Agriculture Committee on Nov. 27th, 2018

[David Bishop]

The issue is capacity. We're getting to where we're at the end of the capacity. There is going to be a time shortly when they physically are not going to be able to move any more product, whether it's grain, lumber, forestry or any commercial product. Let's look at where the shipping is right now. I'm not trying to pick on CN, but as an example, there's a little stretch between Dawson Creek and Grande Prairie where there's no rail that would connect northern Alberta and Saskatchewan to Prince Rupert. That's a big cost, so that would be something I would like to see happen sooner than later.

I keep going back to capacity because, no matter how efficient the railways get, there's going to be a point in time when physically we're not going to be able to move it. In my mind, we need infrastructure all across the board, both at the port and along the railway. More terminals are being built now in western Canada, because every year we've been increasing our grain production. It's a steady growth. We don't see where it's going to stop in the future, and if we're going to grow the economy, which I hear quite often—

[Eva Nassif, Liberal, Vimy, QC]

By 2020....

[David Bishop]

Yes. I'm not talking just about grain but about the economy as a whole. In western Canada especially, we need that transportation system to be in place and reliable. I may have missed it, but I believe Sean did mention the fact that, when his international customers don't get their product when they want it, that doesn't look good for Canada. Also, they may potentially go somewhere else for the product if that's more reliable than getting it out of Canada.

[Eva Nassif, Liberal, Vimy, QC]

Mr. Pratte.

[Steve Pratte]

I'll speak quickly to your question. We all know this, but we just need to remain cognizant that we're still in the early shadows and aftermath of Bill C-49. It only received royal assent on May 23. August 1 is the start of the grain year that all of the planning and reporting goes into. We're still just several months out from that, so I think we need to give that a little bit of time to see the true effects of some of those commercial tools, as the shippers and railways try to either negotiate under that new framework or use some of the mechanisms that are at the shippers' disposal.

As far as the grain transportation system goes, and not to belabour the point, I think we're at a new equilibrium, if you will, on the communications side of things. Part of that is dictated by Bill C-49, and part of that is just all parties getting their acts together and increasing communication over what we've seen in the last several years.

Again, we need to let some time elapse, so that we can give more of a critical analysis of what we've been able to do as an end-to-end supply chain.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Pratte.

Thank you, Mrs. Nassif.

Mr. Poissant, you have six minutes.

[Jean-Claude Poissant, Liberal, La Prairie, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for giving an update on the situation of farmers.

You are our second panel of witnesses today. Before you, we heard from railway representatives. You are giving us the point of view of producers. If we could hear from people at the port authorities, they would probably have their version as well.

Earlier, you talked about reaching $85 billion in exports annually by 2025. Our goal was $75 billion, but you mentioned $85 billion. So I see that there are great challenges.

Are you all already sitting together to plan all the actions to be taken in 2025 and beyond?

[Steve Pratte]

The $75 billion and $85 billion numbers came from the economic strategy tables that had eminent blue ribbon folks on the panel and from consultation with the industry. Those are external folks who are looking at this with more of a global perspective.

As far as planning goes, we have a strategic plan with canola, which we rolled out several years ago. It's communicated. It's the way the whole industry—from farmers to exporters to seed folks—are all working toward a common plan. The railways know this.

On the shippers side, we heard that again this morning. On a day-to-day, quarterly and annual basis, there is that communication. I think it's clear among all parties that we're on a growth trajectory, but how do we, year to year, provide a landscape in which we can actually succeed and, first, transport the goods year to year, but second, keep incrementally moving toward that vision of bigger and better things?

[David Bishop]

As far as a producer goes, those figures, $75 million, well, that's a breeze. On $85 million, I think we can get there. The potential because of the innovation and technology that we adopt on farm and genetic changes in our crops that we grow is right there. If we get there, we still have to get it to market, whether that be as a raw product or a finished product. I'd like to see more finished product, but we still have to ship it, whether it's raw or finished.

Somehow we have to encourage money invested in infrastructure. With regard to the figure, I don't know what that's going to cost. That's not in my wheelhouse. I'll tell you that right now.

I know it will cost a lot of money, but if we don't start spending money now, when the time comes and all of a sudden there is no more capacity, what do we do?

[Jean-Claude Poissant, Liberal, La Prairie, QC]

Would it be a good idea for all of you to sit down together, with representatives from the Department of Agriculture and Agri-Food, to listen to each other and look at this as a whole? We are currently hearing about the challenges on both sides, but we aren't proposing a global solution. Do you think it would be a good idea to have a round table with all the stakeholders involved?

[Steve Pratte]

To some degree, there is that....

In the post Bill C-30 environment from several years ago, the government struck the commodity supply chain table, which semi-annually brings together all parties—railways, shippers of all commodities, including grains—to that table to talk about forecasting, growth, and near-term and longer-term issues.

There is a step in that direction. I'm not sure if that's going to have the optimal outcome. It's run by Transport Canada with the Department of Agriculture in the background, and then there are stakeholders, small commodities, talking with the railways in front of senior officials about growth and future plans—near term and long term.

[David Bishop]

I'm not sure.

Are the ports in on that table?

[Steve Pratte]

It's changing.

