Agriculture Committee on March 19th, 2018

[Rick White, Chief Executive Officer, Canadian Canola Growers Association]

Thank you and good afternoon, Mr. Chair and members of this committee. My name is Rick White. I'm the CEO of the Canadian Canola Growers Association. Thank you for inviting me here today to contribute to your committee's investigation into the current grain transportation backlog.

The Canadian Canola Growers Association is a national association governed by a board of farmer–directors that represents the voice of Canada's 43,000 canola farmers from Ontario west to British Columbia. In crop year 2017-18, Canadian farmers harvested an estimated 21.3 million tonnes of canola, and that is an all-time record.

Canada is the world's largest exporter of this highly valued oil seed, and we grow a truly global crop. In any given year, over 90% of Canadian canola, in the form of the raw seed or the processed products of canola oil or canola meal, is ultimately destined for export markets in more than 50 countries around the world.

Canola farmers critically rely on rail transportation to move our products to customers and keep those products price competitive within the global oilseed market. We have no alternative. The competitiveness and reliability of the canola industry, which currently contributes over $26 billion annually to the Canadian economy, is highly dependent on the supply chain providing timely, efficient, and reliable service.

Last year, Canada's railways transported over 50.7 million tonnes of grain originating in western Canada. It is a complex system, but we need to make it work to the benefit of all parties and the broader national economy as a whole. Farmers occupy a unique position in the grain supply chain, and this is what fundamentally differentiates this supply chain from that of other commodities. Farmers are not the legal shippers, but we bear the cost of transport, as it is reflected in the price we are offered for our products from the buyers of our grains and oilseeds, who are the shippers.

Simply put, farmers do not book the train or boat, but they ultimately pay for it. Transportation and logistics costs, whatever they may be at a point in time, are passed back and paid for by the farmer. Transportation of grain is one of several commercial elements that directly affect the price offered to farmers across western Canada. When issues arise in the supply chain, the price farmers receive for their grain can drop, even at times when commodity prices may be high in the global marketplace.

Another transportation-related issue for farmers is that until their grain is delivered to the buyer, they are not paid. Cash flow depends on grain delivery, regardless of the terms or dates that may be specified on a contract.

When transportation issues disrupt the typical commercial flow out of a bulk elevator or process facility, it affects the ability of the buyer to accept the contracted grain in the agreed-upon window, as there may be no physical space available. When this becomes highly unpredictable or there is a sustained lack of rail service, weeks or months in length, the reverberations extend back directly to the farm gate. It also extends forward to final purchasers in export markets, as grains do not arrive when planned, damaging the reputation of Canada as a solid and dependable source.

This is a primary reason that western Canadian farmers have such an interest in transportation: it directly affects personal farmer income.

Beyond that, farmers critically rely on the service of Canada's railways to move grain to export position. The last several years of reasonably good overall total movement and relative fluidity of the supply chain should not lessen our focus on seeking to improve and do better, as a sector and a nation, as fundamental issues continue to exist.

The current transportation predicament can essentially be grouped into three related but separate issues. The first is that the current rail service issues have created a backlog of grain. The second is the need for immediate government action, and third is the linkage to Bill C-49.

Starting with rail service, one of Canada's class I railways has incurred what we can politely characterize as a system-wide sustained operational failure on its network. As it has conceded, this was largely a problem of its own internal business forecasting and planning, which then was exacerbated by the effects of annual winter operations and various other disruptions.

The other has had better performance overall this year, but at times still at unacceptable levels. The dismal service level sends signals to elevators to not accept grain and in turn to producers to not ship grain. Producers who need to pay bills and purchase inputs for seeding cannot do so, at no fault of their own, and there are no options. Poor rail service causes disruptions in the market for producers, for shippers, and for our export customers. The level of service seen over the past period has been simply unacceptable.

In terms of the second issue, the role for government starts with a recognition that Canada is served by two major railways that operate in essentially monopoly positions. There are no alternatives to move our large volumes of grain. Governments need to play a role in balancing the power of these railways. We were pleased that Minister MacAulay and Minister Garneau have directly communicated with the railways and demanded an action plan, but this should not be needed. Rail should move regularly and predictably on a permanent basis. Bill C-49 can help in that regard.

