Agriculture Committee on June 22nd, 2006

[Paul Miller]

If I may, sir, that's definitely not the case. If for no other reason than self-survival, we can't let one logistics chain back up at the expense or benefit of another logistics chain. We have to keep the fluidity or we have a continuing bow wave of problems in our network. If we let grain sit while we move intermodal traffic, for example, then the terminals would have no work to do; a week later they would have too much work to do and we'd be weeks and weeks recovering from that effect. We're very careful to move all the products that are offered on as timely a basis as we possibly can.

[Jim Buggs]

You're talking sort of general statements, so without specifics it's a little bit tough to address.

One key issue I'd like to talk about, though, is the demand on a consistent basis. For example, at the ports, relative to the terminals that we serve, 2,000 unloads a week is pretty much the maximum CP can get in terms of unloading cars. So if there's a demand for 3,000, well, there's just not enough terminal capacity in Vancouver, for example, to put it through.

It's the same thing with cars. We have a lot of cars. Right now we have 12,600 cars and we're prepared to put more in Canadian grain. But we have to work with what the projections are, and then we have to utilize those cars efficiently relative to the capacity that we have.

Just speaking for CP, we definitely do not in any way discriminate against grain. Grain is our biggest business, so we pay a lot of attention to grain and we move it to the best of our capabilities.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Okay.

There have been some joint meetings. I think Transport Canada has set up meetings in the past where you've had all the shippers at the table, you've had the railways. There was concern that at a recent meeting, CN never showed up. What was the reason for that?

[Claude Mongeau]

I'm not sure I'm aware of which meeting, sir.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Let's see....

You guys might know better. This information was just related to me by one of the grain handlers, that there was a meeting recently and everybody was invited to the table, and for whatever reason, CN skipped the meeting.

[Claude Mongeau]

We welcome meeting all of our customers face to face or in any forum to address issues. We show up at meetings when we know what the meeting agenda is and what we have to discuss.

[James Bezan, Conservative, Selkirk—Interlake, MB]

I believe I'm out of time.

[The Chair, Conservative, Gerry Ritz]

You are out of time. Thank you, Mr. Bezan.

Mr. Steckle, do you have a final point?

[Paul Steckle, Liberal, Huron—Bruce, ON]

Yes, just one point. It's something that really does concern me, as one who has lived a considerable amount of life and has had a lot of life experiences, particularly in agriculture.

We're given constantly to understand that there's a program that is going to return to us some sort of net benefit. Here we have another situation where farmers are in anticipation now, where the guy who sells 5,000 tonnes of barley or wheat or whatever thinks he is going to realize another $10,000. Well, I'm not a prophet, but I can pretty much assure them that they probably will never realize that $10,000 benefit.

I guess as a farmer I would have to wonder how I could be assured that two railway companies sitting down with Transport Canada would negotiate the best deal for me. I realize you're business people and you need to make a profit--I understand that principle. I understand Transport Canada is trying to get a good deal. But without a representative of the farm community or those particular shippers or the people who are the beneficiaries of your system--as you have so eloquently said this morning--how can they be assured that the best deal's going to be struck in the long term, given that, as I see it this morning, 25 years from now very few cars will be owned by the government, if any? It then becomes a system that is controlled and owned by two rail companies, perhaps, or maybe one by then--I don't know; I can't predict that far.

What kind of assurance can you give this group this morning, and the listening audience and those out there who will be reading the blues tomorrow, that the best interest of farmers is always first and foremost for both you and the Department of Transport?

[Claude Mongeau]

If I could answer, you're putting your finger again, sir, on the right issue. And I think you have a lot more life going forward than what you're saying.

I would say the farmers today and you, as government officials, have two choices. We can focus on reducing $2 a tonne, with a rather technical debate on the maintenance costs of 1992, or we can focus on the solution to avoid an increase of $4 to $5 a tonne when those cars are replaced going forward. If we make it win-lose, the farmers will get a short-term $2 a tonne, the railroads will lose $50 million, and the taxpayers will be caught with $1.5 billion of investments going forward, because the less investment return we have in the railroad, the less incentive we have to invest in cars going forward. So that's the win-lose-lose scenario.

The win-win-win scenario is one where we all look to gain productivity. With productivity like one driver, better cycle times, and higher cubic capacity cars we can get enough productivity to replace the cars at no cost to farmers if there is revenue stability.

It's a choice: do we want to do it win-win-win, or do we want to do it win-lose? The stakes are $2 a tonne, which will be ground down as we get the real numbers on the table, or $4 to $5 a tonne for the actual ownership cost of those cars going forward. It's an easy choice if we have a long-term view.

