Agriculture Committee on Nov. 7th, 2024

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you. I appreciate the opportunity to ask questions.

Having a price on carbon is an important way to reduce Canada's greenhouse gas emissions. It has to be designed effectively, and I believe there is ongoing work on that. So far, Canada's price on pollution has had the result of reducing greenhouse gas emissions here in Canada below what they would otherwise have been and below what they used to be. We have to do that, but we always appreciate input from industry and from others on how to do it as skilfully as possible so that it does not put an unnecessary burden on any one entity. We have to have a price on carbon. We welcome your input on how.

The railways have been saying that if there were extended interswitching distances, it would lead to delays, and that would cost the shippers and farmers. It would undermine the cost-effectiveness of shipping.

My question is for each of the witnesses. Have you factored that in? Do you agree with that? How might that work?

I'm just looking at where we have that information. They're saying that it would risk slowing the supply chain down and that would be negative for the producers. What's your response to that?

[Wade Sobkowich]

I can speak to that, if you'd like.

[Terry Youzwa]

The existing program has not slowed down or caused problems. If you were a monopoly, would you work to preserve your monopoly?

[The Chair, Liberal, Kody Blois]

Mr. Sobkowich, I thought you were going to say something.

[Wade Sobkowich]

I was just going to add to that.

It's been a common practice since the early 1900s. The railways are experts at managing the complexity of rail operations and working collaboratively to interswitch efficiently. They do it all the time. In Vancouver, CN switches from the north shore to the south shore and CP switches to the north shore. Canada should have full confidence that railways will be incentivized enough through competitive forces to apply creativity to resolve any operational challenges that may arise. As I said before, less than 1% of the traffic is interswitched. Whether it's at 160 kilometres or 500 kilometres, you're still only talking about one interswitch that rarely gets used.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

I would like to hear your thoughts about whether the extension to 500 kilometres would change the responses. There's been a pilot project on interswitching for 150 kilometres, I believe. Do you see a risk of slowing down supply chains with a 500-kilometre interswitching maximum? Do you think there should be a pilot project on that larger amount?

To anyone who has information about that, I'm interested in your answer.

[Wade Sobkowich]

As I mentioned, 92% of the elevators right now have access to an interchange at 160 kilometres. We're talking about adding 8% of the elevators in western Canada, with an extension to 500 kilometres.

As I mentioned, it's rarely used, so there isn't going to be an operational impact. It will be non-existent at 500 kilometres. There's no need for a pilot project on that. It should be made permanent at 500 kilometres.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

I'm all for the Peace River farmers having access to interswitching as well.

Those are my questions.

Thank you, Mr. Chair.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Murray.

Colleagues, we have a bit of time. I'm going to do two and a half minutes for each party, and I might take a minute at the end to ask a few questions.

Ms. Rood, you have two and a half minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Chair.

We know that in Ontario, there are more than 45,000 kilometres of drainage services and two million hectares of cropland, and it's necessary to maintain drainage and remove excess water to prevent nutrient loss and soil degradation. I have municipalities in my riding experiencing significant issues with drainage maintenance.

We know the railways are obliged to make the payments to assist in those efforts. I'm wondering why railways like CN are not following the law and complying with payments. We heard from you earlier what the cost estimate burden is on our municipalities and farmers and what can be done to make them comply and prevent them from passing these costs on to consumers. We've heard most of those answers.

I'm just curious. If the carbon tax was scrapped, would the railways have the money to pay for the drainage issues in Ontario?

[Drew Spoelstra]

I think you might have to ask the railway companies their opinion on whether, if their costs were lowered, they'd be able to cover those costs. My expectation is that they'd still be looking to shift a lot of these costs for drainage and private crossings to others, whether they're municipalities or the people who use them.

As I said, these are long-standing agreements. We want to make sure they're honoured. We would like to see legislative amendments to make sure they are.

I think we've covered off most of the issues, but these are exorbitant costs potentially being passed on to farmers and municipalities. The railways run every day. We want to make sure they're adequately maintaining the railways. We want to make sure that safety is upheld and agreed upon, but those costs need to be covered by the railway system itself.

