Thank you for the introduction, Mr. Chairman.
Good morning, members of the committee.
I am the president of the Canadian Fertilizer Institute. CFI represents the manufacturers of nitrogen, phosphate, potash, and sulphur fertilizers, as well as the major retail and wholesale distributors of fertilizer materials in Canada. Our members produce 25 million metric tons of fertilizers annually, 75% of which is exported to the United States and to 60 countries around the world. Canada accounts for about one-third of world potash production and 45% of the world's potash trade. Canadian farmers purchase 3.5 billion dollars' worth of fertilizer each year to grow their crops.
We welcome the opportunity to present our industry's views on Canadian transportation. As a major rail customer our member companies make significant use of Canada's railways and are dependent on the railways to safely transport our products to farmers in Canada and around the world. Safety is at the core of the fertilizer industry's operations from production to loading and unloading of all railcars.
Two of our products, anhydrous ammonia and ammonium nitrate, are classified as dangerous goods under the TDG Act. Our members transport about 1.5 million tonnes of ammonia, and 1 million tonnes of ammonium nitrate annually.
Given our industry's experience, I will highlight three key points today. First, the fertilizer industry exercises a high level of diligence to ensure the safe transport of our products. Second, the fertilizer industry is committed to safety and security through mandatory industry-led programs. Third, railways must be held fully accountable for the safety of the operations over which they have control.
First, our member companies assume full responsibility for incidents related to activities within their care and control, and take very seriously policies and initiatives that facilitate the safe handling and transport of our products. To this end the Canadian fertilizer industry has two codes of practice for anhydrous ammonia and ammonium nitrate, which are mandatory for our members.
Ammonia is safely used by farmers across the country, but it must be handled with care. Our industry has implemented the ammonia code of practice to set requirements for distribution, storage, and handling. The ammonium nitrate code of practice is a tool for operators of storage and handling facilities to provide their employees with training and information needed to comply with federal and provincial regulations regarding this product. These codes are regularly reviewed to incorporate new technologies and procedures and include independent third-party audits of all facilities that handle and store these fertilizers.
CFI has developed resources available online for employees, transportation workers, first responders, agri-retailers, and farmers. These help to train personnel to manage fertilizer products through their life cycle and inform the general public.
As mandated by the TDG Act, some fertilizer products require an ERAP, emergency response assistance plan. These plans are established by shippers to assist first responders and carriers in managing an incident. CFI members are also involved in mutual aid programs where an individual company's ERAP resources can be deployed most effectively to respond to an incident regardless of which company shipped the product. Our industry also has an intensive maintenance schedule to ensure that our railcars meet the highest standards of safety and security.
As you are aware, the government recently announced a mandatory retrofit program for all DOT-111 tank cars used to transport dangerous goods. Our members will comply with this retrofit. However, we will ask Transport Canada to confirm that the capacity of the railcar maintenance sector is sufficient to handle both this retrofit program and the critical ongoing maintenance of the existing railcar fleets. Any lack of capacity in the maintenance sector could have a serious impact on our members' ability to deliver fertilizer to farmers.
Turning to the railways themselves, it is the view of our industry that these companies need to be accountable for the safety of their operations and their networks. Once a shipment is turned over to a railway, it is the railway's legal responsibility to ensure it arrives safely at its destination. This responsibility is clear in the Canada Transportation Act.
Allowing railways to unilaterally transfer liability for rail accidents to customers will do nothing to enhance the level of protection available to compensate third parties. Railway efforts to transfer liabilities to customers runs contrary to the public interest as it reduces incentives for railways to minimize the risks of incidents within their care and control, and to improve safety.
Furthermore, railways must meet their level of service obligations under the CTA. Since 1903 these obligations have prevented railway companies from discriminating between types of traffic. This is an increasing concern for our industry as we hear reports mentioned recently by the Mining Association of Canada to the Standing Committee on Agriculture and Agri-Food that CP is planning to refuse to ship uranium.
Unreasonable measures taken by railways to discourage particular commodities from being shipped, including the transfer of liability to rail customers, are discriminatory and exactly the type of barrier to commerce that common carrier obligations are meant to avoid.
The fertilizer industry is committed to investing in Canada's economic growth as well as maintaining global competitiveness. Our member companies have invested over $15 billion over the last 10 years to increase our production capacity. Continued domestic investment by the fertilizer industry relies in part on safe and effective transportation systems, especially railways. This includes competitive and cost-effective rates and tariffs, and a fair liability regime.
To that end, and given the mandate of the committee's current study, we wish to highlight two recent actions that caused the fertilizer industry concern.
First, CP recently issued a tariff that attempts to shift third-party liability to shippers. While the Canadian Transportation Agency's jurisdiction to address this issue is currently under appeal to the Federal Court, if upheld, the CP tariff would essentially transfer responsibility to the shipper even when the products are under the control of the railways.
Second, CP has unilaterally issued new standards for TIH railcars. These actions usurp the role of Transport Canada to establish regulatory policy regarding safety and level of service obligations.
In closing, I want to thank the members of the committee for this opportunity to present our views. We hope we have made three key points: one, the fertilizer industry exercises high levels of diligence to ensure the safe transport of our products; two, the fertilizer industry is committed to ensure safety and security through mandatory industry programs; and three, railways must be held fully accountable for the safety of their operations over which they have control.
The safe and cost-effective transportation of our products is essential to farmers, the 12,000 Canadians who work in the fertilizer industry, and the security of Canada's food supply.
We welcome the opportunity to continue this dialogue and I'm pleased to answer any questions that you may have.
Thank you.