”

The Canadian Oilseed Processors Association called Garneau’s announcement “a big win” for farmers and processors.

“Oilseed processors have already benefited from the element of competition that the extended interswitching limit provides,” COPA executive director Chris Vervaet said in a release. “The option of a competing rail carrier has given our companies the ability to negotiate rates and service in a way we never have been able to before. We are pleased that the federal government understands this and is looking to address it.”

The previous federal government expanded interswitching to 160 km from 30 km in March 2014, to help alleviate a backlog of grain on the Prairies.

The Grain Growers of Canada said it’s pleased that Garneau announced Ottawa will invest $10.1 billion in trade corridor infrastructure to reduce bottlenecks.

The Alberta Wheat Commission said it supports Garneau’s plan to expand the Canadian Transportation Agency’s authority. Farmers and grain shippers hope as a result the CTA can intervene early when it sees the potential for problems transporting grain.

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