For farmers impacted by the poor rail service, cash flow can be a problem. A proactive policy measure available to government could be to increase the maximum limit available under the well-established federal advance payments program. The increase would expand farmers' access to competitive financing while the backlog clears the system, maintain flexibility in grain marketing and farm management, and be at no cost and low risk to the government.

The program maximum is currently set at $400,000. Aside from the transportation challenges being discussed today, a compelling business case for an increase already exists. Since the limit was last set in 2006, farm size and demographics have evolved, farm expenses have grown, inflation has increased, and the grain marketing environment has become more volatile. A limit increase would work to ensure that the program remains relevant and continues to help farmers finance their operating requirements, especially in times like these. Increasing the limit would provide an additional tool for farmers to manage cash flow and finalize 2018 production plans, with spring seeding close on the horizon.

The railways have committed to take steps to improve service, with action plans already set in motion to obtain resourcing. With winter almost over, we expect to begin seeing service improvements in the coming weeks, but an increase to the limit under the APP could offer a tool to help farmers who have been directly affected by the current backlog.

[The Chair, Liberal, Pat Finnigan]

Mr. White, I'm going to have to ask you to please complete your presentation.

[Rick White]

Lastly, looking forward, Canada must continue to find ways to address the fundamental problem of railway market power and the resulting lack of competitive forces in the rail freight marketplace.

Bill C-49 appears to make progress towards this goal in several areas and does reflect a consideration of what the Canadian rail shippers and the grain industry have been telling successive governments for years about the core of the imbalanced relationship. Bill C-49 is designed to balance two competing interests, that of the shipper and that of the rail service provider. The true measure of success will likely take years to fully gauge. The reliability of our transportation system affects buyer confidence in the global Canadian brand. We know that, because we directly hear about it.

The CCG encourages the Senate and government to work together to ensure Bill C-49 passes and becomes law as soon as possible. This is the long-term fix to the problems we have today. We need it passed, and we need it passed before this session is over.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you so much, Mr. White.

Go ahead, Mr. Bonnett, for seven minutes.

[Ron Bonnett, President, Canadian Federation of Agriculture]

Thank you, Mr. Chair and the committee, for inviting me to talk about rail transportation and how Bill C-49 can help to prevent the same chaotic situation from happening again.

Right now demurrage costs for vessels waiting at port are escalating, farmers are experiencing significant disruption in their cash flow, and international markets are yet again facing volatile delivery dates. You'll hear more about this in later presentations.

We are here today because a mere four years after an unprecedented breakdown in rail transportation amounting to billions of dollars of losses to the Canadian agricultural economy, we are on the verge of exactly the same disaster. The Canadian Transportation Agency, the CTA, held a review, and three years ago the agricultural industry submitted 10 recommendations to this review that if implemented in their entirety would most certainly have helped prevent this near repeat of the 2013-14 disaster.

Incidentally, recommendation 1, which was to give the CTA own-motion authority, which I will address in more detail shortly, would have prevented the current disastrous scenario, because everyone, including the CTA, was aware of a pending crisis as early as last October. The railways were either unaware or didn't care, knowing that the grain would wait. For the short term, and to solve the current crisis, we ask the minister to look at all options available. If that means mandating volume, we simply ask that it be done strategically to ensure that all geographic areas and commodities are equally well serviced.

Second, FCC and several banks have already announced various mitigation programs. The CFA would support Rick's comments about the advance payments program to address any cash flow issues farmers may be experiencing, and would support the expansion and higher levels as recommended.

For the long term, the needs have changed. At first it was thought that just an immediate implementation of Bill C-49 would serve us well and perhaps even prevent a repeat of 2013-14, and there was an urgent push to pass legislation quickly, even at the expense of several important amendments. Not everyone believes that this is the key thing right now. We have to ensure that Bill C-49 has the tools to prevent the current crisis from happening again. As it is currently written, it does not, as confirmed by many industry players, including CN, which at the CFA annual meeting said that the passage of Bill C-49 would not have avoided the current crisis. They went on to say that only end-to-end data collection, analysis, and fact-based decision-making could solve the problem. This sounds like a ringing endorsement to give CTA own-motion authority, since for the data to have any value, someone must have the authority to investigate and mandate solutions before a problem has started.

Honourable members, the Canadian Federation of Agriculture recommends the following with some urgency.

