Evidence of meeting #91 for Agriculture and Agri-Food in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-49.
A video is available from Parliament.
6:05 p.m.
As an Individual
I'd argue that. You'd have to talk to the grain companies themselves, but they all said to me at that time that it was easier.
You can't go back and change it now. It was five years ago.
6:05 p.m.
As an Individual
When Australia took their version of a grain commission down, their version of CIGI, the big difference was they were all tied into their wheat board.
That was the big concern with buyers like Japan. They were concerned that we were going to lose our capacity to grade. We didn't, because CGC is a stand-alone agency and CIGI is a stand-alone agency. They continued on doing their good work.
Somebody made the point about the crop tour that happens every fall now, when we go out to the world with representatives of all the different commodity groups. I touched base with a few of them over the years. In countries where they say, “Here's what we have. Here's the quality, here's the pricing, and here's the availability”, those are worth their weight in gold. They continue to work really well.
The grain commission takes part. CIGI takes part. All of the line companies take part, and a lot of the farm organizations. It's a dynamic industry group going from country to country.
6:10 p.m.
NDP
Alistair MacGregor NDP Cowichan—Malahat—Langford, BC
Mr. Nielsen and Mr. Boxall, you've possibly had the chance to hear the statements from CN and CP. You've heard of their plans to rectify the situation and hopefully get us to a place where we don't have to repeat this scenario.
Are you filled with much optimism and hope that we're going to get there with this plan, in addition to Bill C-49 being passed?
6:10 p.m.
President, Grain Growers of Canada
In a word, no. I didn't see much in the letters they presented.
We need to have this bill passed so we can actually have some teeth, and so we as farmers, Ian and I, can do a financial plan for our farms so that if there's an issue because we couldn't move in December, then hopefully we can see.... We may not be compensated, but we know there could be avenues that our grain companies could use to rectify the situation. Still, maybe it won't be the end of December when we move it. It may be the first two weeks of January.
The thing is, we're working on financial plans, business plans for our farms, literally on the combine. We're planning our next year's crop on the combine and we're already pricing some of next year's crop while we're taking the existing crop off.
6:10 p.m.
NDP
6:10 p.m.
Vice-President, Agricultural Producers Association of Saskatchewan
If what we saw on the letter that they posted on their website and circulated on the 15th is an indication of what their planning looks like.... With the passing of Bill C-49 and the planning aspect in that bill for them to submit a plan for the winter haul, if that's what it's going to look like—vague, broad, sweeping—then we're in trouble. As producers, we're in trouble, because that isn't a plan.
I want a plan. I want the number of cars by quarter, by province, by sector. That's what we need. We need a concrete plan that's going to work for the industry. I don't have any recourse, because I'm not a shipper. As a producer, I want a plan.
6:10 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Mr. Boxall. Thank you, Mr. MacGregor.
We have about three minutes left. I just want to warn that there is a bus outside, apparently waiting to take all of us back to the House.
Mr. Poissant, you have the floor.
As soon as the bells start ringing, though,
we're out of here.
6:10 p.m.
Liberal
Jean-Claude Poissant Liberal La Prairie, QC
Okay.
I want to thank the witnesses for being here today.
Mr. Nielsen, I understand the situation since was a grain grower myself, of malt barley seeds in particular.
You said earlier that there are about 50,000 farmers. It was also noted that the APP should be improved and that advances should be doubled. Would that really meet your needs? If the APP advances were doubled, then just half the number of farmers would benefit.
6:10 p.m.
President, Grain Growers of Canada
Any tool that farmers can use to alleviate a situation is great. APP programming is one of the tools we can use. Is doubling the funding...? You have to understand that if you double the amount a farmer....
As Mr. White said in the previous sessions, there's an expense to any line of credit you get. It's called interest. What Ian and I want to do is move our grain when we contracted that grain. If we have to use other tools to try to mitigate that situation, we have to also realize we're going to be paying for those tools in interest charges.
That's my stumbling block. It's nice to have as many tools in our tool box as possible, but I'm very conscious of what it's going to cost me.
6:10 p.m.
Liberal
Jean-Claude Poissant Liberal La Prairie, QC
Similarly, we agree that Bill C-49 must be passed quickly. That being said, I realize that this bill alone will not be enough. We have talked about the APP, Farm Credit Canada, infrastructures, elevators, road infrastructure, and the need to listen to farmers.
With regard to elevators, is it feasible to have infrastructures closer to the ports and to transport a certain amount of grain there in advance of any difficulties that may arise?
