Right now.
Evidence of meeting #15 for Agriculture and Agri-Food in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cars.
A recording is available from Parliament.
Evidence of meeting #15 for Agriculture and Agri-Food in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cars.
A recording is available from Parliament.
3:50 p.m.
President, Alberta Federation of Agriculture
Right now we're facing a drastic situation in western Canada because a lot of the grain is not moving. November contracts are put into April or May of this year. The Red River Valley is probably going to flood, and they have a whole bunch of grain in that area. There has been no logistics plan to take care of that problem. But when it comes right down to it, what you have to do within this system is to plan the whole thing, and you have to have the penalties in place.
Railways right now are short engines and human resources to run those trains, and that's been in the planning for 9 to 12 months. CN went through the same thing a couple of years earlier, so they lost crews and engines.
To immediately get grain moving in western Canada, you'd have to take resources away from other areas of transportation such as coal, or potash, or whatever, and put that towards grain to get the grain moving. They can't physically put the assets in place to move the grain, so they have to steal from some other place to do it.
If they don't do that, this year is going to be a wash. It's not going to improve this year. But our biggest fear is that this is going to move into next year and then cause an even bigger problem next year. Because the cashflow situation for a lot of farmers is going to be desperate by next year if this continues.
3:55 p.m.
Conservative
The Chair Conservative Bev Shipley
Thank you, Madame Brosseau.
Now we'll go to Mr. Hoback for five minutes, please.
3:55 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Thank you, Mr. Chair, and thank you, gentlemen, for appearing by video on this very important subject. It's something that farmers up in the northeastern part of Saskatchewan started to complain about right after harvest. Things started to slow down at the time. I was rather suspicious of some of the grain companies and their contracting. There's still some suspicion there, but the reality now is that the railways just haven't met the task.
I guess the question I have for you is this. Do you think they have enough capacity in the system to handle even a below-average crop?
3:55 p.m.
Second Vice-President, Alberta Federation of Agriculture
I think it's very difficult for them to meet demand in the future. As for capacity, we have to think outside the box as to how we're going to handle this. We were in Banff a couple of weeks ago at our annual meeting of the Alberta Federation of Agriculture. We sat right beside the railroads going through the mountains. They're very busy with consumer goods and all that stuff.
There is not going to be a quick answer. We may have to look outside the box to move the grain this year, and that is something we are going to have to look at into the future. Our production in western Canada will continue to grow with genetics, with research, with other things. The Canola Council of Canada announced that they want another 10 million tonnes by 2025 over 2015. There is no quick answer to this. We need to have rail service to move this crop out.
We have to have a long look at logistics. As Lynn mentioned, there may be some shipping reports and sales reports from the coast, which the Americans have, that may help the system. I would like to understand how many tonnes of grain we're moving through our port facilities, through the system—those numbers are available in the States but we don't have that in Canada. The sales numbers, too, could help us meet future targets.
3:55 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Mr. Chapman, I'm curious. When a train shows up at your terminal, have you been able to follow after it leaves your terminal to see how long it takes to actually get the cars to the west coast? I've been talking to a few other inland terminals who say that the railroads will pick up the cars, but they end up on a spur somewhere 50 or 60 miles down the road, and they will grab one or two cars at a time.
Can you comment on that?
3:55 p.m.
Grain Manager, South West Terminal, Inland Terminal Association of Canada
I'll comment in a couple of ways, one on behalf of ITAC and then directly, as you asked, concerning our terminal.
Our terminal is located on CP's main line. Generally speaking, when the cars are lifted, they go to destination from our location and they go in one block, for the most part. We're a 134-car loader at our location. All of our members are at least 100-car loaders.
We see various lay times, and sometimes it depends on how you link, I think, into the main line. However, lay times as a group are higher this year, in our minds, than they were a year ago. We're also not at last year's levels within our group as far as the car service we have received to date is concerned.
3:55 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Then, concerning the delay and how far you're backlogged in loading under your contracts, where are you today? Would you be loading contracts from November right now? If I were to come to your terminal and to say that I want to deliver some wheat or durum, when would I have a delivery period that I could actually deliver into?
3:55 p.m.
Grain Manager, South West Terminal, Inland Terminal Association of Canada
We wouldn't currently book anything until June or July, and I think most of the other members are in a similar situation. We'd be very hesitant about whether we wanted to book this until we see a little bit more water go under the bridge, if you will, because we're so uncertain, given how far behind we are now. I would say we're probably five to six weeks behind on average, possibly a little bit more.