First, Bill C-49 should be amended to give the CTA investigative authority and the authority to act on its findings by mandating solutions. This would be, for example, investigative authority to be able to request information and data relevant and robust enough to provide a clear picture of transportation logistics, and own-motion authority to proactively mandate solutions. The second is to expedite passage of the bill after the inclusion of industry-submitted amendments.

Allow me to quote the Canada Transportation Act review. It recommended “amending the Canada Transportation Act to confer upon the Agency investigative powers, and the authority to act on the Agency’s own motion and on an ex parte basis, as well as to address issues on a systemic basis and to issue general orders.” The agency itself has requested own-motion powers in its most recent annual report, highlighting it as a major weakness in its ability to discharge regulatory responsibility. Shippers from across all sectors broadly support that request. This amendment will ensure that the regulator has the authority to proactively monitor the system, identify and investigate problems before they become a crisis, and take necessary action.

Own-motion authorities are not exceptional powers in Canadian economic regulation. Other expert quasi-judicial tribunals and regulators often have broader own-motion authorities. The agency's predecessor, the National Transportation Agency, had broad powers to address problems without a formal complaint. The National Energy Board and the Canadian Radio-television and Telecommunications Commission also have the power to act without complaint to address issues within their jurisdiction.

To reiterate, an extension of the agency's own-motion authority would allow for proactive solutions and inquiries when there are reasonable grounds for believing a problem might exist. Such grounds could include statistical evidence, a pattern of complaints, or consistent and credible media reports regarding a transportation service provider's financial difficulties or service failings.

We further support amendments suggested by various industry players, including the long-haul interswitch provision, and the inclusion of pulse crops in the MRE, which would help make our own grain transportation network more competitive and more capable of serving our growing international markets.

The CFA dismisses the argument that amendments will delay the passage of the bill. Members know that this does not have to be the case. Amendments suggested to date have been made by knowledgeable industry players striving to build an effective competitive transportation network and to provide the confidence we need as we continue to grow our international markets.

In conclusion, the excuses of winter weather and unexpected yields don't pass the smell test. The real reason, cutting costs to increase shareholder value rather than focusing on customer service, is much clearer. Information that included higher-than-expected yields, inventory, and grain movement requirements compared to previous years was well known by industry players as early as last October. The fact is that we can no longer depend on railways to get it right without significant regulatory and legislative guidance and authority.

[The Chair, Liberal, Pat Finnigan]

Thank you for your presentation, Mr. Bonnett.

We'll have Mr. Dyck now, for seven minutes.

[Mark Dyck, Senior Director of Logistics, G3 Canada Limited]

Thank you very much for the invitation to be here today to speak about the grain backlog. My name is Mark Dyck. I am the senior director of logistics for G3 Canada Limited.

G3 Canada Limited was formed through the combination of the former CWB and Bunge Canada's grain assets, funded by two strategic shareholders, Bunge and SALIC, with the long-term vision of establishing a state-of-the-art grain handling company in Canada and a new competitor for Canadian grain farmers.

The G3 transportation model was developed well in advance of the formation of G3 in 2015. G3's strategy was formed on the heels of the bumper crop in 2013-14, when the Canadian grain handling system's fundamental weaknesses were highlighted through shipping and rail backlogs. The government of the time intervened with Bill C-30 to further regulate the Canadian grain handling system with minimum volume requirements to address the short-term issue.

There were some unintended consequences. Service levels did increase; however, they may have at any rate, as that coincided with warmer weather and the reopening of the port of Thunder Bay. We believe the regulation never solved the fundamental problems in the industry.

Western Canada is blessed with an abundance of natural resources. The markets for those resources rely largely on Pacific export corridors, and grain must compete with other commodities for a scarce resource: rail capacity. G3 is making investments to address some of these issues to ensure grain handling remains competitive with other industries in Canada.

We believe the fundamental issues are as follows.

Insufficient improvements have been made in the grain industry to invest in efficiency improvements. The last major port terminal construction was in the early 1980s. Much of the port terminal infrastructure dates to the mid-1950s or earlier, when the industry was still moving grain in boxcars. They have been upgraded since, but not to the same standard as for other resources, such as coal and potash.

Inland primary elevators are of a newer vintage, with most dating from the mid-1990s to the early 2000s, but many small shippers still exist. The logistical technology that is incorporated at these elevators has failed to keep pace with other industries and is relying on ladder tracks and breaking trains apart. This slows the loading process for grain, which is exacerbated in the cold Canadian winters when it is difficult to air up the train when it is being reassembled.

