Thanks very much.
We really appreciate the opportunity to present the views of farmer-owned inland terminals.
ITAC, the Inland Terminal Association of Canada, represents the interests of seven grain terminal companies in Saskatchewan and Alberta, companies that are at least 50% farmer owned. The terminals typically handle 2.5 million tonnes per year of grains, oilseeds, and specialty crops and also have cleaning and drying capacity.
The seven ITAC members are: the South West Terminal near Gull Lake; the Gardiner Dam Terminal near Strongfield; the CMI Terminal near Naicam; the Prairie West Terminal in the Dodsland-Plenty area; the North West Terminal at Unity; the Great Sandhills Terminal near Leader; and Providence Grain Solutions, based in Fort Saskatchewan, Alberta.
We believe that farmer-owned terminals provide competitive choice for grain producers, both shareholders and non-shareholders.
On the proposed amendments to the Canada Grain Act, first I'd like to comment on the amendments to establish authorities in the Canadian Grain Commission to enable the regulation of mandatory grain contract provisions and regulate compensation paid by a grain company to a farmer if delivery date timelines are not honoured.
As details of these amendments are finalized, it's important to note that grain companies have extremely limited options for honouring delivery obligations when transportation logistics fail.
There have been complaints about the high basis deductions being charged by grain companies. Widening the basis and thereby dropping the price paid to producers for their grain is the traditional tool for discouraging deliveries when sales or logistics become limiting factors.
In the extreme circumstances encountered this crop year, producers still wanted to make sales despite record high basis deductions. Many companies had to resort to withdrawing bids altogether because they couldn't commit to more grain at any price.
Grain companies take no pleasure in wide basis levels, just as they take no pleasure in turning away business. While grain companies have faced unprecedented demurrages on waiting ships, as well as contract cancellation charges, most grain companies have not been as adversely affected financially as farmers. That's a function of grain companies being a margin-based business. Still, grain companies would much rather compete for grain instead of rationing throughput.
We ask that any mandatory contract provisions be fair and reasonable for grain companies as well as farmers, and that the lack of railway predictability is also taken into account. It's very difficult to be accountable to farmer customers when you have no idea of your future capacity.
Now, on the proposed measures for the Canada Transportation Act, we welcome the proposed continuation of minimum volume requirements for CN and CP Rail. However, that broad approach may have unintended negative consequences.
More cars are now arriving at Vancouver terminals, and that's a good thing, but cars are arriving out of sequence as the railways concentrate on low-hanging fruit—in other words, movement from the closest and easiest locations. This lack of coordination could make the west coast the next bottleneck in the system.
West coast movement is being prioritized at the expense of movement through southern and eastern corridors. The logistics system does not work very well when it's the railways deciding car movement based on meeting an overall target. Although we are unsure of the best solution, the system suffers terribly from a lack of communication and a lack of coordination.
ITAC members have serious concerns over the allocation of railcars to elevators. The railways have reverted to percentages of historical movement as a way to allocate railcars to grain companies. There is no transparency in the system, and as independent shippers there is no way to know whether we're getting our fair share of the railcar supply.
The extension of the interswitching distance from 30 kilometres to 160 kilometres seems like a good measure in theory. It will take some time to fully test its practical applications.
Grain shippers have been reluctant to open negotiations with railways on service level agreements. We welcome proposed amendments that would give the Canadian Transportation Agency the authority to regulate prescribed elements in arbitrated service level agreements, but we'd like to know specifically what those prescribed elements entail.
Some ITAC members are taking a serious look at service level agreements, but shippers across the country, both grain and other shippers, remain concerned by the lack of teeth in Bill C-52. There's no way to implement reciprocal penalties within the agreement if the railways refuse those measures.
As well, any fines that might conceivably be imposed against the railways by the Canadian Transportation Agency are payable to the Receiver General. If fines were paid instead to the aggrieved grain company suffering the lack of service, that could facilitate possible payments to farmer customers who may not have been able to deliver their grain within contractual timelines.
Attaining a service level agreement appears to be an adversarial process that will require a great deal of time and energy with a significant level of cost. In the end, will the benefits outweigh what will likely be a damaged business relationship? ITAC members also believe that after an SLA is established, there will be a need for an effective dispute settlement component that should include access to an appointed arbitrator.
Regarding additional measures, we welcome the commitment to collect more data from the railways and from all the other players in the logistics chain. This is vital to system improvements. Data needs to be as current as possible and it should be publicly accessible.
The accelerated review of the Canada Transportation Act is also welcomed.
In conclusion, it is ITAC's view that while immediate improvements in the grain transportation system are vital, it's also very important to make the changes that will move the industry along the path to sustainable, long-term solutions.
Thank you very much.