Agriculture Committee on April 2nd, 2014

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Goodale.

Now we'll go to Mr. Dreeshen from the Conservatives, for five minutes, please.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much for being here this evening.

Mr. Larson, I'd like to go to you first of all.

The 11,000 cars per week that have been mentioned, and we've talked about this before, were numbers in various corridors that CN and CP said they would be able to handle without affecting other shippers. Of course, we've heard stories where that doesn't seem to be the message that is going to the other shippers, so it brings up this issue about one group fighting against the other, and that's going to affect everybody's approach to this.

Somebody mentioned the rancour that exists. I know that Mr. Payne spoke earlier of some of the concerns. As you say, this is not something that has just happened in the last couple of years. This has been ongoing for quite some time.

The way I'm looking at it is that there are other things that CN and CP have spoken of. One of those things was that they were also against interswitching, yet you were saying that perhaps we should be taking a look at expanding that.

The first question I had when I heard you speak was what would that number be, or what kind of flexibility do you think a person might have to have in order to at least help those in your industry?

[Roger Larson]

Mr. Dreeshen, I'll address the interswitching question first. I don't have an exact number for all of my member companies, but I would be prepared to have member companies discuss that number with you directly because at that point it is in their individual commercial interest to advance that request.

The CFI presented a proposal a number of years ago, in 2006, called a competitive access rate, which is very similar to the concept that is being proposed, with the addition of interswitching distances here. We could also share that along with individual companies.

There are concerns with the 11,000 cars per week. We've had discussions with at least one of the two railways. The feeling is that in normal conditions that number can be achieved with their operations without damaging their obligations to their other customers. The challenge that we have been advised of.... Keep in mind that we probably share the infrastructure with the grain industry more than any other industry in Canada. The Saskatoon yard is that kind of thing. We share the same yards. We're shipping to and from the same points. Distribution for fertilizer really is a mirror of distribution for grain. We ship fertilizer to the farm and then farmers ship grain back to markets.

We've been warned by the railways that any disruption that affects those 11,000 cars could have an impact on our industry.

[Earl Dreeshen, Conservative, Red Deer, AB]

Okay, I thank you for that. Again, they were their numbers to start with that said it wouldn't affect you, but of course, you know, they're couching the discussion somewhat just in case, and you're a little further down the pecking order, so of course you're going to feel that.

I also want to talk about producer cars. Mr. Banack, you were discussing that.

My experience with producer cars is a little bit different from some of the other areas. There are some great facilities that are set up for producer cars. Mine was hauling in my own auger and somehow trying to figure out how to get the train up and down the track. But I do have some experience with it, and I think CGC didn't stop producer cars. They were simply saying that the wait times were so long because of the poor rail performance, and that's what we are dealing with, of course. Producer cars certainly will roll if we can get them hooked onto a train.

I'm wondering if you could talk about some of the efficiencies that we might be able to look at. You also talked about short lines. Could you tie in some of the thoughts that you have about producer cars, short lines, and what we should be looking at in that regard?

[Humphrey Banack]

Producer cars provide an option for a lot of producers. Where I am in east central Alberta, there's a line, Battle River Railway it's called, that runs from Camrose to Alliance through an area where there isn't a lot of service. It provides the producers along that line very close hauling distances. With the amalgamation, the consolidation of the elevators across the Prairies, some of these guys.... I was talking to a fellow the other day who went 220 kilometres one way from Castor to the terminal, one trip a day virtually for him.

The producer cars have allowed that, and in our area, it's a proven fact—it has been proven through studies—that any place where you're close to a producer line, the producer cars do bring down the basis in those areas. They provide that competition. So we ship a small percentage of our grain through producer cars, but our terminal elevators know I do, and they're a very important part of moving forward to keep that competitive.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Dreeshen.

We'll now go to Ms. Ashton for five minutes, please.

[Niki Ashton, NDP, Churchill, MB]

Thank you to our witnesses for joining us.

Mr. Banack and Mr. Etsell, I really appreciate the sentiment that you have shared with us today as producers and the frustration you feel. Sadly, this committee, thanks to the government's approach, is limiting the number of voices we can hear, particularly of producers. It means that we don't get to hear directly that frustration. I'm sure it's the reality for members across, as it is my reality that when I—

[The Chair, Conservative, Bev Shipley]

Mr. Zimmer, on a point of order.

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

Mr. Chair, on a point of order, I don't think Ms. Ashton understands that we're trying to get this legislation through to help farmers as quickly as possible. That's why we have the agenda that we do. Maybe if she understood farmers and their desires to have this done, that statement might be accurate, but it certainly isn't.