The supply of grain does not enter the grain handling system in a steady state. Market conditions are such that demand for rail capacity is generally higher in the fall and winter months. The surge capacity required to effectively conduct these exports, particularly off the west coast, does not exist today. Terminals are generally operating at or near capacity, and this problem will continue to grow as the production level in Canada continues to increase.

Early this crop year we saw that farmers were tight holders of grain during what has historically been a very busy season immediately following harvest. The volumes started to shake loose at the same time that western Canada entered winter. The railroads did not have the capacity to service such a spike, following a slower than expected delivery in the early fall period.

If these are the fundamental issues, what are the solutions?

First, it's important to recognize that the situation is not as dire as it was in 2013-14. Production in western Canada in 2017 was 70.9 million metric tons, down about 1% from last year but about 3% above the five-year average. According to Quorum Corporation, the federally appointed grain monitor, total metric tons unloaded at the Vancouver, Prince Rupert, and Thunder Bay ports, which is where the vast majority of western Canadian grain is shipped, is 6% behind last year but on par with the five-year average.

In comparison to 2013-14, Quorum shows that the railways moved 25% more grain hopper cars—that's about 40,000 cars—to Vancouver, Prince Rupert, and Thunder Bay in 2017-18 versus 2013-14. That is from August through January. The February date is not yet available. While rail performance has not met industry's expectations this year, the situation is not as bad as it was in 2013-14. That said, the long-term issues need to be addressed with long-term solutions.

G3's long-term strategy was born out of discussions with industry experts, the railroads, and farmers alike. G3 is investing significant money in a new type of grain handling system featuring loop tracks, a feature not uncommon in the coal and potash industries. We load grain faster and more efficiently than ever before. In addition, we are constructing a new state-of-the-art grain terminal in Vancouver, with loop tracks that will be able to accommodate three fully loaded grain trains intact on the property. G3 is making investments that industry has not experienced in decades, investments that will create surge export capacity, rail efficiency, and velocity.

In periods when demand spikes and conditions become challenging, companies such as G3 will still be able to function at levels not seen anywhere else in the industry. We are able to load a full, 134-car unit train even in extreme cold weather by keeping the trains intact, with the railway locomotives on the train. When locomotive power is not left on the train, the railroads are forced to shorten train lengths to ensure they can properly air out the train for their braking systems. Our model creates a win for us as the grain handler, as well as for the railroads and for farmers.

G3's position is that its investments in efficiency will allow Canadian farmers to effectively reach world markets, allow railroads to function, and allow those grain handlers willing to make the investments to thrive in the long term. Competing exporters around the world—in the U.S., Latin America, the Black Sea, and Australia—have been investing in efficiency for decades. It is time that Canada does the same. We are leading by example in this regard.

The railroads have the responsibility to provide sufficient rail service to the grain handling system. Overall, we are supportive of Bill C-49, which introduces reciprocal penalties, as each party in the supply chain needs to be held accountable. We believe this will provide the motivation required for the railways to be adequately resourced to handle surges in rail demand and winter operating conditions. Further, Bill C-49 introduces the incentive for railways to invest in newer hopper cars, allowing for more grain to move on the same unit train. New, shorter cars will bring additional efficiency to the supply chain and allow companies such as G3 to load 150 cars on our loop tracks, where today we can only load 134. In addition, each car will be able to load about 2.5% more product. This represents a total increase of 16% for each train that arrives at one of our elevators. We would like to see Bill C-49 pass as soon as possible.

We are also supportive of the national trade corridor fund and hope to see some of this fund applied to projects that will further increase railway efficiency, specifically around the port of Vancouver.

In conclusion, I would like to thank you for the opportunity to share G3's unique perspective on the issues and potential solutions pertaining to grain handling in Canada.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Dyck.

Now we have Mr. Tyler Bjornson, for seven minutes.

[Tyler Bjornson, Consultant, Western Grain Elevator Association]

Thank you, Mr. Chair and members of the committee.

I'm presenting to you today on behalf of my client, the Western Grain Elevator Association. We're pleased to have the opportunity to contribute to your study of the grain transportation backlog.

