Agriculture Committee on March 19th, 2018

[Dan Mazier]

That was planned shipment, so that's correct.

Here is what happens if they don't get them when they order them. The boat is sitting out there, and they said they wanted them in week one, week two, or whatever. They don't show up until the next week, so then they have more orders. They have to clean up week one and week two. Let's say they delivered only half of them; then they get bumped, and they say, “Oh, no; we only brought half of them again.” That's 28,000 cars of missed opportunity.

Meanwhile, as was alluded to earlier this afternoon, there's another crop coming from another part of the world that we didn't even think we were going to be competing against, because our grain was supposed to be gone. The plan was for 5,000 cars a week. The shippers were there and the railways agreed to it, but the railways decided they had another plan. Then I guess winter came.

[Warren Sekulic]

Further to that, if the plan was 5,000 cars a week, the elevators buy grain to their expected level of service. They're only buying grain from the farmers up to what they can expect to ship. They're doing that, as far as I understand, based on their agreements with the rail companies, and the rail companies aren't living up to those agreements. It's frustrating at the farm level, where the line companies or shippers are actually just buying up to the number of cars that the railways say they can supply, and they are not even living up to that.

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

We know that Bill C-49 is supposed to solve much of the problem, but do you think this bill and the amendments will meet all the needs?

[Daryl Fransoo]

I guess time will tell. I don't think it's quite strong enough. That doesn't mean we can't get it passed and get some clout for the shippers, right? Maybe next time around we'll have to circle the wagons and look at the MRE or whatnot. What is important today is to get this bill passed.

[Dan Mazier]

There is no silver bullet. It will go a long way in fixing a lot of things, modern-day things.

We've dismantled the Wheat Board. In some way they did control the flow of grain. They bought it differently, as Mr. Ritz alluded to earlier today. Things flowed differently in Canada.

We have a new market, called Japan, all of a sudden coming into the west coast. Things have changed in Canada. A modern-day Bill C-49 will bring us up to date to at least address these problems.

The problem is that part of the act needs updating. We've transformed as a country and we just haven't been able to adapt in a regulatory sense to make it happen for everybody.

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

I have one last question.

Earlier, I asked the people around the table if it would be possible to have elevators near the ports. When crop yields are high, the crops could be shipped very close to the ports. In difficult times, there would be reserves on hand ready to be delivered so you could meet your commitments. Is that feasible?

[Warren Sekulic]

In my part of the world, the farmers are already hauling huge distances. Some farmers are already hauling four hours one way to get to the high-throughput elevators. Maybe I'm misunderstanding your question, but if you start building the elevator....

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

At harvest time, the grain cars would start moving immediately in order to fill the reserve elevators close to the ports. When challenges arise then, there would already be reserves on hand to meet the demand because the grain would already have been shipped by rail.

[Dan Mazier]

That's how they treat Alberta. They're closer, so they'll do cycle times quickly. Then they'll empty out Saskatchewan. In Manitoba, we actually go through the St. Lawrence Seaway a lot. Sixty percent of our product goes from Manitoba that way. It's interesting. The railways have got it figured out, but if things go really badly, they empty out Alberta first—probably southern Alberta, not northern Alberta. Then they'll start whittling away at western areas. They're using the closer elevators, but there's still a mountain range that they have to get through.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Poissant.

Mr. Barlow, you have six minutes.

[John Barlow, Conservative, Foothills, AB]

Thank you very much, Mr. Chair. I'll split some of my time with Mr. Dreeshen.

It's frustrating that we're dealing with this, and it's sad to see or hear from our producers today that they have pretty much resigned themselves to the fact that this is a lost season. It's especially frustrating when, as Mr. Fransoo said, action could have been taken weeks or months ago to address the season, regardless of what happens with Bill C-49.

This is no fault of my colleagues across the way, because we do work fairly well together. Many of the amendments that are being discussed right now that you have all talked about today were brought up at the transport committee by the Conservatives, and the Liberals voted them down at the transport committee.

We're already talking about dealing with things next year, the consequences of this year. This should never have happened if we had acted quickly on the advice from stakeholders and members who went through this before in 2013-14. I'm just shaking my head that while we're having to deal with this situation, we're already talking about how to deal with the consequences.