[The Chair, Conservative, Bev Shipley]

Carry on.

[Niki Ashton, NDP, Churchill, MB]

Thank you for the clarification, but that's not necessary. Mr. Zimmer, I understand very well what happens in this Parliament.

All this to say that where I come from, producers and people in communities across Manitoba are very concerned about the backlog and the lack of federal leadership on this front. To hear from people on the ground is the most important.... We've heard a lot certainly from industry and from representative organizations, but the fact of the matter is that the frustration is being felt first-hand by people on the ground.

In light of this discussion, I realize that the Canadian Federation of Agriculture has also put forward recommendations on the way in which Bill C-30 could be improved, certainly recommendations that we believe need to be looked at very carefully. I'm especially interested in recommendation number seven, where you're calling for transparency in the grain logistics system. You talk about how the U.S. has a model that supports producers by offering greater transparency. What we're hearing, and we heard it in the previous panels as well, is the need for federal leadership, the need for coordination, and the need to have information that is housed and offered by government, and obviously in the interests of producers.

I'm wondering if you could speak to the importance of that kind of coordination and federal leadership when it comes to transparency.

[Humphrey Banack]

Yes. On our lobby day on the Hill yesterday, I know we were visiting Mr. Payne for sure and some of the other MPs around the table, including Mr. Eyking. We talked of transparency and great logistics systems. I think that's absolutely important.

Every Saturday I get my marketing report on my desk and they talk of U.S. sales, out of the U.S. That's the U.S. sales and all the U.S. transport, how much is loaded and shipped, the U.S. shipments per week. We don't have that capability in Canada. We have to somehow get that out there. It helps both for marketing and logistics. Whoever is gathering this stuff will understand how many sales have been made. That's the first point in understanding what logistics you need to move the grain to that port, the shippings. If you have this many shippings, the U.S. data report says we need to ship 482 million tonnes of wheat a week. We're at 450 million. We do that for three or four weeks and pretty soon they say there's a logistics problem.

Those are the numbers that they provide to their producers. We don't have that in Canada. That's what we're calling for, that opportunity to take that number and put it to either a round table or an agency that would take those numbers and use them to make those long-term plans. But, first of all, you need that number, that solid number on sales and that solid number on shipments. That can give that long-term planning.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much for sharing that.

I'm wondering in terms of the other recommendations you made, if you could share what kind of feedback you've had from others on the ground that you work with, not just through your organization, but perhaps other organizations. Do people agree with the kinds of recommendations you're putting forward? Should this committee be aiming to improve Bill C-30 by adding these recommendations, based on the views of many people out there?

[Garnet Etsell]

Let me address the domestic grain issue because that really comes from ANAC, the Animal Nutrition Association of Canada. If we do not get some kind of prioritization in Bill C-30, we will be unable to get enough grain in the valley to feed our animals. If that day comes where the bins are empty, we are going to be faced with a decision. The decision is going to be to cull animals.

Just from an animal welfare point of view, you cannot send a half-grown chicken to market. There's only one thing to do and that's to destroy it. That is what we're faced with.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

We'll go to Mr. Payne, for five minutes, please.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, gentlemen, for coming. Thanks in particular to Mr. Banack and Mr. Etsell for coming back after your first presentation and our apologies for being disrupted by the bells on a couple of occasions.

I'm really disappointed in our colleague, Ms. Ashton, across the way, for suggesting that the government has not been doing anything on this. She hasn't been helpful at all in this whole process. If I think about it, Minister Raitt and Minister Ritz have been leading the charge on this whole process. They've been talking to grain companies, the railways, the producers. They've brought forward this bill. We've been doing what we can to help move this record crop. Certainly, we understand there are other aspects to this whole issue.

In terms of that, Mr. Banack, you talked about the producer cars. I was wondering how many producer cars there are per year. As I understand it there are about 7,000 allocated, so the whole question is where those cars are that you suggested. You also talked about the sidings. You talked about the closure of sidings.

I wonder if you could add some further comment on those items.

[Humphrey Banack]

Yes, on producer car numbers, when we had the Wheat Board before the change in the marketing status, until producers found a different way to use the producer cars, we were doing between 11,000 and 13,000 producer cars per year.

In the following year, until we find— First, to ship a producer car we have to have a buyer at the coast, so those relationships had to be built. The line we deal with deals with two grain companies, P & H grain, and Lansing. It took a while to develop those things.

As I said, our line this year is looking at doing 2,000 cars out of there, so I think that producer cars have an opportunity to grow in this atmosphere.