6:15 p.m.
President, Grain Growers of Canada
In being around for a good period of time, sitting on a couple of previous entities of grain companies that merged as they grew up, and sitting as a director of the Canadian Wheat Board at one time, I think we've rationalized our elevator system to make things more efficient.
In the case of Ian and me, we have made our farms more efficient by getting larger trucks and stuff like that. We see the efficiencies, I believe, in the inland terminals that have been built and that certain companies are continuing to build. We're seeing a great expansion and improvement on the west coast in some of the handling facilities that have been retrofitted, plus a brand new facility that's coming on stream.
It's a good point, but I think that the way we have it set up now works. We're seeing growth in capacity in the western provinces. I think that's a bonus. We just need to have a system that works so we can get our product to the market.
6:15 p.m.
Liberal
Jean-Claude Poissant Liberal La Prairie, QC
The CN and CP officials said earlier that they will be investing $3.2 billion.
Do you think that is enough to improve the situation?
6:15 p.m.
President, Grain Growers of Canada
It's great. As far as investing into infrastructure goes, I know Ian's probably increasing his investment in his farm every year, and as a producer I'm trying to increase my investment in my farm to make my farm better. It's just a good business decision for CN and CP to do that. I commend them on that and encourage them to continue doing it.
6:15 p.m.
Liberal
Jean-Claude Poissant Liberal La Prairie, QC
I would like to hear about your dealings with shippers.
By harvest time, you surely have an idea of the amount of grain that will have to be shipped. When the crop yield is high, you know there will likely be a problem.
Do you meet with shippers often to make transportation plans?
6:15 p.m.
President, Grain Growers of Canada
I'm the primary transporter. I own my own trucks, so I'm the driver. If I can't drive it myself, I hire a neighbour to drive for me. I'm the primary person.
As Ian and I are on our combines in the fall, we're already planning our production cycle for the following year. You know by your averages what you're going to produce, so you work that production into future contracts—
6:15 p.m.
Liberal
The Chair Liberal Pat Finnigan
I'm sorry to interrupt. The bells are ringing, so we shall suspend and return after the vote.
7:30 p.m.
Liberal
The Chair Liberal Pat Finnigan
Welcome again. I apologize for the late sitting, but sometimes we're called back to the House, so we had to prolong the meeting.
From the Alberta Wheat Commission, we have Warren Sekulic, Director; from the Western Canadian Wheat Growers Association, we have Daryl Fransoo, Director; and from Keystone Agricultural Producers, we have Dan Mazier, President.
Thank you all for being here.
We shall open with a seven-minute statement.
Go ahead, Mr. Sekulic.
7:30 p.m.
Warren Sekulic Director, Alberta Wheat Commission
Mr. Chair and members of the committee, thank you for the invitation to appear today.
My name is Warren Sekulic. I'm a director with the Alberta Wheat Commission. I'm a fourth-generation farmer in northern Alberta, and we will actually celebrate 90 years next year.
I am here today because the current grain transport backlog continues to impact my operation and the operations of farmers across western Canada. In addition to sharing my specific experiences, I also offer the strong support of our 14,000 farmer members for the amendment and passage of Bill C-49, the transportation modernization act, as a means of addressing the systemic issues in our freight rail system.
My farm is located 70 kilometres north of Grande Prairie, Alberta, which is over 1,200 kilometres from the nearest port, and we are totally dependent on the one railway that services this line of four inland terminals. With our limited access to processing facilities, market alternatives, or other methods of transportation, almost 100% of the grain and the crops I grow are destined for the export markets and dependent on a single railway.
As with all businesses, planning is an essential part of my operation. Each year, much work goes into planning—planning what crops I'll plant; the amount of inputs, such as the fertilizer and seed I'll need; when those inputs will be delivered; and the timing of the contracts that I will negotiate to sell my grain. Those contracts are usually aligned with when I pay my bills.
As an example, on my farm in 2013-14, as a sound farm management practice, I had all of my forward contracts in place to sell my grain to the local terminal. I had a prudent plan to deliver my grain in a timely manner so that I could pay my land rent and input costs, such as fertilizer and seed. The rent is typically due in the fall. I even had allowed a buffer for rail delays, given that they are commonplace, especially up north.
When the railway failed to deliver in 2013-14, it put my farm business and my livelihood in jeopardy. I'm contractually obligated to pay my rent, regardless of whether or not I deliver my grain. Like most young farmers, I'm cash strapped as I build equity in my business, and because of long delays that year, I needed to secure a bridge line of financing in order to ensure that I could retain my land, pay my debts, and see my operation succeed into the next year.