The WGEA represents Canada's six major grain handling companies, with inland and port facilities from Quebec to British Columbia. Collectively, these companies handle in excess of 90% of western Canada's bulk grain movements. Working alongside grain producers and other rail-reliant industry sectors, the WGEA has been committed to finding long-term solutions to chronic capacity and performance deficiencies in our rail freight system.

The growing backlog of rail shipments in western Canada continues to have a significant negative impact on shippers and the farmers they serve. As you will hear from numerous witnesses over the course of this study, declining rail service over the winter months has created the worst backlog we have experienced since 2013-14.

According to the Ag Transport Coalition, the total railcar shortfall is currently at almost 28,000 railcars. This represents over two and a half million tonnes of grain that companies have submitted orders for that have not been filled in the week they were ordered.

Overall performance over the course of this shipping season has been steadily deteriorating, with car order fulfillment below 50% on average in most weeks. One railway in particular has brought the average down, hitting an all-time low in the week of February 12, when just 17% of cars ordered were filled for that order week.

For grain shippers, that translates into serious costs in the form of not just lost sales but penalties due to vessels waiting at port. It also means a hit to Canada's reputation as a reliable supplier, a reputation that has not yet recovered from the 2013-14 grain crisis. As members of the committee will know, in a highly competitive market like ours, once business is lost to a competing supplier, it is very difficult to win that business back. These are the immeasurable costs that hurt us not only in the immediate term but also for years to come.

In this context of challenging service, we would like to thank Minister MacAulay and Minister Garneau for their interaction with the railways and for working to find ways to see an immediate improvement in rail service, not only for grain but also for the many sectors that are experiencing problems.

As most of you will know, the WGEA has been singularly focused on fixing rail issues in a permanent way. While this current backlog is shining much-needed light on the systemic problems that plague Canada's rail logistics system, the issues are of a much more chronic nature.

The WGEA is of the view that the measures contained within Bill C-49 represent a big step in the right direction toward arriving at permanent legislative solutions. The ability to negotiate reciprocal penalties into our service level agreements, for example, is in our view one of the most important provisions contained within the bill.

Consider what has likely precipitated the current rail backlog. Would the railways have planned differently this fall had there been the legitimate threat of penalties for not moving grain and other bulk commodities? We believe the railways would have taken different decisions if credible reciprocal penalties had been in place. Unfortunately, with the provisions of Bill C-30 expired and the passage of Bill C-49 uncertain, grain companies and farmers are effectively left in this no man's land with no tools or remedies for poor service.

It is to that end that the WGEA has joined with farmers and the entire grain sector in asking that Bill C-49 be passed without delay. The bill, as you know, is currently before the Senate committee on transport and communications. We are grateful to the senators of that committee, who are taking the time to ensure the bill achieves its intended goal of better performance by rail.

It will be well known to members that the WGEA is of the view that the bill needs to be improved in a key area with respect to the long-haul interswitching mechanism, the LHI mechanism. The LHI provision is not only more bureaucratic and difficult to use than the extended interswitching mechanism we saw in Bill C-30; we are also concerned that the grain sector will not be able to leverage its use properly if two small targeted amendments are not made.

As the bill is current written, if an elevator is dual-served—meaning it already has access to two competing rail lines on site—or if it's located within 30 kilometres of an existing interchange, the facility will be excluded from applying for an LHI order. Now, if those two rail lines are both headed in the relatively wrong direction—for example, east-west when the traffic's final destination is the southwestern U.S.—that elevator for all intents and purposes is still captive. The LHI is useless to them.

We have done an analysis on this point and have determined that 75% of all Canada's value-added grain processing facilities would be prohibited from using LHI because of this restriction. In terms of creating competition, we believe this was not the intent the government had when it drafted this provision.

The grain sector submitted an amendment to the House of Commons transport committee study to address this situation, but unfortunately it was ultimately rejected by the House.

It is our hope that now, during these final hours of consideration and in the context of the current grain handling situation, the Senate committee will take this opportunity to include these important targeted amendments in their report.

I want to take these final seconds to address you, the members of this agriculture committee, to ask for your help to ensure that once the bill is brought back to the House, you will work with your colleagues to do whatever is necessary to get the bill passed.

The WGEA, grain farmers, and our sector as a whole have waited too long to see this bill made law. We implore you to work across party lines in the interest of this sector to get the job done.