Mr. Mazier, you talked about CN getting through this before somehow despite massive cuts. It was because nothing was being transported in the energy sector that they managed to get through that, but it's a little different this time around. You're right that they made massive cuts to their staff and their equipment, and now they're trying to scramble to get it back.

Ian Boxall brought it up before, when he talked about how he pays $360,000 a year in freight alone. The cost to the industry of that last crisis in 2013-14 was $8 billion. Do you have any idea what this is costing you this time around, and have you recovered financially from 2013-14?

[Daryl Fransoo]

I think it's a little too early to put a dollar amount on it. Fortunately, this time around we are a little later in the season. In 2013-14 we saw that basis widen, whereas right now we're just starting to see it widen.

It's a little too early to put a number on it, but the fact that a lot of farmers are taking on more debt to pay off their debt shows we have a big problem here.

[John Barlow, Conservative, Foothills, AB]

We also heard over the last few weeks that our transport minister and our agriculture minister consistently defend the railways, saying we've talked to CN and we've talked to CP. They relied on them to try to solve this problem. We've seen the consequences of that approach.

In your opinion, from the answers you heard today from CN and CP, do you have any faith that without the consequences of fines, penalties, and mandatory volume regulations, there would be any incentive for CN and CP to improve their service?

[Daryl Fransoo]

No. The straight answer is no. Their plans were nothing. A lot of CN stuff was already announced, to be quite frank. Then I felt CP brushed farmers by the wayside with their letter to the minister, unfortunately.

[Dan Mazier]

They didn't talk about grain at all in their replies, so it was basically business as usual. This is how they were reacting to it. It was not specific to agriculture or grain, which is.... I think they missed the mark on it.

To answer your question, when we get Bill C-49 passed—not “if” we get it passed—it will enable a lot of us to do a lot more things to the railways to hold them accountable. That's why we need it passed.

[John Barlow, Conservative, Foothills, AB]

Right, but sometimes the government has to step in and take some action. Definitive action could have addressed this weeks ago, and they didn't act.

I'd like to share the rest of my time with Mr. Dreeshen.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you, John.

Again, as we've heard so many times, getting Bill C-49 passed with the amendments is the critical aspect of it; otherwise, we'll be coming back to deal with this again later on.

One of the things we talked about earlier was the APP and whether it should be raised from $400,000 to $800,000 and so on. All of those things don't help unless you know exactly when you want to use that tool, because if all you're doing is punting it down the road because you've lost all of the contract opportunities and your marketing....

That can work, and you can use it, but you better know that the year before, rather than trying to deal with it on an ad hoc basis.

Of course, the other aspect of it is trade, which is what we really are missing throughout. I was just in Southeast Asia a couple of weeks ago, talking on trade issues. We tried to say that we'll be able to market these products and that they should look at the great things they'll get if they have our Canadian grain or our beef and so on, but they look at it and say that right now they know they can get it from Australia, and there are no issues there. I know we're losing all of these opportunities because of the way people look at it.

That's one of the aspects that we have to recognize. The railways forecast a 2% or 3% increase and say they'll just do it as the economy looks, but as farmers we are increasing the volumes immensely because we have the skills and the tools and we are going from there. The key concern I have is how we keep this pressure on throughout the summer so that they are ready on August 1, when week one shows up, to handle the issues we always face.

[The Chair, Liberal, Pat Finnigan]

Unfortunately, that's all the time you have.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Well, I got my story in.

[The Chair, Liberal, Pat Finnigan]

I guess that covers our meeting. I certainly want to thank all of you for taking the time and for that extra-long day. I wish you a good trip back, and I think the message has been heard.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

I want to thank all the members of the committee too, Mr. Chair, because they accepted to have this emergency meeting. I think we appreciate the fact that we had this four-hour meeting. I just wanted to put it on the record.

[The Chair, Liberal, Pat Finnigan]

Okay.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

To all the staff, translators, and everybody, thanks. Hopefully we won't get you to work that late every night. Thank you.

[The Chair, Liberal, Pat Finnigan]

The meeting is adjourned.