Agriculture Committee on April 2nd, 2014

[The Chair, Conservative, Bev Shipley]

Thank you very much for that time.

I'll go to Mr. Easter, for five minutes, please.

[Wayne Easter, Liberal, Malpeque, PE]

I thank all three witnesses for their presentations.

Mr. Ballantyne, you mentioned a number of proposed amendments that you had previously. We will have a look at those, but if you have any that are specific which you think would improve this bill, we'd appreciate it if you could forward them to us. I don't want to take time here to get into them.

Turning to Quorum, Quorum monitors grain, as I understand it, not the total system. Am I correct in that? You're not monitoring the total transportation system in terms of its capacity with respect to potash, fertilizer, or oil. You're just monitoring grain. That's your responsibility.

[Mark Hemmes]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

Are there any gaps in the system that make it difficult for you to gain access to the necessary data? Let me give you an example. How much grain car rolling stock is on sidings sitting empty, not moving on the railway system within Canada, especially on the Prairies, at any given time?

I ask that because I was in CN's Chicago centre a year ago, and they were showing me on their computer system how they could tell where a car was and what was in that car at any given time. Are they providing you information on how many grain cars are sitting empty in the sidings, or can you get it?

[Mark Hemmes]

In the past we were having difficulty getting that information, but this last three months and the orders that went forward from the government will start to provide us that information. I expect we'll start to get it within the next four or five weeks, and we will be tracking that on an ongoing basis going forward.

Insofar as the position of cars in the network, if it's loaded, we get a record of it.

[Wayne Easter, Liberal, Malpeque, PE]

In terms of your monitoring today or in the last week, is there any congestion in the port of Vancouver relative to grain cars being unloaded, based on the previous questions just asked?

[Mark Hemmes]

To the best of my knowledge and every indication that's been given to us by the grain companies, no. They are unloading them as quickly as they possibly can and turning them around.

[Wayne Easter, Liberal, Malpeque, PE]

Let me turn to logistics as a whole. This question is for both witnesses, Mr. Hemmes and Mr. Xotta.

In terms of preventing congestion in Vancouver, I'm told that under the previous system, when a unit train got to Vancouver, there would be basically a paper transaction to allocate.... The total unit train might go to one terminal, but there would be a paper transaction to give credit to the other grain companies for that grain that was realistically theirs, same grade, same quality. That created some massive efficiencies in the system. Now I'm told that it's actually physical cars that are moving around.

Can either one of you give us any information on that?

[Mark Hemmes]

I can comment on that.

Mr. Easter, what you're referring to is a process that actually was abandoned about 12 years ago. It was done basically in collaboration between the grain companies and the Canadian Wheat Board. They felt that keeping track of it was unfairly penalizing some groups, and it wasn't to the advantage of the actual sale of the grain. It was actually confounding the railway operations. They chose to abandon it roughly 12 or 13 years ago.

The system that was brought into place in behind that saw a more direct method of moving cars into position. What resulted from that was a far, far more efficient use of the railway equipment than what was used under that previous system.

[Wayne Easter, Liberal, Malpeque, PE]

Is that system still working today?

[Mark Hemmes]

I would say it is. Yes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Easter.

We'll now go to Mr. Zimmer, for five minutes.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thank you for appearing at committee tonight. I know it's late.

I'm pretty much going to keep my questions for Mark at Quorum and Peter at Port Metro Vancouver.

Mark, a colleague just asked about the jams at the port currently, and you said it wasn't. Are any projected in the future, with these higher volumes coming into Vancouver? Are you projecting any jams of that sort in the next month to four months?

[Mark Hemmes]

I don't foresee it, but now that I've said that, it could happen. It could happen for a multitude of reasons.

What you have to bear in mind is that with 28 or 29 ships sitting out in Vancouver right now, and most of the terminal empty, you have very close to 1.8 million tonnes' worth of available space to put grain. It will take a long time to fill that. You also have to bear in mind there are ships coming in every day looking for grain. As long as the cars keep running into the terminal on a consistent and regular basis so that you don't end up with big surges, I can foresee where they will continue to operate that way.

