Agriculture Committee on Nov. 7th, 2024

[The Chair, Liberal, Kody Blois]

Good morning, colleagues. We'll call this meeting to order.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, October 24, 2024, the committee is commencing its study on issues and opportunities related to railways and agriculture.

As you know, colleagues, we have five different witnesses. We've decided to collapse them all into one panel. We'll be going for about an hour and a half today, and we'll get right to it.

First, from the Ontario Federation of Agriculture, we have here in the room Drew Spoelstra, president, and Jason Bent, director of policy research. Gentlemen, thank you so much for your work, and welcome to the committee.

From Pulse Canada, we have Terry Youzwa, who is the chair. It's great to see you in the room as well.

From the Union des producteurs agricoles, we have Stéphanie Levasseur, second general vice-president, in person, and David Tougas, coordinator, economics and trade, by video conference.

Welcome to you both.

Last but not least, from the Western Grain Elevator Association, we have Wade Sobkowich, executive director, joining us by video conference.

Colleagues, you know the drill: We're going to start with five-minute opening remarks from each witness, and then we'll get into questions. I expect we should be able to do about two full rounds, with three rounds for the Conservatives, three for the Liberals and two for the NDP and the Bloc.

I'd also like to recognize Ms. Sidhu, who is joining the committee. It's great to have you here.

Welcome to Mr. Boulerice, filling in for Mr. Cannings.

Finally, I'd like to welcome Mr. Epp, who's replacing Mr. Lehoux.

Okay. Let's move forward. We're going to start with the Ontario Federation of Agriculture.

Mr. Spoelstra, you have up to five minutes. It's over to you.

[Drew Spoelstra, President, Ontario Federation of Agriculture]

Thank you very much.

Good morning, Mr. Chairman and members of the Standing Committee on Agriculture and Agri-Food. Thank you for the opportunity to address the committee as part of your study into the issues and opportunities related to railways.

My name is Drew Spoelstra and I'm the president of the Ontario Federation of Agriculture. I farm near Hamilton with my family. With me today is Jason Bent, OFA's director of policy research. We represent over 38,000 farm families across Ontario and are committed to advocating for the interests of our members and the broader agri-food industry.

Ontario farmers face significant challenges as railways look to off-load costs onto them. These challenges centre on two main focus areas. The first is the costs related to safety upgrades for private railway crossings, and the second is the issue of drainage infrastructure.

Many Ontario farmers depend on private railway crossings to access their fields. These crossings are vital for transporting equipment, supplies and produce, ensuring that landowners can reach their own property, which was once divided by the railways.

Safety is critical to both railway users and those needing to cross the railway tracks. However, new safety regulations under the grade crossings regulations, which railways must comply with by the 28th of this month, will put an enormous financial burden on some farmers. Upgrade costs vary greatly depending on what's needed for each crossing.

Some of our members with private railway crossings have recently received letters from CN Rail informing them that unless an exemption to the regulatory requirements is granted, their crossings will need to undergo mandated upgrades, which will include the installation of an automated warning system with gates. In the letter, CN Rail provides an estimate that notes the necessary upgrades will cost each private railway crossing owner between $600,000 and $2 million, depending on the cost of installation for each automated gate system, in addition to an annual maintenance cost of $9,685 for the equipment.

The excessive costs of these required regulatory upgrades will result in the closure of some private crossings. Without alternatives, some property owners will have no choice but to lose access to the landlocked portions of their properties.

We understand that CN Rail is currently pursuing options with the regulator to seek a regulatory exemption for some specific crossings where CN Rail believes that cost-effective alternative measures could be implemented that would provide the same level of safety. While we support CN Rail's efforts to seek lower-cost safety alternatives for these crossings, the question remains as to who pays for the upgrades.

Depending on the crossing, some railways are pushing farmers to bear the upgrade costs by imposing new agreements. These unilateral agreements not only shift costs onto farmers, but also threaten to destabilize long-standing arrangements. In some cases, farmers are even receiving 30-day notices to close crossings or, worse, finding their crossings removed without notice.

OFA believes an immediate moratorium on the unilateral closing of private railway crossings is urgently needed. Additionally, railways must continue to honour their past long-standing obligations to manage maintenance and upgrades at their own expense. We support the efforts of railways like CN to seek reasonable safety alternatives for crossings.