I am here today, at what is one of the busiest times of the year for my operation, because as I head into the 2018 planting season, we are once again experiencing a backlog in the freight rail system which is impacting my operation and farming operations across western Canada that are reliant on the freight rail system.
When it comes to rail transportation in Canada, the agricultural sector has always operated in a monopolistic environment. Each year, our farmer members grow millions of tonnes of wheat, other grains, and oilseeds. We rely almost entirely on rail transportation to ship our products from the Prairies to port terminal facilities on the west coast and to Thunder Bay and south of the border into the U.S.
Costs associated with railway failures, such as demurrage fees and lost sales, are ultimately passed down the supply chain to me, the producer. As the price-taker, I'm dependent on the price the market dictates. I cannot adjust my price, the price of the products, so ultimately these increased costs reduce my profitability.
AWC appreciates the government's commitment to legislation that will ensure a more responsive, competitive, and accountable rail system in Canada. We believe that Bill C-49 is in fact a historic piece of legislation that paves the way for permanent, long-term solutions to the rail transportation challenges that Canadian farmers have faced for decades.
Passage of this bill is imperative, especially in light of poor rail service that shippers have been experiencing in western Canada this year, with the poorest period of car order fulfillment dropping as low as a combined 32% between CN and CP, reaching the levels experienced during during the 2013-14 crisis. In any other business, this lack of performance would be unacceptable, but in the grain sector, these service levels are all too common.
Because of this poor service level, currently I am left with a significant amount of grain on my farm, grain that was all contracted for delivery in October, November, and December. This type of backlog causes a cascading effect, not only on my operation but across the entire system. For instance, I had peas contracted for delivery in November, and when railcars didn't arrive to take my peas as scheduled, I had to bear the cost and resources of bagging my peas and leaving them on the ground in temporary storage, pending the availability of railcars to make up this shipment.
As the snow starts to melt now and the railway has still not fulfilled my delivery, I have to now use further resources to move the peas from bags to bins so that my product doesn't get damaged.
I, like most farmers, have contracts scheduled with terminals on a fairly ongoing basis, so when cars eventually do arrive for my peas contracted in November, the contracts that I have in place for March delivery of my canola get pushed into April. April contracts get pushed into May, May into June, and on and on. This is further complicated by spring conditions in which road bans are instituted, making it almost impossible to deliver my grain if delayed trains do arrive. This is not a fictitious backlog; this is reality.
As I and other farmers ramp up our operations to prepare to get our seed in the ground for this growing season, we are feeling the impacts of the current backlogs in the system. Farmers who haven't had the opportunity to deliver their grain in as long as six months are strapped for cash flow to buy inputs for this year's crop, and systemic rail failures often cause delays in receiving inputs, such as my fertilizer, which has actually been delayed since December.
In January I was in Ottawa to deliver this same message to the Standing Senate Committee on Transport and Communications. Now it's March, and while I have moved some of my grain, I am still significantly behind. From all indications, between the backlog and the spring conditions, as well as my focus on getting the crop in for next year, I will likely not deliver my grain until we're into April or May. For some of my contracts, that's almost eight months later than what the contract stipulated, which is eight months of not getting paid.
For these reasons, I am advocating for the amendment and passage of Bill C-49, the transportation modernization act, as a long-term solution to addressing the ongoing freight rail failures.
With respect to the role that reciprocal penalties play in this legislation, railways have long had a variety of measures that govern shipper efficiencies, including asset use tariffs. These tariffs are used to penalize shipper failures through monetary fines in order to gain shipper efficiencies. For example, when the railway spots my cars at a local elevator and the grain company fails to load them within 24 hours, the grain company faces an automatic monetary penalty. On the other hand, if the railway shows up two weeks late, there are limited or no penalties. Therefore, the railways are the only link in the grain logistics supply chain that are not held to account.
We were recently made aware that CN Rail has included a form of reciprocal penalties in their service level agreements. On the surface, this seems like good news, but these penalties are still extremely one-sided. As an example, they give CN the ability to spot cars at any time in a period of more than a week, while grain companies are still required to load these cars within 24 hours or face penalties. Bill C-49 provides the ability to establish service level agreements with truly reciprocal penalties.
Under Bill C-30, which expired on August 1, 2017, interswitching provisions, which allowed shippers to access any interchange within 160 kilometres, proved to be a powerful and effective competitive tool to improve competitiveness for grain shippers.