You can't forget, too, that you have the port of Prince Rupert, and Thunder Bay is just coming on stream now. I think they're going to start moving a lot of grain as well.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thanks.

Peter, we heard from CN CEO Claude Mongeau last night, and he wasn't particularly fond of the legislation and the teeth it has. He thought it unfairly targeted rail companies, and he pointed a finger at you guys. He took some of the blame, but he said that part of it belongs to the ports, because the grain can't get out fast enough.

Is that accurate?

[Peter Xotta]

I think this probably will be repeating my comments from a previous question.

I think it would be a fair concern for Claude, who runs generally speaking a very efficient operation that runs 24-7. If they are spotting traffic in Vancouver, and terminals choose not to unload those cars for a variety of reasons until the next day, or don't want to operate a shift, that has a significant knock-on effect in other parts of the supply chain.

If that's the nature of CN's concern, I think that is something that needs to be addressed with the terminal elevators. Given the situation we're in, in terms of the backlog and the pressures on the system to rebalance, I can't speak for those elevator companies, but I would imagine they will be operating every available shift, and frankly, I think they should be in order to assist the railways in reaching their objectives.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

I have one last question. I'll make it really simple.

Who do you think is to blame for the current situation we have right now affecting grain farmers on the Prairies not being able to get their grain to market? Do you have somebody who you would point a finger at first?

[Peter Xotta]

Frankly, the increase in demand that we've seen concurrent with the weather challenges have created a situation that we need to work through collectively.

As I said in my statement, I'm a very strong supporter of the work Quorum does, and as a port we're very committed to monitoring and measuring service performance. The exciting thing about this work that's proposed to be undertaken is bringing greater visibility and data sharing across the supply chain, so we can do better forward planning. That, to me, would be a positive outcome.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mark, you're monitoring this on a daily basis. Can you give a quick answer to that?

[Mark Hemmes]

In my summarized comments I said that I don't think you can point to any one place and say that's where you pin the blame. I think the railways carry the brunt of it, but I think there is also an issue with the fact that there isn't enough transparency, or there presently isn't enough transparency in the market for people who are selling grain to be able to see a problem like that coming at them.

It's not a simple issue just to point your finger at one stakeholder and say it's all its fault. I think we would be remiss in this process if we were to do that.

[The Chair, Conservative, Bev Shipley]

Ms. Ashton, I'm going to give you about two or three minutes if you have questions, and then we want to move on to the next panel.

[Niki Ashton, NDP, Churchill, MB]

Great. Thank you.

Thank you to our witnesses.

As a member of Parliament from the eastern part of western Canada, from Manitoba, what I've heard from people on the ground is the need for federal leadership and a federal championing of this strategy. A lot of producers from our part of the country go east to Thunder Bay and are looking to reinforce their capacity through the north. I'm wondering to what extent you believe it is important to see federal leadership that looks at all the options that would benefit producers, given the varied realities of producers depending on which part of the country they're in.

Perhaps, Mr. Ballantyne, you could speak to that, and Mr. Hemmes as well.

[Robert Ballantyne]

There is a role for all the stakeholders in moving things forward.

Transportation is always something that has a high level of government involvement one way or the other. There clearly is a role for the federal government to be involved in this and possibly take a leadership role. As the answers to the various questions have shown so far tonight, it certainly is going to require really good cooperation going forward, and good transparent data sharing on the part of all the participants in the supply chain, not only for grain but for other commodities as well.

One other point I would make is that the issue of railway service is not a western Canadian problem; it's a problem across the country. I have member companies in Toronto that are having some of the same problems that branch-line people are having in Saskatchewan. So, it does require good leadership from the government and the other folks.

[Niki Ashton, NDP, Churchill, MB]

That's a very important point on how national this issue is and clearly how important it is for the federal government to take a leadership role.

Quickly, Mr. Hemmes, I'm wondering if you have anything to add.