Thank you Mr. Chairman, and thanks to the committee for the opportunity to appear today as you address what is without question the single most important issue facing the agriculture industry.
This afternoon you are going to hear from a key group of stakeholders. Each witness is going to provide you with some important insights into the impact of this year's poor supply chain performance on that group's membership. I know that Wade, with the WGEA, will provide a great deal of data that will help us get a handle on the magnitude of the situation from the grain companies' perspective. Allison, of the Grain Growers of Canada, will later on this afternoon no doubt shed some light on how growers are being impacted by the system's inability to move grain off the farm this year. Rick, with the Canadian Canola Growers Association, will again a little bit later be able to talk about how farmers are managing cashflow, when they are less than 90 days from hitting the fields.
But let's begin with some of the very big numbers that set the stage. Year to date, we are 51,000 cars behind, meaning that 4.5 million tonnes of grains, oilseeds, pulses, and special crops have not moved to market according to plan. There are currently more than 35 vessels in Vancouver waiting for product. Agriculture and Agri-Food Canada is forecasting a 22-million tonne carry-over of grains and oilseeds this year.
These numbers tell you that all agricultural sectors have been hit hard this year, and the pulse and special crop industry is no exception. Year to date, participants in our performance measurement program have received 64% of their orders for hopper cars and 61% of orders for boxcars. Bear in mind that these are averages and thus mask experiences of shippers on a week-to-week basis. During the first 25 weeks of the current grain year, the railways provided participants in our program with no cars to meet orders 46% of the time and only supplied up to 80% of orders 61% of the time. As a result, pea shipments during the first four months of the 2013-14 shipping season were only at 739,000 tonnes, and at that pace they will fall 500,000 tonnes short of export expectations. Lentil shipments were only at 170,000 tonnes at the end of November, and at that pace we'll be more than a million tonnes short of this year's target.
As frightening as they are, these abysmal order fulfillment rates, resulting in massive railcar shortfall figures leading to enormous carry-outs, tend to hide the reality of the situation for individual companies and their buyers.
Take Simpson Seeds of Moose Jaw, Saskatchewan, for example—one of the first family-owned pulse and special crops processors in the business. They employ 100 people, serve 4,000 farmers, and export to more than 70 countries worldwide. In the month of January, Simpson Seeds was nearly shut out on hopper car orders and only received their January 6 hopper car orders in the week of January 27. With no railcars for nearly a month, they have been forced to shut down their processing plants, but continue to carry the full cost of their 100 employees.
Let's not forget the customer on the other end. Packaging and canning companies worldwide have been threatening to cancel Simpson's contracts. It is only a matter of time before the threats become a reality for Canadian suppliers such as Simpson. Only last week, Bloomberg News reported that Japanese wheat buyers are turning to U.S. wheat after two months of late shipments from Canada.
While every bit of this information is critical as we assess the impact of our transportation system's failure to meet the needs of its users, it is really only serving to confirm what you already know to be the case: it's bad out there and it's going to get worse until some very real and concrete actions are taken by our two national railways.
In the short term, Canadian farmers, processors, and exporters need to know with certainty what will be moved in the next six months. They don't need a plan; they need a firm commitment. The size of the crop and the nature of the demand has been known since September 2013. The expectation from the pulse industry is that by now a plan should be in place to meet that growth in demand.
In the medium term, Canadian farmers, processors, and exporters expect the capacity will be in place to move increasing volumes of Canadian grains, oilseeds, pulses, and special crops. Massive investments are being made to expand productive capacity in this country. These investments need to be matched with commensurate investments in our ability to market and move this production.
In the long term, Canadian farmers, processors, and exporters along with their colleagues and counterparts from the mining, forestry, fertilizer, chemical and other industries expect to see transportation system capacity that matches their industries' plans to grow—capacity for what we produce today, capacity for our planned growth tomorrow, and capacity that can surge to meet demand when it's needed. These are mandatory requirements for an economic growth strategy.
Peter Hall, vice-president and chief economist of Export Development Canada, called attention to this in June 2013, long before agriculture's record harvest was off the field, when he said:Transportation infrastructure is key to facilitating...growth, but insufficient rail track capacity is a key limiter. ...we may be running short of the means to realizing the growth that is already coming our way.
The first step in addressing this issue is to embrace section 5 of our national transportation policy, which currently says that:...a competitive, economic and efficient national transportation system that meets the highest practicable safety and security standards and contributes to a sustainable environment and makes the best use of all modes of transportation at the lowest total cost is essential to serve the needs of its users, advance the well-being of Canadians and enable competitiveness and economic growth in both urban and rural areas throughout Canada.
Our starting point must be an agreement that the system is here to serve the needs of its users. Today, the primary focus is on ensuring that the system is configured in the most profitable way for the railway, and the evidence is in the headlines of the business sections of our national newspapers. While the users of our system are experiencing massive shortfalls, the railways continue to create greater efficiencies and drive greater returns for shareholders.
We must make the needs of the users of the system in Canada our priority from this day forward. If we don't, we're answering the question that the Simpson Seeds CFO recently asked the senior management team, and that was, why are we considering more capital investments when we can't meet our current commitments?
Thank you.