[The Chair, Liberal, Kody Blois]

Thank you Ms. Rood.

Ms. Taylor Roy, you have two and a half minutes.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much, Mr. Chair.

Thank you to all of our witnesses for being here.

It seems like the real issue here is the imbalance of power between the railways, which in some cases have a monopoly, and the farmers.

I have a couple of specific questions based on testimony so far.

Mr. Youzwa, you stated that the price on pollution program has had no impact. Are you an expert in this field? What research have you done or what do you base that on?

[Terry Youzwa]

I believe you need a carrot rather than a stick to incentivize and prepare for the future. The other reality, as it was worded today, is that Canada may have lowered...but a more polluting—

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

I understand your opinions on this. I'm sorry. You're here as an expert witness, and I'm trying to understand your expertise in gauging the impact of climate policies on the environment. I know there are a lot of rumours or shared beliefs about this, but I just want to ascertain that you have not done research or that you do not have any basis, other than your beliefs, to believe that this doesn't work. We have seen emissions go down by 8%, and 300 experts in climate science and economics have shown that this is one of the most effective ways to reduce pollution.

On another front, I'm wondering about the price on pollution, which we're talking about. Ninety-three per cent of farm fuels are exempt from the carbon levy. Do you know how much of your fuels are taxed and what your carbon tax would be compared to your overall expenses?

[Terry Youzwa]

I thought we were here to talk about opportunities to improve the railway system.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

I'm sorry. You brought up carbon pricing earlier, so I was just following up on that line of questioning. That's fine, then.

Perhaps, then, you could talk a bit about the railways themselves. They have been incredibly profitable. We see that CN had a profit of $5.43 billion last year, and CP had a profit of $3.54 billion. They have the resources needed. The question is whether they're using them to do what needs to be done to support farmers and support the initiatives that impact climate change.

Do you feel that the railways could be doing more to help the situation for farmers when it comes to crossings, drainage and other things, or do you think they don't because they don't have enough money and the price on pollution is making it very difficult for them?

[The Chair, Liberal, Kody Blois]

We are at time. I'd ask for a brief response.

I apologize; I didn't see who the question was for. However, whoever wants to—

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

It's for Mr. Sobkowich.

[The Chair, Liberal, Kody Blois]

Just answer quickly if you could, Mr. Sobkowich.

[Wade Sobkowich]

You're right that the railways are incredibly profitable, but that doesn't stop them from trying to pass on as many costs as possible to the shippers and farmers. I think that's a bit of what's happening here, and that's what we need to keep in mind. That's why we need to do what we can to make amendments to the Canada Transportation Act to rebalance the relationship between railways and users by whatever means we can. Extended interswitching is one of them, but there are other ways to do that and it takes some exploration.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much.

Then government regulation is necessary to help the free-market system work for farmers.

[The Chair, Liberal, Kody Blois]

Thank you.

Mr. Perron, the floor is yours for two and a half minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Mr. Sobkowich, I would like to clarify the question you raised regarding extending the interswitching distance to 500 kilometres. You say that this would seldom be used, that it would be used by about 8% of producers.

How could we formulate it so that it would be more readily acceptable to the government? The interswitching distance would not necessarily be extended everywhere. Could that be done? The current distance, 160 kilometres, could be made permanent, and a determination could be made as to the regions where it should be extended to 500 kilometres.

That way, it would be more likely that the government would agree to this proposal. What do you think?

[Wade Sobkowich]

There could be something in there that carves out, with GPS coordinates or something, the B.C. area, the grain-growing regions of B.C. and the Carrot River region—any place where an elevator within 160 kilometres doesn't have access to an interchange. That's for grain. However, we know there are other sectors and that this doesn't just apply to grain. Other sectors, like mining and forest products, have the same struggles we have with the railways. Five hundred kilometres would do them good as well.

Speaking for the grain industry, I think maybe there's a solution there, but it's also important to consider the question in the context of other sectors.