Members of the committee, the reality is that we've already lost too much in this shipping season. Let's not lose the next one as well.

Thank you for your time. I look forward to your questions.

[The Chair, Liberal, Pat Finnigan]

Thank you very much, Mr. Bjornson.

Now we'll start our question round. We'll start with Mr. Berthold and Mr. Barlow.

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

Before I begin, Mr. Chair, I want to commend our interpreters on their outstanding work. Everyone here can attest to the work they do. Part of the presentation was very tough to interpret. Mr. Bjornson spoke very quickly and the interpreter did an outstanding job. My congratulations and thanks to him.

[Voices]

Hear, hear!

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

For the last little while, you have been calling for Bill C-49 to be passed as quickly as possible. Do you have an opinion on the Canadian passenger bill of rights, though? Do you have an opinion on the public participation of foreigners in the funding and shareholding of Air Canada? That is the problem with Bill C-49.

The problems with Bill C-49 can be traced primarily to the fact that the Liberals refused last June to divide up the bill so as to speed up the adoption of certain measures. The two opposition parties wanted to proceed very quickly in order to avoid the black hole of August, given that the special measures established in Bill C-30 were about to expire and become void. That is the truth.

The government does not want us to be partisan, but it behaved in a partisan way itself by putting forward Bill C-49, which is full of things that have nothing to do with each other. Now, it is using us to get this bill passed as quickly as possible, but you have nothing to do with the passenger bill of rights.

What we want is for the grain to be shipped. What we want is for you to sell it on the market. What we want is for the system to work. Unfortunately, what the government wants is to pass an omnibus bill that is full of things that have nothing to do with grain shipment. That is the problem.

If the bill had been divided up and we had been able to pass these measures last June, would we be in the same situation today?

[Rick White]

Our interest is on the rail side of the bill and on how it handles grain and grain products. We have no interest in, or at least our organization has no comment on, the passenger bill of rights side of things, or marine aspects or those types of things. We are very focused on the rail side of the bill. The government structured it as the government structured it, and that's for the government's debate.

[Ron Bonnett]

I think our issue is very similar. We know we have a problem with grain transportation. Frankly, it's not our job to fix it; it's the government's role to figure out the best way to fix it. I think what you've heard from the presentations is the urgency that's required, and I think what we have to focus on now is that urgency.

This is about the Senate, this committee, and the minister working together to figure out how to make sure that we can get Bill C-49 passed and how to make sure it has the teeth that are necessary to make it work.

[Tyler Bjornson]

I will just add quickly that no one is telling us to say “get this passed quickly”. We've been saying that for a very long time, and three of the five key things that we were asking for during the review under the previous government are now in this bill.

It's not perfect. It scares me a little bit that I have the same line as the railways: that although it's not a perfect bill, it's a good bill. There are several things in there that are critical, including reciprocal penalties. We didn't get extended interswitching, but long-haul interswitching we're willing to work with, so long as these important amendments are made to make it legitimately credible for us to be able to use it.

We're now stuck in the situation of having to implore all sides of the floor to please work together. If it were our way, we would have liked to have had this done months and months ago.

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

We could have worked together to solve this crisis nearly a year ago.

I will give the floor to my colleague, Mr. Barlow.

[John Barlow, Conservative, Foothills, AB]

Thanks again, Luc. You're exactly right.

Tyler, you touched on it. I remember speaking in the House about this last September and October; we did want to work across the floor. We adamantly supported splitting the rail transportation off of Bill C-49. We would move it through. I think if that had been the case, we would have caught some of these proposed amendments that you're bringing forward, like the long-haul interswitching and those types of things. If it had been a separate bill, we could have addressed some of these points then, but because it's such a huge bill, it's now stuck in the Senate on something that has nothing to do with what we are talking about right now. That's the frustrating part of this entire discussion.

I like to think that when we went through this in 2013-2014 as the government, we knew what we were facing. Bill C-30 would have addressed some of these issues in good faith. We said, “We're warning you that this is going to happen, so let's try to address it.” It is frustrating for us, but it's more frustrating for you as producers and stakeholders that you're having to go through this again when there was opportunity to try to fix this situation.