[David Bishop]

It's changing but I would like to see that, because it has to be a group effort. You can't blame one party or put all the emphasis on one party to fix this. It's everybody, from the farmer, the train terminal, the railway, the ports. For that matter, you can go to trade, because we need to have free trade to get that done too.

This is a very large and complex issue. It's not going to get fixed overnight, but as long as you're having a conversation, you have a hope of having things done.

[Jean-Claude Poissant, Liberal, La Prairie, QC]

I'm somewhat familiar with the reality of farmers, because I was a grain producer for several years. I would like to know how western producers market their products. On my farm, when we were marketing, we set a price for ourselves to release the grain. When I decided, there were several producers doing it at the same time, which caused a problem of congestion in grain delivery. Is there a similar problem in the western provinces?

[David Bishop]

Yes. The condition of our grain varied, because we kind of had two harvests. We had our early harvest where the weather was good, the quality was good, and then we had the snow events. Like I said, I was five weeks without turning a wheel, and then, of course, the quality was down.

Now we have two different qualities that we have to market. Each farm markets it individually, as far as that goes. Some people have marketing people hired to do it. I do my own. That's something that in our business we do all the time. It's part of the nature of farming. W do most of our own marketing. We know what are costs are. In my situation, as soon as it gets to where my cost is or above for sales, we'll start marketing. I've even marketed some of next year's crop already, and I haven't even seeded it.

Those are things that we do. As it varies from year to year, I don't know how you could equate that into the shipping. When we market it, we're selling it to a grain company or another entity that will ship it.

[The Chair, Liberal, Pat Finnigan]

I'm sorry that I have to interrupt. Thank you, Mr. Bishop.

Mr. Shipley, you have six minutes.

[Bev Shipley, Lambton—Kent—Middlesex, CPC]

Thank you very much.

Earlier on, railway operations were talked about as a team sport, and Mr. Bishop, you just talked about the complexity of that team sport. I have to say, it was pretty encouraging, though, to hear from our rail companies the changes that have happened. The communications that have happened between all the players has been a significant boost forward. When I look at the capacity in terms of railcars, in terms of what they can do and carry more because of the technology and the materials they're using, that's good.

As you have talked about in terms of genetics, in terms of precision planting, all those types of innovative things we have, they're making a difference for the primary producer. With that, is there a significant increase in primary producer storage capacity of their crop when they take it off so that when the railcar is moved out to the elevators, with the larger capacity of the cars now, you will have more to put in those cars at the time?

I still remember back, and earlier we were talking about the complexity of ordering and getting the cars for specific commodities. We tend to talk about barley or wheat. We don't always talk about what different varieties of barley are used for and meeting those demands in terms of the cars that are coming.

What's the increase that has been happening at the producer level, on farm? Are we able to meet those demands for the different varieties of product? Thirdly, when the cars are ordered, are they showing up?

[David Bishop]

At the present time, most farmers have been increasing storage. I can just use me as an example. We're probably at about 115% or 120% of capacity on my storage because we always have some carry-over. In fact, I'm probably going to have to expand my storage again. Every year, it's just something we do as a business model. We know we have to have that storage on hand because we're not going to ship it right off the combine, off the field. That isn't going to happen.

As to the next part of your question, yes, there's a bit of an issue. I'm trying to think about how I'm going to say this properly.

Do you mind repeating the second part for me, please?

[Bev Shipley]

I was just actually wondering about the corridors. You mentioned the corridors and getting the particular varieties of grains that need to be on trains without being mixed.

[David Bishop]

The grain terminals are pretty good about that. What happens is that, when we sell our grain, we usually have a time period where we market it. The elevator will call for it. They'll bring it in, if it's an elevator, and then they will load the cars as they're needed, for whatever quantity and quality they need. In all honesty, as producers, it's more the grain handling side that we deal with than the railway on that.

[Bev Shipley]

I'm sorry—

[Steve Pratte]

I just have a very quick footnote to your question about on-farm storage. Certainly that was one of the take-aways from 2013-14. In the producer community, we saw a run on bins, for instance, after the 2013-14 backlog. Off the top of my head, I believe there are about 75 million tonnes of on-farm capacity in western Canada.

[Bev Shipley]

That's one of the things right now, the capacity to hold the crop. I'm from Ontario and I farm. We have a huge challenge in Ontario this year with our corn and vomitoxin.

I'm sorry about the time left for my colleague here, but the other one I want to talk about quickly is the value added. That's going to be key in what we can do in terms of taking the product we're growing, the grains we're growing, and value-add to that before it just hits the ports.

Mr. Pratt, what is happening in terms of the commodity organizations with different millers and different opportunities to value-add to the products you're growing?

[Steve Pratte]

With canola, as a perfect example of that, the goal would be to have half of Canada's production domestically processed, because obviously that's the highest and best use economically. We've seen that through the illustration of canola's 10 crushers across western Canada. For instance, in 2013-14, they were doing slightly under seven million tonnes of processing of oilseeds on the Prairies. Last year they did almost 9.5 million tonnes, so there was a 3.5-million tonne increase of domestic processing in Canada.

The other issue there is that if you're domestically processing, and in canola's instance, a majority of that oil would be absorbed into a continental market as opposed to an export market as it currently stands, that's less product you're trying to put through Vancouver or Prince Rupert. It is using a different corridor, so it's helping to diversify that trade profile of our particular—