Agriculture Committee on April 2nd, 2014

[Kevin Hursh]

I think it was touched on by everybody involved but I do agree with other presenters that it's hard to regulate every detail on every corridor and you go further and further down into a hole of trying to regulate everything. But maybe having some broad outlines would be good. If it's a million tonnes of wheat that's all going to move to Vancouver in an uncoordinated fashion, that's not going to serve the system really well, so perhaps there's a place for a few subsets, some nod to the fact that not all of our grain goes west. We have domestic people who need grain. We have U.S. customers who need product. We've got oats that are $3 a bushel more valuable in the U.S. than they are in Canada because we can't get them there.

There's a number of problems with setting just a broad overall target. I wish I had better solutions. I would think that it might be useful to try to set the targets for corridors rather than just setting an overall movement target. I think there might be some advantage in that.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

All right, Mr. Phillips, you represent, like you said, a large spectrum of stakeholders, so perhaps you might comment on that?

[Richard Phillips]

I think what Kevin's getting at is that we do have customers everywhere and whether the broad target...the railways will work within that. I think if you've got the penalties underpinning all of this, which is what you're putting in place, I'm optimistic that the grain will move where it needs to go and there will be increased coordination.

I would say that before you brought in the legislation, I think Kevin is right, you probably had no negotiating power. I think shippers are feeling that with this legislation, they will have a little bit more power now to try to negotiate where the grain goes.

I don't know how much further you want to go than that, but I think we've got the basis here to level the negotiating field somewhat better.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

All right, thank you, Chair.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Now we will go to Mr. Eyking, five minutes please.

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

Thank you, Chair and guests.

As Liberals, we only have five minutes and I have four guests here. I have a few questions, so if you can keep the answers really short. I'd like to just touch on this corridor issue because we heard from the British Columbia farmers in Fraser Valley. I think it's a billion-dollar industry there.They say they're within a day's supply of grain.

I think to you, Mr. Bender, you were talking about the corridor solution. Should the farmers have some say in this—the farmers receiving grain who are not getting enough grain—in this mechanism of somehow having an input to make sure the corridor works well for them?

[Kevin Bender]

I agree in that I think all players need to be participants in that. Mr. Phillips already mentioned it. Those who are affected, they should have a say in that. I mentioned ANAC, the Animal Nutrition Association. I believe that we ship about 800,00 tonnes of feed grains to them every year. So that's a key market for us, but as well, if they don't get the feed, their animals go hungry. So it's a big issue: as big an issue or bigger for them than it is for us. So I agree that everybody's got to be participating in that discussion.

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

Thank you very much.

I'm going to move over to you, Mr. Gray. You mentioned a couple of very interesting things on long-term vision. You said it's very important that we do a costing review and the other thing you alluded to is that we need some sort of grain transport authority, kind of a watchdog overall. Looking at the big picture for the long run, can you kind of add to that what your comments were on both those issues?

[Richard Gray]

Yes, in terms of a grain transport authority, it's not that we need to have government saying how to move grain all of the time. But I do think when we get a backlog like the current situation, there are no longer any contractual instruments that work very well. We've got a bunch of contracts that are now overdue and it's really up to the railways as to who ships grain where. That's not working very well. We can't identify the buyers who need it the most or the sellers who need to make that contract: there's a bunch of information that's missing out of that equation.

I basically see a grain transport authority being able to step into those situations and help put together the grain with the highest demand to actually make it work, but I wouldn't see them operating on it. When there is enough capacity and the grain is moving well, I think it would probably work just fine without them, but at least having that information to step in would be really important.

Sorry, what was the second part?

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

You mentioned how important a costing review would be right now.

[Richard Gray]

It's been a long time since there has been a costing review with the regulation within the revenue cap. Going forward to make sure the right elements are costed correctly, it would make sense to actually do a costing review to make sure the incentives are there, the railways get fairly compensated for what they move, and that over time the technological improvements are reflected in the cost, because it's important to be competitive in the long run.

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

Thank you.

My next question is for Mr. Phillips. You mentioned quite a few times looking at the long term. This bill is really kind of a band-aid and it's only short term. So what do you think we should be doing more with this bill to make it long term? Whatever it's going to do in the next year and a half, should this committee and the present government be looking at what's down the road 10 to 20 years as soon as this bill is done?

[Richard Phillips]

I think we have to take responsibility in our industry to do that long-term look. I think we're the ones who need to sit down as an industry with each of those commodity councils: the Canola Council, the Flax Council, the Barley Council, the wheat council, the corn council, and the soybean council. I think we need to sit down and ask what are the realistic tonnages that we anticipate growing. Yields are going up in all of these crops, so where are we going to be in five years? Where are we going to be in 10 years?

Then, realistically, with the grain companies and the exporters, we need to ask them where they are going to sell this grain. Is it to the United States? What are they going to do with all this corn that we grow in the Prairies? Is it actually going to be exported? Are they—

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

On that, how can government help facilitate where you think your industry should be going?

[Richard Phillips]

We actually have a group called the Grains Roundtable, just like there's a beef round table. That's actually in place. I think that we have just woken up and we just need to get working as an industry. This has been a big wake-up call for us. I think we can start on that.

Just leave the hand open and say, “If you guys need help from us, come and ask.” Right now, I don't have any specific asks of you. I think the ball's in our court to get working on this right now.

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

Do I have any more time there, Chair?

[The Chair, Conservative, Bev Shipley]

You are.... Thank you for reminding me. You're out of time.

[Voices]

Oh, oh!

[The Chair, Conservative, Bev Shipley]

Your questions were so good that I was writing down the answers, Mark.

I will now be going to Mr. Zimmer for five minutes.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

I had better use my time wisely.

I want to talk specifically to Kevin Hursh. We had CN and Mr. Claude Mongeau here last night. In part of his comments, he chided us a little bit on our regulations and the fines we're imposing to increase his level of service. He blamed.... He said that it's not just a rail problem, it's a terminal problem, and he said that very soon terminals would be at maximum capacity anyway and this was really unnecessary.

Is this true? Can you confirm that you're almost at maximum capacity now?

[Kevin Hursh]

I'm not sure whether Mr. Mongeau was talking about elevator capacity in the country or port terminal capacity. I would see the next bottleneck potentially being port terminal capacity, particularly in Vancouver.

I think we need to know where that capacity is. We need to push the railways to get product there so we can see where we're at with port terminal capacity and then decide whether in the longer term we need to do some improvements. But as I mentioned, we need grain there in a coordinated fashion to give that a fair chance.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Yes, Kevin, but can I just specify? It is port terminal capacity, but I'm also asking you specifically: are you at maximum capacity now or do you still have more capacity available?

[Kevin Hursh]

There is one port that is owned or partially owned by Inland Terminals. That's Alliance Grain. I think they feel, as I believe, that considerably more capacity of grain can come forward in a coordinated fashion.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Do you have a quantity, a number?

[Kevin Hursh]

I'm sorry. No, I don't.