Rick, you brought up an interesting point that I think we missed out on, and it's a fact that Tyler brought up too: we're missing markets that we may have had. We're not getting a premium for our product, because on the international trade market when we're talking about our producers and we want agriculture to have a $75-billion trade business, which is fantastic, we're taking away every possible tool for our producers to be able to reach those types of goals.

Can you touch on the fact that we are not getting a premium for our product because we are no longer a reliable trading partner because we cannot meet our sales deadlines because we can not get our product to market?

[Rick White]

Our biggest premiums in the market globally are October, November, and December shipping. That is the toughest time to ship in Canada. When we miss that sweet spot and we're now pushing shipping down into June, July, and August, we are losing premiums that we would have captured had we had more rail capacity earlier in the year.

Yes, it's very unfortunate. We would rather see a lot more movement, a lot more sales going on when customers around the world are paying top dollar for our product, because the southern hemisphere is in a different cycle than we are. We are definitely losing out.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. White. Thank you, Mr. Barlow.

Mr. Drouin, you have six minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair. I'd just like to state some of the facts here, because I heard some issues that were not factual. I just remind my colleagues that the House of Commons was able to pass Bill C-49 within two months. The bill was first introduced on May 16 and we got it passed by October 30—sorry, let me correct the record: it was by November 1.

It's been in the Senate for more than two months, and it's the charter relating to passengers. I remind my colleagues as well—and they have access to the blues—that 70% of the discussion is about what we're talking about today. I just want to put the facts in perspective.

Mr. White, I know there are some issues with Bill C-49, but I think we're striking the right balance. We've heard a lot about the winter. Bill C-49 wouldn't have addressed the winter issues.

What can government do better? I know you mentioned the advance payments program. Right now the discussion we're having is not going to help our farmers today. In the future, is the government providing enough steps to mitigate that risk in terms of cash flow issues? Do you have any suggestions for us that we could adopt today?

[Rick White]

I did mention briefly about the advance payments program. As a proactive measure, the government should be looking at the advance limits that are currently in place. Right now, if farmers have not delivered and paid down much of their advance and they're at the maximum $400,000—say they paid it down to $300,000 due to slow movement—they're running into a brand new program on April 1 and they're only eligible for another $100,000. That's catching some of them in the pinch between two programs, because the overall maximum is $400,000.

An easy fix would be to expand that limit to whatever the government would be comfortable with. We would say double it to $800,000. Farmers use the program for what it's intended for, which is to cash-flow themselves so they can market their grain appropriately. They can't market now because of the grain transportation problems that are plaguing the industry such that they're not able to sell their grain. That is one very proactive measure on the finance side.

Again, I don't want to take away from the focus on the service issues at hand. Bill C-49 is what we really need long term, and we really need that bill amended and passed. There are some good amendments coming forward. It needs to be done this year to get ready for next year, because this year, what's happening is going to happen. We can address some of the financing, as I suggested—a short-term Band-Aid fix to help farmers through it financially—but at the end of the day, Bill C-49 is the focus. We need to get it passed. We need to get it through the Senate. We need co-operation with the House to get royal assent on it before we go into the summer break, because we need to start next year in a lot better place than we have been this year.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Great.

Mr. Bonnett, do you have anything to add?

[Ron Bonnett]

The cash flow is just one point.

I was a little disappointed when I listened to some of the railroad presentations. The one thing that gets missed in there is about getting the planning in place so that you can deal with the issues. Everybody knew back in October that there was going to be an issue, and then all of a sudden it's February when you start putting locomotives in place and drawing people back. I think the only reason they put those people in place was the threat of government action, and I think what we're looking at with Bill C-49 is that this threat is always going to be there. They have performance standards that they're going to have to meet.

We're talking about a bridge with the advance payment programs, but we have to remember that the core issue is that farmers can't market that grain when the grain is ready to be marketed. That's going to affect the cash flow, so unless we have a long-term solution, we could be back at this table in three years.

It's interesting that they talked about putting in interim engines to keep the lines open. That was discussed when they were in front of this committee four years ago as well. Why wouldn't that type of planning be in place?

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Maybe I can ask Mr. Dyck and Mr. Bjornson.

I know, Mr. Bjornson, your group is part of the Ag Transport Coalition. Is there an opportunity for you guys to meet every year with the rail companies and say what you think your crops are going to be this year, and how many cars you believe you're probably going to need? Is there that opportunity for you guys to talk about that with rail companies?