Thank you for inviting us to present here today.
My name is Martin VanderLoo and my associate with me here today is David Kohl.
Huron Commodities is a grain processing and marketing company selling Canadian grains and oilseeds domestically as well as to the U.S. and Asia over the past 18 years. The reason we are here is due to complaints I had logged to our local member of Parliament regarding the reduced level of rail transportation service, to the point of Canada being an unreliable and uncompetitive supplier of Canadian grains and oilseeds.
Huron Commodities moves oats from western Canada to Ontario for processing and further export to the United States. We ship oats from Ontario and Quebec to the U.S. via rail. We ship rye from Ontario and western Canada to major distillers and flour millers in the United States via rail. We ship food-grade soybeans to Japan and Southeast Asia via rail to the west coast and ocean freight further on.
Over the years, we've seen increasing rail transportation costs with severely declining rail service. All the while, Canadian railroads are posting consistent record profits. Although we're not opposed to supporting a profitable railroad, we don't agree that it should be done at the expense of the farmer. For example, as mentioned earlier, we ship oats from western Canada to Ontario for further export to the United States. Unless we are a mainline shipper in western Canada, willing to ship 100-car-unit trains to the west coast, we are just denied service. The same situation is the case with our rye shipments out of western Canada. Unless we can provide 100-car shipments to the railroads for export to the U.S., they are simply not interested.
The railroads have consistently refused to spot cars for any of our shipments, jeopardizing our reliability as a shipper to our customers.
About a year ago, we were working on a project with a local elevator to facilitate a multiple railcar shipment facility for local corn and wheat exports to U.S. markets. This project would require a sizable capital investment. CN Rail advised us they could not guarantee equipment and power to make this project feasible. This project was scrapped.
As mentioned earlier as well, we ship food-grade soybeans to Japan and Southeast Asia. That move is facilitated by containers from Toronto and then rail to Vancouver and a vessel to the country of destination. The railroads have recently imposed an inland fuel surcharge of $174 per 20-foot container, U.S. funds, which is increasing our rates here, of course, and our cost of shipment. On May 1 they plan to increase that further, to a total of $195. There have been threats by the Port of Vancouver to impose a $40 per container port congestion charge--that's what they're calling it. All of these extra charges are just making us uncompetitive.
I'd like to cite some other instances in western Canada. On March 8, Great Northern Grain Terminals filed a major level-of-service complaint against CN Rail, and this filing has been supported by the Canadian Wheat Board as well as ten other grain companies in western Canada. Last year the Western Grain Elevator Association met with the Ministry of Transport and agreed on May 5, 2006, that the department would attempt to make changes to the Canada Transportation Act. The Western Grain Elevator Association is looking for reform in the Western Grain Transportation Act.
Huron Commodities, as well as many other grain-handling and marketing firms, has become increasingly discouraged with the lack of rail service and our ability to facilitate movement of Canadian grains and oilseeds to the marketplace.
What does this mean for agriculture? The federal and provincial governments have for years encouraged farmers to consider value-added marketing of their production. Farmers have answered that call by producing variety-specific crops and handling processes for these crops to secure a better price and a premium. Both the grains and oilseeds as well as the livestock sectors have pursued organic markets to realize a better return on their production.
Our inability to move farmers' produce to the marketplace negates any efforts growers have made to realize any value-added premiums they may have earned. Currently, our customers in the U.S. and Asia are telling us that they are seeking suppliers other than Canada because of our inability to be a reliable, competitive supplier. We ask you to push for immediate regulatory reform to the Canada Transportation Act, before we lose further markets we currently hold.
Thank you.