3:55 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Okay. As far as going to the new crop is concerned coming into this June or July, we normally start contracting in September and October. How are you going to approach this year, with the knowledge that we're probably going to have a 20-million metric ton carry-over plus whatever they don't deliver above that? I'm curious about how aggressive you're going to be in putting contracts out, because this past year you obviously did contracts and obviously weren't able to execute them properly because of the railways.
4 p.m.
Grain Manager, South West Terminal, Inland Terminal Association of Canada
We were extremely aggressive last year with our bookings all the way from April-May forward. Yes, we are lucky enough with...[Technical difficulty--Editor]...and harvest does come earlier. So we were able to get some of our program executed early, simply before the rest of the province's harvest was completed.
Yes, it will be a struggle to contract new crop and to know at what levels we're able to anticipate service. Given what normally happens, in the short term, we will be a lot more...I don't want to use the word conservative or responsible, but very careful in how we go forward, because we really don't know what's going to carry out of this year into the next. We're really in a quandary.
That's a very good question, sir, and very difficult to answer.
4 p.m.
Conservative
The Chair Conservative Bev Shipley
Thank you very much, sir, and thank you, Mr. Hoback.
We'll now go to Mr. Eyking for five minutes, please.
February 12th, 2014 / 4 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
Thank you, Mr. Chair, and thank you, guests, for coming to us by video today. Of course, it's a very serious situation, and I have a couple of questions.
My first question is for the Thunder Bay Port Authority.
Tim, can you hear me?
4 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
It seems that your port has a very good record of turnover times in handling grain. I have visited your port before, though I have never visited the actual operations there.
You have ice in your harbour for a long time. Compared with Vancouver, are you doing something different? They seem to be having problems loading the ships fast enough.
4 p.m.
Chief Executive Officer, Thunder Bay Port Authority
Thunder Bay has what we call the legacy of capacity. At one time we did most of the grain shipments in Canada through the port. We had the reputation of being the largest grain port in the world and we still have the largest grain storage. The number of facilities and that excess capacity leads to our quick ship turnaround time, because you have so many facilities available and reduced tonnages through the eastern corridor. Much of the grain shipment has moved to Asia, so we have lost a lot of it. It was traditionally to Europe and the Soviet Union. When those markets changed, of course, Thunder Bay declined in tonnage, but we still have the facilities.
What's happening today to some extent is that you're seeing a rush to the west coast even for European shipments, to take advantage of an anomaly in freight rates on Panamax vessels. These ships are much larger than Seaway size, and the rates are so attractive on these ships that they're trying to hit those by going through the Panama Canal and exporting to Europe.
The problem we have is that when people do this, the demurrage is piling up in Vancouver. When you do the actual costing, you probably should have been on the Seaway with those shipments. Our car turnaround time is much faster, and you don't have to cross the Rocky Mountains to get to Thunder Bay; it's all downhill from the Prairies.
4 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
Yes. Thank you very much.
My question is for the other two gentlemen. I think we're alluding to what's working in the United States that is not working here. I think on Monday somebody alluded to there somehow being a bigger stick over the head of the railroads down there.
What happens if, for instance, a ship can't be loaded, as we saw in the case of a ship from Japan, and it goes to Seattle and there is a million-dollar fine. Do you think that would wake up the railroads and that all of a sudden they would be buying more locomotives and having more on the track?
4 p.m.
Second Vice-President, Alberta Federation of Agriculture
Yes. We believe that a fair shippers act and contracts can be based two ways. We as producers and shippers have times to load cars and there are penalties and we receive premiums from the railroads for meeting those deadlines. What we don't see is penalties for the railways or premiums for them. If we have a contract that we have to meet on time, we and I'm sure shippers across the country, whether they be in mining, forest products, or whatever, would pay a premium to have their product delivered earlier or on time.
The Fair Rail Freight Service Act just goes to penalties on the railroads. There are premiums for the railroads to earn for exemplary service and there are premiums to be earned by the grain industry. I think we could have penalties and premiums from both sides of this through the act and through those agreements.
4 p.m.
President, Alberta Federation of Agriculture
I have just one more comment on that.
4:05 p.m.
President, Alberta Federation of Agriculture
Premiums shouldn't have to come at the expense of the freight rail cap either, because I think keeping it in place provides some type of check on the system. But you can put premiums in place for early dispatch of a ship or whatever, like the dispatch that they earn at the terminals. There could be some such split for the railways so that they can do that. But the railways have never ever paid a penalty for late delivery.
4:05 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
My last question, and I guess it's a big one, follows up from Mr. Hoback's on the loss if, for instance, the railroads don't pull up their socks and improve the status quo over the next three or four months. There are talks of at least two billion dollars' worth of loss for growers. Is there a number for what we could lose this year? How much could we lose in potential sales, assuming that this crop is going to be the same?