[Paul Steckle, Liberal, Huron—Bruce, ON]

Does anyone else want to respond to that?

I'm not going to give a rebuttal because I want your word to be the last one. We'll judge you on that.

[Judy Harrower]

As I mentioned earlier--I concur with what Mr. Mongeau has said--we need to look forward and make sure we provide for the future of the grain-handling transportation system in Canada and not be anchored in the past. We need to make sure we make the right choices today for the success of this country.

[Kristine Burr]

Clearly we're talking to both railways, and we're very mindful of the complexity of the situation. There are issues around car supply. We are also regularly hearing service concerns on the part of shippers right across the country, including grain shippers.

We're going to have to think very carefully, as we make recommendations to the Minister of Transport, about what the best possible outcome is for the transportation system. I think this is the driving rationale for Transport Canada, and we're very mindful of the concerns we've heard expressed today.

I'd like to thank you for the thoughts you've shared with us.

[The Chair, Conservative, Gerry Ritz]

Thank you.

Mr. Bezan, you have one final point.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Ms. Harrower, you talked about the efficiencies in the system, and said we are improving at CP in particular, and hopefully at CN as well. There's no doubt that our future is going to be based upon the efficiencies we can have here to better serve our farmers and everybody in the entire shipping industry.

You said we're one of the best in the world. Where would we rank in efficiencies and the ability to move product out to port, in relation to the U.S., Australia, Brazil, and Argentina?

[Judy Harrower]

I'm not sure I understand the point around “best in the world”.

[James Bezan, Conservative, Selkirk—Interlake, MB]

You made the comment earlier in your presentation, if I'm not mistaken, that we had one of the most efficient systems in the world.

[Judy Harrower]

I think from an overall grain-handling and transportation aspect, Mr. Mongeau commented earlier about having a very efficient transportation structure in place to provide a very economical package to the farming community to get their goods to the export market vis-à-vis other countries.

As it pertains to the overall rail side of things, there's no question that from a safety and service perspective North American railroads do provide some of the best performance of all railways in the world. I can speak for us, in particular. Our focus on safety and service--and the performance we've had in the last several years on this--puts us in the top ranking within North America as well. That's what I was referring to in my comments.

[James Bezan, Conservative, Selkirk—Interlake, MB]

If we look at our system versus other countries, other competitors on the global stage, in being able to get product from the farm gate to port and delivered to the export customer, how do you think we stack up?

[Judy Harrower]

I don't have specific documentation on that, but from information I have read and commentary, we have an extremely economical system in place for our farming community, an extremely service-conscious system in place to provide an excellent service to the grain shippers of Canada.

[Claude Mongeau]

There is no question that on a world-scale basis we have the best grain-gathering system. If you compare us to the most direct competitor, which is the U.S. system, we move product faster at a 35% lower cost.

There is no better system in the world, and we can make it a lot better if we work together. We can improve if we move away from the complexity and confrontation, the aura of past regulatory measures, and the kinds of debates we have been having around construction and maintenance costs of 1992, and focus on what it takes to perform going forward and get even better.

[Kristine Burr]

One of the areas identified at the time of the Estey and Kroeger reviews a few years ago was cycle times. Although we have seen improvements recently, as has been mentioned this morning, the cycle times of today are nowhere near the targeted improvements that were identified when Mr. Estey and Mr. Kroeger looked at how the grain transportation system could be improved. So I think there are real opportunities for more productivity gains, and this should be a focal point as we move forward.

[The Chair, Conservative, Gerry Ritz]

Thank you so much, ladies and gentlemen, for your presentations today. The dialogue has been very helpful, and I'm sure we'll continue down this route next fall.

This is our final meeting of the spring. I'd like to thank everyone for their great attendance here at the few meetings we've had.

We have a little housekeeping to do, and Mr. Anderson has one last point to make.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I just wanted to let the committee know that I apologized to Maple Leaf for the fiasco on Tuesday, the fact that we did not get to the Rothsay plant, and I guess I just want to express my disappointment with this. We had commitments, and we thought we had matching numbers between government and opposition members. When we got to the bus, we had five of us, and two people showed up, one official opposition member, and that was it.

People were on the list as being committed. There was only one person who had said he would not be there, and he did not get a replacement. But when we tried to leave, the whip made the decision that we weren't going. So I hope that doesn't affect our ability to travel in the future. If we're going to make commitments, please let us know ahead of time if you're not going to be there so we can make the adjustments. It was frustrating for everybody.

[The Chair, Conservative, Gerry Ritz]

The taxpayers were out $800. We did have to pay for the bus, because we started and stumbled....

Mr. Easter.