Looking now at drainage, the shift in cost responsibilities is not limited to railway crossings. Railways are now backing out of their obligations under Ontario's Drainage Act, which distributes drainage costs based on the area of land drained. Proper drainage is critical for farmland, ensuring that soils remain productive by preventing waterlogging and flooding. Historically, railways have paid municipal drain assessments, but they now refuse to do so, citing their federal regulation status as grounds for exemption. This refusal means that millions of dollars in drainage costs could fall on farmers and rural municipalities instead.

Our position is that railways should remain responsible for these drainage costs, consistent with their historical obligations under Ontario's Drainage Act. In support of this, OFA has applied for intervenor status in a legal challenge between the Municipality of Chatham-Kent and the Canadian Pacific Railway. We are also requesting federal amendments to the Canada Transportation Act to clarify that railways must honour such provincial legislation.

In conclusion, these sudden and unilateral cost shifts are simply unacceptable. Farmers are already under intense financial strain from rising input costs, climate challenges and market instability. Imposing unexpected financial burdens undermines the stability of agreements that farmers rely on, impacting their mental health, their productivity and, ultimately, their livelihoods.

OFA urges the federal government to act swiftly on the following points:

Impose an immediate moratorium on the closure of private railway crossings.

Reinforce railway responsibility to bear the cost of necessary upgrades and maintenance for private railway crossings, as they have done in the past.

Prevent unilateral agreements imposing new contracts that shift maintenance costs and upgrades to landowners.

Secure government funding. Fully fund the rail safety improvement program to support farmers with compliance costs for safety upgrades. The deadline is fast approaching, and immediate action is critical for preventing these costs from falling on farmers.

Legislate amendments to the Canada Transportation Act to prevent railways from shifting costs historically covered by the railways.

Ontario's farmers provide essential services that support our economy and feed Canadians. We urge this committee to support policies that ensure fair and stable terms for farmers, enabling them to continue to produce food while safeguarding their financial and mental well-being.

Thank you for your attention to these urgent issues. We look forward to working together to secure a viable solution for Ontario's farmers and rural communities.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Spoelstra.

We'll now turn to Pulse Canada.

Mr. Youzwa, it's over to you for up to five minutes.

[Terry Youzwa, Chair, Pulse Canada]

Thank you, Mr. Chair.

I want to thank the committee for its invitation to appear this morning.

I'm Terry Youzwa. I am the chair of Pulse Canada. Pulse Canada is a national association representing over 26,000 pulse growers, as well as the processors and exporters of Canadian pulse crops, including peas, lentils, chickpeas, dry beans and faba bean. I'm a farmer from Nipawin, Saskatchewan, where I, along with my son, grow canola, wheat, oats, peas, faba beans and canary seed.

Canada is the world's largest exporter of pulse crops. Every year, we send billions of dollars' worth of pulses to over 120 markets around the world. To do this economically, Canada's pulse industry—and the entirety of Canadian agriculture—relies on a well-functioning supply chain. For crops like mine to make it to ports and onto dinner plates in markets around the world, they first rely on timely, predictable rail service. The lack of competition available results in unreliable and unpredictable service for shippers.

For a farmer in Saskatchewan, there is only one rail carrier that serves the region, effectively creating a monopoly. In fact, 94% of grain elevators are beholden to one single carrier. That is why Pulse Canada advocates for measures that not only make our system more efficient but also increase competition. Key among these measures is extended, regulated interswitching. Pulse Canada has long been an advocate for this policy, dating back a decade. It has been positive to see parties of all stripes recognize the pro-competitive value of extended interswitching and the positive economic benefits that competition delivers.

Farmers like me bear the cost of a supply chain that isn't performing, and you can see it in our yard: higher levels of inventory, increased storage costs, additional interest charges, wider bases and lower prices. That's what an under-performing supply chain means to me.

However, there's more to it than the cost of storing more grain for longer periods of time. For pulse growers, a good deal of the product moves by container. When the supply chain that moves product from Saskatchewan to transloaders in Vancouver is failing, it has an even bigger impact on our bottom line. Poor railcar order fulfillment and unpredictable service through to Vancouver create delays. Delays often result in demurrage charges and container detention fees. If cars and containers aren't getting unloaded and loaded at port on time, we're missing the vessel we booked to ship our pulses to the customer overseas. Missed shipment windows lead to price penalties that are built into the standard contracts.

