Thank you for inviting the Canadian Canola Growers Association to speak to you today during your study of Bill C-58.
The CCGA is a national association governed by a board of farmer-directors and represents Canada's 43,000 canola farmers on issues and policies that impact on-farm profitability.
I recognize this isn't the House agriculture committee, so I'll briefly provide an overview of our sector.
Canada typically produces 20 million tonnes of canola annually and exports over 90%, in three forms: seed, oil or meal. These products are exported to 50 countries, and in 2023 our exports were worth $15.8 billion. Canada's the world's largest producer and exporter of canola, and our industry supports 207,000 jobs and contributes $29.9 billion to the Canadian economy annually.
Canola travels, on average, over 1,500 kilometres from the farm where it is grown to an export position. There is no alternative in long-distance transportation of our products across the continent: We are completely reliant on Canada's two class I railways to get the majority of our product to market, both now and into the future.
Transportation of grain is one of several commercial elements that directly affect the prices offered to farmers. When issues arise in the supply chain, the price farmers receive for their grain can drop, even at a time when commodity prices may be high in the global marketplace. When rail service is disrupted, the worst-case scenario is that space in grain elevators and process facilities becomes full, and then grain companies stop buying grain and accepting deliveries from farmers. This can occur even when a farmer has an existing contract for delivery, potentially straining their ability to have cash flow into their operations. This is the major reason that western Canadian farmers have such an interest in rail transportation: It directly affects individual farmer income, and beyond that, the ability of Canada's railways to move grain to export critically affects Canada's reputation as a reliable supplier of canola to the world.
Today's grain supply chain is predicated on having the right grain in the right place at the right time. There are a lot of moving parts in this complex system, including trucks, inland collection points, railways, port terminal facilities and marine vessels. All are needed in order to move canola from the Prairies, where it is grown, to international customers, where it is demanded. In such a complex system, in any given year there will inevitably be incidents and events that negatively impact the fluidity and on-time execution of the supply chain. Weather, infrastructure damage and other unforeseen events are often outside our influence or control. In Canada we have enough risk to our supply chains from natural causes in any given year, so ones of our own making must be avoided.
Broadly speaking, elements we do have control over are labour agreements and organized work environments. However, we have observed ongoing and concerning levels of instability between our class I railways and their labour in recent years.
Currently our industry, and Canada, is bracing for the possibility of both class I railways having labour disruptions as early as next month. Even if a strike is avoided, we are concerned that as the May deadline approaches, there'll be significant impacts on service for weeks or months to come.
We saw a similar situation in March 2022, when one of our class I railways approached the brink of labour action with one of their labour groups. Ultimately, a shutdown was avoided at the eleventh hour, but there were still ramifications for supply chain fluidity from even the threat of labour action. In advance of labour deadlines, the railways began curtailing operations, sending a wave of logistical disruptions and delays back through the supply chain that took weeks to rectify. In November 2019, a class I railway did have labour action that affected operations for a full week, with effects reverberating for months. Given the complexity of this system, it generally takes six to seven days to recover for every one day of service disruption.
I ask you, as parliamentarians on this committee, to consider these labour issues from the lens of our international customers and competitors. Over the last decade, our customers have seen strikes or threats of strikes, both of which disrupt the grain transportation system and affect Canada's ability to reliably supply our customers. This has led to Canada building a reputation as an unreliable supplier and trading partner.
Labour-to-management issues naturally reside between those parties. It is a tenuous balancing act that is enshrined in law and evolving jurisprudence. It is not our intention, as a farm organization, to suggest a solution for these issues but rather to highlight the second- and third-order effects when labour issues do arise. We want to produce more, grow more and expand our exports to drive our economy's growth, and labour is needed to get our products from the farm gate to an export position.
Looking forward, we clearly see further rising demand for our agricultural products, both domestically and internationally. At the end of the day, farmers will not be able to capitalize on the opportunities from increasing demand or trade agreements without a reliable rail and labour system that grain shippers and our global customers have confidence in. Bill C-58 will likely compound the significant issues that our sector is already facing through labour and supply chain uncertainties.