Okay.
Evidence of meeting #43 for Agriculture and Agri-Food in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rail.
A recording is available from Parliament.
Evidence of meeting #43 for Agriculture and Agri-Food in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rail.
A recording is available from Parliament.
9:50 a.m.
Executive Director, Pulse Canada
So you do have penalties applied for not hitting your contractual window of obligation. Beyond that, the steep discounts that apply after you've exceeded those allowable dates are where the real costs are incurred.
So while I think it's reasonable to make some allowances for change and unanticipated problems, I think we also have to bear in mind that our shippers don't get those kinds of allowances.
9:50 a.m.
Conservative
December 9th, 2010 / 9:50 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Thank you, Chair.
I want to thank all of you for coming out here this morning.
The argument that I think a lot of people are struggling with is that of cost versus service. When you look at it, they are intertwined. There's no question about that. If you buy something from a discount store, you don't expect proper service or extreme service. Thus, when you pay a premium for a product, you expect premium service.
To try to find that balance depends on the product that you're shipping. If you're shipping a low-dollar, high-volume product, you don't really care about service. You just basically want to see it get to where it needs to get to, because you have so much volume going through the system that it doesn't matter.
But if you're dealing in lentils or something like that, service becomes a huge issue, because you have a key customer you're connected with who's expecting that product. I guess that's where I'm going to go with my questioning here.
Humphrey, you talked about this canola you have on the ground. That's costing you a pile of money when it's sitting on the ground, is it not? You're getting a tremendous amount of loss, I would think, by having that canola on the ground.
9:50 a.m.
Director, Canadian Federation of Agriculture
Yes. Our operation has suffered huge losses for this. I mean, the loss is simply a loss on the ground; we're not going to be able to recover all of it.
9:50 a.m.
Director, Canadian Federation of Agriculture
There are going to be grade and storage losses from it sitting outside instead of being binned properly. And it's time over money: I mean, this canola is contracted and priced on a September delivery. I should have had money in my pocket in September. I'm going to see December before I can see it. So the service is very important.
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
In that case, then, you'd probably give up 10¢ a bushel to get the service, would you not?
9:55 a.m.
Director, Canadian Federation of Agriculture
Yes, sir, there is always that balance. That's where we're looking. It's simple balance, whether it's a cost review or a service fee, wherever we are.
When Greg addressed the thing about--
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
But regardless, if that canola does not move, it doesn't matter what the price per bushel is, it's gone. If it heats, if it goes on you, it's gone. If you don't have service, it doesn't help you to go to the bank and tell your banker that it's going to move sooner or later. If it heats in the midterm, it's gone. That's why I look at the service side of things as being very, very important. If you get the service right, it can offset a lot of costs.
Again, Greg, the number you used--about $11 per tonne--is the cost of poor service. When I think about that, if I put that back to my farm, which is roughly 1,000 acres or 1,500 acres, that's roughly--I don't have a calculator--$12,000 or $15,000. If you multiply that across the system, that's huge. Now, if you compare it to what the Wheat Board is saying about $6 a tonne, well, that's a smaller number.
I think when you look at the different products that are in the mix.... On Wheat Board grains, you can look at them and say, well, they're lower-priced products. They're not high-value products like canola, or lentils, or peas. What's more important when we look at the western Canadian industry? Is it to get the lentils, peas, and canola to market? Or the wheat? Because the reality is that wheat has become a byproduct. Farmers are growing wheat basically because of rotation; they're not growing it because it's paying the bills. That's what it's turned into.
So where do you concentrate? Where is the value in our industry as we look forward in the next 10 or 15 years? Is it to get a low-quality-of-service product moved to market or is it to get the high-value goods to market on time and get the premium for being able to deliver them in a proper fashion? That's the question I have.
Mr. Oberg, you talked about having a test--
9:55 a.m.
Member, National Council, Canadian Federation of Agriculture
Can I respond to that?
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
No, you can't. I only have seven minutes.
You said you did a study to get your $6.81. In that study, did you look at what cost you are adding to the system by being involved in logistics?
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Did you look at what cost the Wheat Board is adding to the system by being involved in logistics?
9:55 a.m.
Member, National Council, Canadian Federation of Agriculture
We're not adding costs. We're actually saving.
9:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Really? Are you sure? Are you sure you're not tying up cycle times?
9:55 a.m.
Liberal
Wayne Easter Liberal Malpeque, PE
Will you let the witness answer?
Could Randy give him time to answer?
9:55 a.m.
Conservative
9:55 a.m.
Liberal