Because it's all too common for our industry to experience these kinds of problems, companies often have to switch to more expensive transportation modes or widen shipping windows to mitigate risks, which only further reduces profitability and increases costs. These added costs can't be passed on to the customer because we're competing against the Aussies and new producers throughout the Black Sea region. Most of these costs have to be passed down to growers. We see these costs in the form of reduced prices and higher risk premiums.

The bottom line for me as a grower is that we need a system that offers more cars, better rates and better service. To get there, we need competition. The pilot that ran from 2014 to 2017 and the one running currently both show that extended interswitching works. Even when traffic isn't switched over to another carrier, I understand that extended interswitching is encouraging the originating carrier to do what it can to win the business. They offer the cars and match the rates. That's competition. We should expect nothing less every day in our rail freight system.

Competition will put the right cars in the right place at the right time and at the right price. When that's happening, we'll reduce the need to absorb penalties and pay for costly workarounds, such as changing transportation modes and extending shipping windows. Those benefits accrue back to the Canadian supply chain, which creates better outcomes for farmers like me.

It's time to take the 160-kilometre extended interswitching pilot and make it permanent. In fact, in order to include all growers in the Prairies, a range of 500 kilometres should be considered so they can take full advantage of increased competition. There's no reason to study it further. Let's do it and get on with the business of growing our economy.

Thank you, and I look forward to your questions.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Youzwa.

I now give the floor to Ms. Levasseur from the Union des producteurs agricoles, who has five minutes.

[Stéphanie Levasseur, Second General Vice-President, Union des producteurs agricoles]

Thank you, Mr. Chair.

Members of the committee, thank you for having us here today.

My name is Stéphanie Levasseur. I am pleased to be here as an apple producer in Frelighsburg, in southern Quebec, and as the second general vice-president of the Union des producteurs agricoles.

The UPA represents more than 42,000 farmers, who operate nearly 29,000 businesses throughout Quebec. It represents all sectors of agricultural production, and its members are active in local, national and international markets.

As you know, the economic contribution of agriculture and forestry is undeniable. In 2023, agricultural businesses generated total revenues of $13 billion, making agriculture the largest primary sector activity in Quebec. In addition, according to a study produced by our economists in 2022, the growth potential of the agricultural sector is estimated at 23% by 2030, 4% higher than the Quebec economy as a whole. These few figures clearly show the importance to be placed on agriculture and the consequences that certain decisions can have on this key sector of our economy.

The first topic I want to talk to you about is grade crossing upgrades. As my colleague Mr. Spoelstra said, on November 28, less than three weeks from now, all crossings under federal jurisdiction will have to comply with the grade crossing regulations.

CN has identified a limited number of private crossings that still require significant upgrade investments to meet these regulations.

In accordance with the current regulations, the costs will have to be borne by the producers who use the crossings. As previously mentioned, the estimated costs are $600,000 to $2 million for each of these crossings. Added to that is an annual cost of up to $10,000 to maintain the equipment.

You will understand that these amounts greatly exceed the financial capacity of the farmers concerned. In the absence of viable solutions, the only option may be to close the crossings, making some of the landowners' agricultural and forestry lands completely inaccessible. That would be unacceptable and would cause considerable harm to the affected producers.

CN informs us that, with the help of experts in the field, it has found replacement measures with equivalent safety benefits and at significantly lower costs for a number of agricultural level crossings. In light of this information, the UPA, along with the Ontario Federation of Agriculture and, more broadly, the Canadian Federation of Agriculture, supports CN's initiative to obtain regulatory exemptions for these grade crossings.

The exemptions are all the more critical given that the rail safety improvement program, or RSIP, has not been accepting new proposals since 2022 for projects aimed at improving rail safety at grade crossings and along railway tracks. While we strongly encourage the Government of Canada to recapitalize the OSAP to cover the costs of upgrading, maintaining and modifying private grade crossings, we are well aware that any new funding will not be available in time to meet the end-of-the-month deadline, as stipulated in the regulations. Hence the importance of granting regulatory exemptions.

I also wanted to draw your attention to the crucial importance of maintaining efficient and fluid rail services for the transportation of agri-food products, including inputs to agricultural production such as seeds, fertilizers and equipment. Rail disruptions are a strategic issue for the agriculture and agri-food sector. Delays in the delivery of our agricultural products have serious consequences for farm businesses and, by extension, the entire agri-food industry, not to mention the direct impact on consumers.