7:35 p.m.
Liberal
The Chair Liberal Pat Finnigan
Mr. Sekulic, I'm going to have to ask you to wrap up, because we're past the time. I'll give you time for a concluding statement.
7:35 p.m.
Director, Alberta Wheat Commission
Our priority is to ensure the ultimate passage of Bill C-49 in order to help correct the imbalance between the market power of the railways and shippers, and we would strongly advocate for the deficiencies in long-haul interswitching to be addressed.
7:35 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you so much, Mr. Sekulic.
Now we have Mr. Fransoo for seven minutes.
7:35 p.m.
Daryl Fransoo Director, Western Canadian Wheat Growers Association
Thanks for that story, Warren. I've heard from farmer after farmer after farmer that we can't get our grain to the ports and we can't get paid. That's kind of the big thing.
Mr. Chair and members of the committee, on behalf of the Western Canadian Wheat Growers, thank you for holding this meeting. I'm glad this issue is getting the attention it needs, although I am saddened that we have to be holding this meeting at all.
As a grain farmer, I can state without hesitation that when our rail lines are only hauling 50% at most, a lot of people and a lot of farmers are hurting.
Unfortunately, one of the reasons these statistics have risen in the last couple of weeks is that carriers are running more trains on main lines, and many farmers and terminals on the side branch lines are still woefully short of rail stock. In addition, we are now facing spring breakup in many parts of the country, so road restrictions are coming into place. Then we have planting season. We can ill afford to have these kinds of rail backlogs in the future.
As I stated, I personally know of many grain farmers who are having the same problems as Warren. One in particular has a barley contract worth three-quarters of a million dollars that is three or four months behind. He's a good-sized farmer, but that's a lot of money to be waiting on.
When grain is sitting in a farmer's bin, of course we aren't getting paid. We can't pay our bills, and the domino effect rolls out across all the towns and across the Prairies. On top of the immediate financial problems, farmers are attempting to make decisions for the looming crop year. When cash flow has all but stopped for many farmers, the future looks bleak.
I'd like to remind the committee—and Ian did it earlier—that in 2014 this not only affected grain but also the fertilizer coming up from the Mississippi. It ultimately made it here, but it gave input companies a reason to jack the prices, and farmers had to pay for that in the end. Truthfully, it shouldn't be this way and it doesn't need to be this way.
I'm glad that CN acknowledged they had made mistakes. This is a good start, but good intentions do not resolve the problem that grain farmers are facing.
I recognize that we can't discount weather, because it is an obvious safety issue. With that said, rail has run in Canada for over a hundred years. Cold temperatures and snow in July shouldn't be a surprise, and we need better planning for that. CN and CP need to be better prepared. They need to not get rid of power and have more front-line manpower. Obviously their forecasting was poor, so I suggest maybe they spend some money on that.
Although Bill C-49 isn't a perfect bill, it does give shippers some clout and does put some of the onus back on the rail companies. We need to pass this bill, with some of the proposed amendments, sooner rather than later so that farmers have that much-needed protection.
The government has stressed this year that agriculture will play a major role in strengthening our GDP and the middle class. We grain farmers are up to the task. We are among some of the most productive grain growers on the planet. Unfortunately, with the current grain transportation problems, we won't be able to easily meet these objectives. There are tens of thousands of farmers and hundreds of thousands of middle-class people who are negatively affected by backlogs like this.
We need an efficient transportation system. We need to be able to move all commodities to market: grain, minerals, raw resources, and finished goods. We need to be able to meet our customers' expectations. We need good rail lines that meet timelines, and we need pipelines for oil. The Western Canadian Wheat Growers believe this is a non-partisan issue. Ships are waiting in Vancouver. Farmers have the grain that needs to be exported on these ships. Farmers and grain shippers want to work with you, the governments, and we want to work with the rail companies. Let's collectively solve this problem.
In closing, Mr. Chair, Bill C-49 needs to be passed as soon as possible. We need long-term solutions to the problems we are facing today, but first and foremost we have to get this bill through. Get it done before the summer comes along so that we can work with some of these clauses in there and make sure they work.
Mr. Chair, I thank the committee for meeting today. Let's make certain that we, collectively, are not just talking. We need to be doing, and starting today, we need to fix this problem for the long term.
I look forward to answering your questions.
7:40 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you very much, Mr. Fransoo.
Now we have Mr. Mazier for seven minutes.