Ottawa’s new ‘transportation modernization’ bill addresses key concerns raised during 2013 rail crisis, but has gaps
Anew national transportation bill could leave a major gap in grain movement during the 2017 harvest — particularly in areas captive to one railway, say Alberta farm leaders.
“Between Aug. 1 and when this new bill comes into effect, there’s a period where there might be a hole in performance,” said Alberta Canola director Renn Breitkreuz, who farms near Onoway.
“We’re just going to have to get through that period. Hopefully this bill passes as quickly as possible, which would mean that window of time is as brief as possible.”
At first glance, Bill C-49 — the Transportation Modernization Act — appears to address most of the concerns that producers had about rail transport during the 2013 harvest, where a record-high bumper crop and backlogs in grain movement created a grain movement crisis for producers across Western Canada. In the midst of that crisis, the federal government enacted an emergency order-in-council that mandated the shipping of minimum levels of grain and extended interswitching. And that emergency measure expires on Aug. 1.
“I think the government believes that everybody is going to play nice and that we’re going to see a smooth transition into Bill C-49,” said Olds-area farmer Jeff Nielsen, who is president of the Grain Growers of Canada. “But as a collective group, we’re concerned about the period between Aug. 1 and the passage of C-49.”
And until the bill becomes law, western Canadian growers will be stuck in a wait-and-see mode.
“We’ll be going into harvest and everybody is hoping for a very good crop. We’re seeing some great opportunities for pricing and people like to take advantage of early shipping,” said Nielsen.
“But we really don’t know how the railroads are going to perform yet. That has always been the problem.
“We are concerned that prior to its passage, we’re not going to get adequate movement of grain.”
Looks good ‘so far’
Even so, farm leaders are “cautiously optimistic” about the bill, which passed second reading last month and is expected to receive royal assent in the fall.
“What we’ve seen so far looks good, but as with many things, the devil is in the details, and there are a lot of parts that need to be worked out,” said D’Arcy Hilgartner, chair of Alberta Pulse Growers. “It’s something that we as an industry are hoping to work with the federal government to make sure we have something that meets the needs of the Alberta farmer.
“But overall, it’s a good start — better than we’ve seen in many years.”
The bill has introduced reciprocal penalties for failures in service, which was “always a concern” for farmers, he said.
“We’ve had challenges with the reliability of the system — having the cars in place when needed and expected. That’s probably been farmers’ biggest challenge and frustration,” said Hilgartner, who farms near Camrose.
“If things don’t work out and the cars aren’t there, there are no real consequences on either side.
“And unless it has some teeth, any legislation that you have is hard to enforce. If it’s just based on goodwill, that really doesn’t take you very far.”
The maximum revenue entitlement, or revenue cap, will remain, but only for bulk shipping.
“They have taken it away for containers, and that’s a bit of a concern,” said Breitkreuz.
That could affect western Canadian pulse crops, 44 per cent of which are shipped to Vancouver in containers.
“We move a lot of grain through standardized shipping, so with any reforms to the maximum revenue entitlement, we need data to show if this is working or not,” said Hilgartner.
The bill does not extend interswitching, which allows shippers to get a competing railway to haul their grain if it’s within 160 kilometres of an interchange.
“Especially over this last year, that’s helped bring in some rail cars where they’re needed,” said Hilgartner.
That provision expires on Aug. 1, and instead, the bill has introduced a different and more complex measure called “long-haul interswitching” for distances up to 1,200 kilometres, or 50 per cent of the total haul in Canada — whichever is greater.
“They’re looking to put in long-haul interswitching to replace the current provisions, but we need data to support that — is this working, and could it be working better?” said Hilgartner.
“We don’t know what that’s going to look like yet,” Breitkreuz added.
“It’s a big bill, and there’s lots of stuff that’s included in it. The transportation system is a complex thing. Some of the things, we won’t know exactly how they work in the marketplace and at the farm level without going through a year or two of shipping grain.”
Group to keep watch
But the newly revived Crop Logistics Working Group hopes to alleviate some of that uncertainty.
“It was kind of on hiatus for a bit, but we’re in the process of getting the group back up again,” said Nielsen. “We’re just in the discovery stages now. We had our first meeting on June 20, and it was a very good meeting.”
The Crop Logistics Working Group was re-established for a fourth mandate by federal Agriculture Minister Lawrence MacAulay in May. Composed of grain industry stakeholders from across the Prairies, the group will work to identify supply chain challenges, particularly in Canada’s grain-handling system.
Right now, their key priorities are monitoring the implementation of Bill C-49, measuring data performance, identifying infrastructure needs, and bolstering system resiliency.
“We have to focus our efforts on ensuring that the information that’s getting to government is the right information and concise enough for our government officials to understand the need for the speedy passage of this,” said Nielsen.
“We just need to see that there’s no hiccups in the bill and no delay in the passage of the bill.”
Ultimately, western Canadian growers “can’t keep relying on stop-gap emergency measures,” said Breitkreuz.
“We need more capacity and accountability in the system as a whole,” he said. “The transportation system is an integral part of getting my product to the market. Everything has to work in sync for that to happen, including the bulk transportation system.”
Without that accountability, Canadian farmers — not railways or elevators — are the ones who suffer, Hilgartner added.
“You get into the game of the railways blaming the elevators and the elevators blaming the railways. But if there’s a ship waiting at port because we can’t get our grain there, we’re the ones who pay,” he said. “At the end of the day, if this doesn’t work, it’s the Canadian farmer who pays the bill. We have a vested interest to make sure this works right.”