The farm propane crisis, which occurred in November 2019, is a prime example. At the time, rail transportation in Quebec and elsewhere in Canada was interrupted by a strike. As a result, the supply of propane, which is essential for a number of agricultural uses, including grain drying during harvest, was severely affected. The propane shortage particularly affected Quebec farmers. The crisis revealed the significant dependence of Quebec agriculture on rail transportation for the supply of propane, among other items, and raised questions about supply chain resilience.

During the pandemic, we saw how much our resilience depends on a stable and reliable supply chain. The agricultural sector, already facing financial and climate challenges, cannot afford to have its access to rail transportation compromised. The current situation calls for urgent action to ensure that the transportation of essential goods, particularly those related to agriculture, is protected and prioritized.

In conclusion, we applaud the fact that the members of this committee have taken the initiative to focus on this issue. We hope that the committee's recommendations will help adapt existing regulations and programs to the reality of Canadian society today.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Levasseur.

Mr. Sobkowich, you have the floor for five minutes.

[Wade Sobkowich, Executive Director, Western Grain Elevator Association]

Good morning. Thanks for having the Western Grain Elevator Association appear on this very important subject.

The WGEA is a national association of grain companies that handle over 95% of Canada's bulk grain exports. Grain shipments account for roughly 20% of railway revenue, meaning that Canada's major carriers make one dollar out of every five dollars they earn from the grain sector. Our members represent an even larger portion of total cargo volume in Canada's largest ports, including in Vancouver, Thunder Bay, Hamilton and Montreal.

Having cost-effective and efficient rail service is fundamental to the success of Canada's grain supply chain. Alongside many of our farmer and grain processor partners, the WGEA has for decades advocated for improvements in rail-related legislation. I personally have been employed by the WGEA for 27 years, and we've been working on rail legislation improvements that entire time.

There are a number of items we are advocating for and have been trying to get into the Canada Transportation Act. One is to see the railways pay reciprocal penalties when they fail to deliver shipments on time. Right now they charge grain companies for failing to load trains within a 24-hour period or some similar period, but there is no discipline on the railways for failure to bring a train or deliver a train when they say they're going to. We think reciprocity is required in that area.

The second area of advocacy is to retain the maximum revenue entitlement to prevent railway rates from falling on the shoulders of farms, essentially. The third is to turn the grain and winter plans into useful tools of accountability. I could expand on that later, if required. The fourth one is to end the practice of so-called contracting out, which is where the railways get shippers to sign away their rights under the Canada Transportation Act. That happens today. The fifth one is to improve on the cumbersome and ineffectual remedies through the Canadian Transportation Agency, among other policy ideas.

These are all very important concepts that deserve to be considered, but the sixth one, the one I'll talk about for the remainder of my time, is extended interswitching. Terry explained this. It's an ideal example of low-hanging fruit. It provides meaningful competition on rail rates and service for shippers that are captive to one of the two primary rail networks.

Extended interswitching is one of the only policy tools that actually caused Canada's two rail monopolies—we call them “dual monopolies” as opposed to “duopolies”, because if you're positioned on a rail line, you don't have a choice between one or the other—to compete with one another for shipper business. Not only does it offer an alternative service provider; it also encourages the originating carrier to offer better service or pricing than they otherwise would.

Canada had extended interswitching in place from 2014 to 2017, which was prompted by catastrophic railway failures in 2013. At that time, Canada's railways voiced strenuous objections to extended interswitching on the grounds that it would cause major operational challenges and economic hardships on their companies. Time would reveal that class I railway profitability in that four-year period, based on their operating ratios, was the best it had been over the previous decade. We know that the railways are very active right now in advocating against extending or renewing extended interswitching.

More recently, the pilot trial to increase the regulated interswitching limit in the Prairies was once again adopted under budget 2023. It's been in place since September 2023, but it was only granted a very short timeline of 18 months, which, for a variety of reasons that I can expand on, has made it very difficult to use.

At its core, extended interswitching gives shippers on a single line the option to call in another railway to get product to market within the extended distance, which is 160 kilometres under the pilot. Poor rail service is often the result of underinvestment by the railway companies. In order to compete with one another, though, they would have to deploy more resources, which means hiring more people. The fact is that extended interswitching will create more jobs in Canada.

