Thank you, Mr. Chair, and committee members.
The issue with the bells here is much like shipping grain in western Canada: it's on; it's off; you never really know what it's going to be doing right through the whole system. We start our trucks; we're going to deliver grain Monday. No, we're not; we're going to deliver it Tuesday. No, we're not....
It's wonderful to know that we are not the only people across this country who get our chains yanked on a regular basis.
My name is Humphrey Banack. I am the first vice-president of the Canadian Federation of Agriculture. With my wife, I operate a 4,500-acre third-generation grain farm in the Round Hill area of Alberta and crop about 3,800 acres of pulses, oilseeds, and coarse grains. The balance is leased to local beef producers.
I am pleased to be here today to speak on Bill C-30. I will be splitting my time with Garnet Etsell, a B.C. director of the Canadian Federation of Agriculture, who will speak to you about the issues facing livestock producers who rely on our prairie grain to feed their livestock.
The Canadian Federation of Agriculture has created a crop transportation and logistics committee composed of crop producers and shippers in western Canada that will develop recommendations addressing not only the short-term transportation issues facing our farmers, but also lasting solutions that will strengthen the entire logistics chain. My presentation today reflects the views of that committee.
We have attended most of the committee hearings on this bill over the past several days, so there is no need for us to repeat what many of the witnesses who have appeared before the committee have already stated about the problems of inadequate rail service this winter for prairie crop farmers.
Also, for the record, the CFA fully endorses each recommendation made by the previous shipper and farmer representatives appearing before the committee on BillC-30, especially those pertaining to service level agreements.
Instead, l'II bring the committee's attention to two areas that we feel need further discussion.
The first area is the extent of market power the railways exert on the crop supply chain. As the committee will recall, the government's Rail Service Review Panel stated:
There is no doubt that effective competition exists in some markets. However, based on a broad range of considerations, the Panel does not believe that the degree of effective competition is as extensive as the railways indicate.
Further, the panel states:
Based on the considerations discussed above, the Panel concludes that railways continue to have market power over some of their customers and that there are sectors and regions where competitive alternatives are limited or lacking altogether. This railway market power results in an imbalance in the commercial relationships between the railways and other stakeholders.
I raise this issue as it pertains to service level agreements between shippers and railways. Although the Fair Rail Freight Service Act enacted last year provides for shippers and railways to enter into service level contracts, given the market power railways enjoy there is little incentive for them to negotiate terms and service levels that fully meet the needs of shippers. The only recourse for shippers is a time-consuming and costly arbitration process through the Canadian Transportation Agency.
Despite the desire of both government and industry for a crop supply chain driven by commercial and competitive considerations, one is not possible, given the current market power exerted by railways in western grain transportation.
To remedy this situation, the Canadian Federation of Agriculture recommends that Bill C-30 contain provisions that compel railways and grain companies to enter into service level contracts that contain terms and performance measures that would reflect those that would be included in a truly competitive marketplace. We understand that the bill has accounted for this provision through establishment of future regulations. The CFA would be pleased to work with the committee and the government to develop regulations that meet the needs of the entire supply chain.
The second area I would like to address is producer car needs.
Producer cars are quite essential to the grain transportation system in Canada and provide farmers some good options to deliver their grain. The producer car gives farmers access to rail transport, but it also acts as a competitive cap on the basis levels that elevator companies can charge. The record number of producer car orders in 2013 demonstrates the importance of this avenue for prairie farmers.
However, the grain backlog has caused disruption in the system for producer cars as well. We feel that if Bill C-30 does not carry sufficient teeth to keep producer cars available and make the railways accountable for spotting of producer cars, they will be forgotten.
Bill C-30 also outlines the minimum weekly amount of grain CN and CP must move for the 2013-14 crop year, and the Canadian Transportation Agency, after consultation with railways and grain handlers, will recommend the minimum amounts of grain the railways must move thereafter. To ensure that the needs of the producer car users are met, the bill should be amended to ensure that producer car users are also consulted by the CTA before it makes its recommendations to the minister.
Over the past 20 years, to maintain their profitability, CN and CP have closed half the sidings where producers load cars, but at the expense of farmers. The events of this winter and spring demonstrate that the grain transportation infrastructure in western Canada is nearing or at capacity, and therefore producer car sites are ever more important. The government must place a moratorium on CN's and CP's ability to delist or close producer car sites, or western Canadian grain farmers' competitive situation will continue to worsen. In order to further increase capacity, the government must also designate sidings that are currently used for loading other commodities as eligible producer car loading sites.
I will now turn our presentation over to Garnet, and he will fill us in on—