Agriculture Committee on Feb. 12th, 2014

[Earl Dreeshen, Conservative, Red Deer, AB]

Okay. Well then, thank you, I appreciate that.

We're taking a look at the fact that you can make longer trains if you're heading east with this. So it's all of that. Maybe what I'll do is simply come back to the need for you to be able to give us some confidence that you're actually doing what you say you're going to do.

We still hear the stories that at the elevators, they say they're going to have a fifty-car spot, and they come with eight, and all of these kinds of things. So that's what we're hearing.

How can you suggest there is anything that can be said except that you're not living up to your end of the deal? We have to know where these things are coming. You can always tell us about the cold weather, and we know that and we understand it. But as soon as the sun starts shining, you're going to have to make sure that you can show us that there are things happening.

If you want to comment, if you have any time, I'd appreciate it.

[The Chair, Conservative, Bev Shipley]

You have a few seconds.

[David Miller]

There's no question we recognize that we're under the gun, and we're under the gun in a number of other areas. So we certainly recognize that and we're prepared to move on that.

In terms of the numbers, it's all on our website. It's all public, so people will know what the backlog is and what we're doing per week, so they'll be able to judge us. We expect those numbers to go up significantly.

In terms of our performance on spotting cars, we think that before we ran into all these problems in December, our record was pretty good. Under our scheduled grain program, we were hitting 80% to the day. Not that many years ago we weren't hitting 80% to the week, so we really do feel there has been a significant change.

[The Chair, Conservative, Bev Shipley]

Before I move to the last one, I want to take the chairman's prerogative.

You made a comment, Mr. Miller, at the start. You said when the weather straightens out that you'll have the capacity to meet the demand. Can you clarify that? I would have read that to say you're actually going to be able to meet the demand that's out there. I don't know, in fact, based on what I'm hearing, if that is the case.

[David Miller]

We will be able to move the kind of volume that we were moving in the fall. We will be able to get the crop moved. It's not going to move immediately. We're going to be going full bore through the summer, which we haven't done in recent years. I certainly can't say there won't be some carry-over, considering the size of the crop, but we will be able to move the grain that's out there.

[The Chair, Conservative, Bev Shipley]

Mr. Eyking.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Chair, and thanks for giving me another round.

As we close up here, gentlemen, we're hoping that you guys get the message that we have to get the grain moving. This freight rail act that came in last year apparently didn't work. It didn't work for various reasons. It was supposed to work to help everybody work together and get the stuff moving.

I don't know; I just look at it from the outside. There are only two things that I think could help the situation. If you had more farmers on your board of directors, that would make sure they had some sort of priority over the coal or potash or the other products that are being moved. But the other thing is that there's going to have to be a stick here. I know you people don't like to hear it. I don't know if you want to comment on it, but penalties make people function better. If a ship's turned around and we lose the sale to Japan, the farmers should not be having it coming out of their pockets. It should be coming out of your pockets.

I wonder if you have any comment on the government imposing some sort of a penalty on you people if you don't pull up your socks.

[Michael Murphy]

Well, I can say we're already under a pretty significant level of regulation, particularly in this marketplace. There are lots of regulatory remedies, tools that are available to all of our customers to use, regulatory tools, and that includes right up to and including the new act that was passed last June. I don't—

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Mr. Murphy, if I may, what was mentioned yesterday by various commodity groups is that there seems to be a better stick or something in the United States that makes the railroads more accountable for making sure that farmers' products are moving.

[Michael Murphy]

It's a completely different environment in the U.S. It's one that operates on commercial principles, as opposed to what we do here. They don't have an MRE type of environment as we do. That's a pretty obvious example of the difference. They deal with it as you're doing with other commodities. It's not a system that has a heavier regulatory burden, if that's your implication. It's just, in fact, the opposite.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

It's not really a licence as much as penalties.

[Michael Murphy]

It's the opposite.

Penalties are something that we have in negotiated agreements with a number of customers. That's just part of the reality. We do that today. People make commitments to us, and we make commitments to them, and we have reciprocal penalties in a number of contracts today. That's not terribly unusual for us. The issue, though, becomes whether you can negotiate something that allows for the two parties to come to an agreement. We're always ready to discuss that with every one of our customers.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Yes, but when that Japanese boat goes to Seattle, it's not coming out your pocket; it's coming out of the farmers' pockets. That's the whole problem here. You guys aren't losing; the farmers are losing here. So what's the incentive? If there were some sort of way you guys had it come out of your pocket, then maybe things would change. Maybe we would have new locomotives here by now. Maybe it wouldn't be a different system.

[David Miller]

I could say a couple of things.

First of all, I'm not sure there are any penalties that would have made a significant difference in terms of what we're facing this winter, and most penalty clauses would have force majeure provisions, which likely would have been invoked.

The second thing is about the working of the act. We have service agreements with a number of customers that were negotiated before the act was passed. I'm not aware of any customer, certainly in the grain sector, who's come to us since the act was passed asking to negotiate a service agreement. Regarding the question of whether or not the act is effective, it's tough to determine when, in fact, nobody has really used it.

[The Chair, Conservative, Bev Shipley]

Okay, I'm going to bring it to an end. We're at 5:30.

I want to thank the witnesses for coming out. We will be putting a report together at the end, when we come back after.

I appreciate, again, all of the witnesses on a subject that's really important.

Thank you very much.

The meeting is adjourned.