The threat of loss of business causes the railways to sharpen their pencils on freight rates, which is factored into the cost of goods to Canadians and affects our competitiveness globally. The Canadian Transportation Agency ensures that railways are fully compensated for their actual costs plus a margin of profit under regulated interswitching. It also provides for other options. One of these options is to find quicker and more direct routes for the movement of goods. This reduces costs for shippers and therefore consumers. It also frees up rail capacity to help get product to customers in a timely way.

Extended interswitching essentially turns a monopoly market into a duopoly situation, which isn't fantastic, but at least it's not a monopoly. Even if an interswitch does not physically happen, the presence of another option changes railway behaviour. In fact, that's the real value of extended interswitching. It brings the primary carrier to the table.

The intent of extended interswitching is to give all captive shippers at least one competitive option. For that to happen in the grain sector, as Terry mentioned, the extended interswitching distance would need to be 500 kilometres to allow for the Peace River and Carrot River growing regions to participate.

It's a vital tool for Canadian shippers that has proven to increase competition while lowering costs to shippers and consumers. It should be a permanent right for all Canadian shippers.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much to the witnesses.

We will now start with questions.

Mr. Barlow is going to lead us off for up to six minutes.

[John Barlow, Conservative, Foothills, AB]

Thanks, Chair.

Before I start my questions, I want to put on notice a motion that I hope we can discuss on Tuesday. The motion reads:

That, given:

a) the Minister of Agriculture confirmed he didn’t know the capital gains tax hike was in Budget 2024;

b) no consultation was completed by the Minister of Agriculture with the agriculture sector; and

c) the concerning and heartbreaking testimony the committee has heard on the impact the capital gains take hike will have on farm families;

the committee hold at least four additional meetings on its study of the intergenerational transfer of farms and new entrants.

I hope we can discuss that on Tuesday. As a result of the testimony we've had thus far on this issue, I think it warrants additional study.

To get to the study at hand, Mr. Spoelstra, thanks very much for your testimony, as well as yours, Mr. Youzwa, on these crossings.

When Transport Canada made the change to the grade crossings regulations in 2022, basically there was no difference between a private crossing and a public crossing. Was there any consultation from the government department with OFA or Pulse Canada?

[Drew Spoelstra]

To my knowledge, no, there was no consultation with our organization, but we have since been following up with Transport Canada on the concerns that our members around the province are facing with private-level crossings to ensure they have the support they need to go forward and maintain those crossings, with the cost being associated to the railways.

[Terry Youzwa]

I think you want to talk to Stéphanie about this.

We didn't speak to private crossings, but they're certainly important for a farmer to access his own land in a reasonable manner. We haven't looked at that.

[Stéphanie Levasseur]

To my knowledge, no, we weren't consulted. At the time, though, the program was still in effect. There was still money in the program for safety upgrades, but the money ran out and hasn't been renewed since, so everybody who could get up to standard in that year did, but everybody else fell at the end of the bridge.

[John Barlow, Conservative, Foothills, AB]

I want to make sure that folks understand what we're talking about when we're talking about rail crossings on farms. These are not rail crossings at public roadways, highways, or anything along that line. In most cases, these are remote rail crossings where you would be moving farm equipment maybe once or twice a year from one parcel to another. More than likely, the only people using this crossing would be the landowner or the farmer. Am I right on that?

Going back to the 1800s, when the railway was built, have any concerns been raised about safety to the public on these railway crossings? Was there an outcry to Transport Canada that these crossings needed to be upgraded?

[Stéphanie Levasseur]

I'm not aware of any.

Yes, the crossings are on private land. They are used only by producers who own the land or their employees, who cross them to work in the fields or woodlots on the other side.

In the 1800s, the lands were probably forested and were not being used. There were a lot fewer problems at the time, but since then, the land has been cultivated and now the grade crossings are only used by producers to access their fields on the other side.

I have not heard of any issues related to accidents or incidents involving landowners or anyone else.

[John Barlow, Conservative, Foothills, AB]

Thank you.

I'll turn to you, Mr. Spoelstra.

[Drew Spoelstra]

We're certainly not aware of many, if any, challenges from around Ontario or the rest of the country that we've seen with farm equipment crossing the railway tracks, but safety is of utmost concern to all of our members and to the railways. We want to make sure that our crossings are safe and that farmers have reasonable access to those things, as you mentioned, a minimal number of times a year.