Producer cars need sidings. In the last number of years we've seen CN and CP close sidings. There are sidings out there that they don't have registered to load as producer cars.

We have to be able to allow the option for these producer cars because they're our only outlet when we want to have some options against the big four grain companies. They're that other outlet we have to produce.

Number two was to call for a moratorium on railway siding abandonments and make sure that the ones that are there are re-listed for producer car loading sites. We have a large number of producer car loading sites that have been delisted by the railways and they said they would not spot railcars on those sites. We need to go backwards. I understand there is a cost to maintaining these lines, but there's also a cost to western Canadian grain producers when we lose that competition.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you.

Mr. Larson, thank you for coming in.

You talked about shipping problems, and this is ongoing. As you're aware, in my riding I have a major fertilizer producer, a petrochemical producer, carbon black. I have farmers. Quite frankly, CP has kind of had their way and done their thing. I don't know if you have any information particularly on Canadian Fertilizers Limited's operation there, but could you give us some feedback from your members in terms of the disaster, in terms of being able to deliver cars and move product for you?

[Roger Larson]

Thank you, Mr. Payne. I do encourage you to talk to your constituents about their opportunities and concerns.

Our feedback would be general, that we've had some very significant problems in getting fertilizer to farmers this winter. I was invited by some of our farm groups to join them for some meetings with one of the railways to discuss the challenges both in terms of moving grain off the farms and then moving fertilizer to the farms.

Most farmers recognize that we're facing a potential crisis on both sides. Probably the one saving grace that we're going to have with regard to this spring's crop is that it looks like a late spring. A late spring gives us more time to deliver fertilizer to our farmers, and hopefully that will mitigate some of the risks of not meeting our needs for our customers.

I would add that I've heard of some very unusual situations from some of our members. One retail company told me that they could not move urea from one side of western Canada to the other. Consequently, they were importing something in the order of 100,000 tonnes of urea through the Panama Canal into the eastern United States and putting it on U.S. rail to move it to the eastern Prairies.

Those are sales that your constituent and other fertilizer producers in western Canada have lost. It's going to be handled by imported fertilizer materials because of the challenges we have in transportation this year.

[The Chair, Conservative, Bev Shipley]

Thank you, both.

We're short on time, and we're pretty close to the end of our time. We have one more.

Mr. Watson, go ahead for five minutes, please.

[Jeff Watson, Conservative, Essex, ON]

Before I get to any questions, it's probably appropriate to take a step back for a second.

The government's approach with respect to what is happening in the west first of all was an immediate solution to ramp up the cars available, if you will. That was the order in council.

Bill C-30 is not a long-term structural change. It's intended to address near-term issues in a more comprehensive way than the order in council allows us to do. Through that we're proposing, among many things, a flexible regulatory approach to some of the service level issues that have been raised, as opposed to putting in force a legislated framework, and trying to be prescriptive about it in that approach for a short duration.

The third aspect is that we are proposing to accelerate the review of the Canada Transportation Act. It's important because of some of the bigger structural questions. Earlier we heard from witnesses about the establishment of a transportation authority and some other things like that. These are major structural things and we don't necessarily know what the interrelationships will be. I don't even know if they'll exceed the scope of the bill as it currently exists. But some of these issues related to major structural changes to the legislative framework of the Canada Transportation Act are probably dealt with better in that earlier review, so we can take a look at that.

I think Bill C-30 has to be looked at with a view of not trying to solve all the issues, if you will, in a structural fashion. That being said, it doesn't mean there aren't opportunities. There'll be consultation, obviously, on the regulations. I think we've heard a number of witnesses who think that will achieve at least some of the important objectives related to operational terms of service level agreements.

Is that a fair understanding of that approach in that regard? Do we understand that we're not trying to solve all of the issues, if you will, structurally with this particular bill? Are you comfortable with that approach, knowing that the bigger questions will be dealt with in an accelerated fashion?

[Humphrey Banack]

Yes. The bill outlines a sunset date of 2016. We realize this is a medium-term solution. The order in council was a short-term solution, and we have to build beyond that.

The long-term solution, as you said, is a review of the Canada Transportation Act. That, as we understand it, will be accelerated to probably start in June of this coming year.

[Jeff Watson, Conservative, Essex, ON]

That will include major consultation obviously.

[Humphrey Banack]

That will mean major consultation.

It's a very important part of that moving forward. I think where we are is very good. We don't have all the answers by far.

[Jeff Watson, Conservative, Essex, ON]

Right.

That being said, you've raised some other issues that wouldn't be contingent per se on the Canada Transportation Act review. Those, I think, form some important advice to this committee in this process right now with Bill C-30.