There have been changes, obviously, to the speed and frequency of trains, and also to the size of farm equipment. As time passes, I'm sure there will be more focus on the ways crossings are changing and evolving, but as you mentioned, these agreements go back to the late 1800s, when the railways cut these farms in half. We want to see these agreements honoured going forward in the future.

[John Barlow, Conservative, Foothills, AB]

Thank you.

I want to switch gears now and go to Mr. Youzwa or to Wade.

I know the ask is for the interswitching pilot that ends later this spring to be extended by 30 months.

Wade, as you mentioned, we had the Fair Rail for Grain Farmers Act from 2014 to 2017. It clearly showed that extended interswitching works. It solved a problem that you termed catastrophic. That was a move by the previous Conservative government.

I'm curious about why the ask is to extend the pilot for another 30 months when I think it's been proven that this works. Why not just ask for this to be made permanent?

[The Chair, Liberal, Kody Blois]

Unfortunately, we're at time. I'll try to manage you a little better moving forward, John. It's a tough job.

You can have 20 or 30 seconds, Mr. Sobkowich.

[Wade Sobkowich]

It should be made permanent. The ask for 30 months is simply about reading the tea leaves of what's within the art of the possible, but permanency is the goal.

It should be an as-of-right provision. Access to competition, with at least one other competitive alternative, should be a permanent as-of-right provision.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Mr. Drouin, you have six minutes.

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

Thank you, Mr. Chair.

Thanks to the witnesses for being here.

I'll start with the OFA. Mr. Spoelstra, thanks for coming before us.

For private crossings, consultations started way back in 2014. The delay of implementation of regulations was in question after.

Your members have received letters from CN and CP. When did they receive those letters? Did they receive those letters a year ago, or are we talking just months ago?

[Drew Spoelstra]

The letters that I'm aware of they received this past July. July 2 I think is the date. Those letters were regarding upcoming requirements for the crossings. They basically issued an ultimatum that either they're upgraded at the farmers' costs or they're removed.

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

I know CN is trying to get an exemption, and I think Jason has been in touch with Transport Canada.

I understand that at public crossings, there may be 100 cars per minute, but on the farm, there might be five or 10 crossings per year. Obviously, the level of safety doesn't need to be the same. Blowing a whistle might suffice to know that there's a train coming.

Obviously, $600,000 to $2 million is completely unacceptable to be farmed out to the farmer, so thanks for coming here. We're trying to find a reasonable solution, because, again, the invoice doesn't work.

With regard to interswitching, the only way we can change interswitching is through a legislative change. For six weeks now, nothing has moved in the House. My plea to you is to call your local members. I don't want to make this partisan, but you can say that we've heard all the MPs who spoke on SDTC and that we've heard them loud and clear. We have to get back to the business of the House, because if we don't have enough time to legislate interswitching, there will be a gap after March. I'm trying to reduce that gap. If we don't get it through the fall economic statement, then we're stuck. The Minister of Transport will have to go to the House leader and present a bill. That requires time, and time is extremely sacred in the House. My plea to you is to send letters.

My second plea to you is also on interswitching. I haven't heard from you guys about whether interswitching works well, but that's good news. I only hear when it doesn't work well. I would urge you and your organizations to send a letter to the Minister of Transport to say why interswitching has worked well for you, because you can be sure that the other side is definitely sending letters as to why they shouldn't extend interswitching. That's my advice to you.

Mr. Youzwa, you mentioned in your opening remarks that interswitching has worked well. Can you explain to this committee why? You're talking to shippers. You're talking to farmers. Ever since this has been implemented, you have seen a better service from rail service. Is that right?

[Terry Youzwa]

We're price-takers in a global market. We're far from port. Every time there's a disruption, it comes out of our bottom line. If we don't find ways to be innovative, we're faced with diminished returns, which eventually lead to losses. Data collected during that period showed that $5.3 million was saved by grain companies that used the extended interswitching regulations.

For example, for a routing from Lethbridge to Stockton, California, using a CP routing, we pay by ton-mile. Through Vancouver would require a routing distance of approximately 2,790 kilometres. A BNSF routing would be approximately 2,145 kilometres, a reduction of 23% in route miles. It's not rocket science. It's there, and it's real. That's a 23% gain. That's just one example.

Even when something doesn't move by another carrier, the threat of it moving by another carrier lowers the price. We have to find ways to be innovative in order to remain competitive.