Evidence of meeting #21 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was interswitching.
A recording is available from Parliament.
10:40 a.m.
Conservative
The Vice-Chair Conservative Luc Berthold
You have three minutes left.
Since some of the witnesses have travelled a great distance to attend this meeting, I suggest that we let a representative of each party ask one final question in conclusion. That would mean ending the meeting a bit earlier than scheduled, but it would give a representative of each party one or two minutes to ask a final question. Are the members of the committee in agreement?
10:40 a.m.
Some hon. members
Agreed.
10:40 a.m.
Conservative
The Vice-Chair Conservative Luc Berthold
That being the case, Mr. Badawey can begin and I will then turn it over to Mr. Aubin.
10:40 a.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Mr. Chairman.
Fiona, you never had a chance to respond with respect to the overall economic strategy. Of course, utilizing you folks is part of that economy, but infrastructure investments have to be made to be an enabler for you to actually participate more in that economy.
10:40 a.m.
Executive Director, Grain Growers of Canada
As you know, Canada suffers from low productivity growth. We are victims of our own natural land base and long distances, but we do need to have a transportation system that will allow us to compete. As an agri/agrifood industry, we're looking at feeding an extra two billion people by 2050. Canada has the natural capital and the innovative farming industry to do that, but we need to get those products to market.
As to the agency and its role, we just submitted comments to Transport Canada on the next transportation strategy. It's very important that the agency have an investigative capacity and be able to go out on their own accord when they see problems with the transportation system. Right now, the way it works, shippers have to go and make a formal complaint and go through the legal system.
10:40 a.m.
Executive Director, Grain Growers of Canada
In the U.S., the Surface Transportation Board has more investigative authority and can act on its own.
10:40 a.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
We also have to be stewards of the overall strategy and therefore make recommendations that the strategy be invested in. That's what I'm driving at.
10:45 a.m.
Executive Director, Grain Growers of Canada
Perhaps we need to work with one of the economic departments as well.
10:45 a.m.
Liberal
10:45 a.m.
Conservative
10:45 a.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
Thank you, Mr. Chair.
I think we have realized the effectiveness of the 160 km distance in these negotiations. Without this provision, the rail companies would have a near monopoly.
Do you have other suggestions to make for more equitable negotiations between the rail companies and the farmers you represent?
10:45 a.m.
Vice-Chair of the Board of Directors, Cereals Canada
We suggested that we might be able to or have the right to negotiate service agreements directly with the rail companies, agreements that include aspects of mutual financial accountability when the negotiated obligations are not met. Under the current act, we can take part in these negotiations, except the adjudicator cannot impose financial penalties in the case of obligations that are not met. That is where the problem lies.
The agreements should be valid for a longer term. The negotiation process to produce the agreements is complex and I think for them to expire at the end of one year is too short a period.
10:45 a.m.
Vice-President, Canadian Federation of Agriculture
We agree. We support a solid service-level agreement process from the shippers and our grain companies. We need to manage the guys dealing directly with the railroads. Because of their small volumes, our short lines have a real challenge to come up with good service-level agreements. Right now, it's a one-way street with penalties and payments. The terminals in our area get their cars, and if they don't load them and have them cleared in 24 hours, they lose their bulk shipper rate. Those cars may sit there for three days afterwards. A company may have gone through a lot of work and time and cost to make sure they get that 24-hour load. But there's no penalty if the railroads don't come through. If they say they're bringing you cars on Wednesday, and they don't show up until Friday, there are no penalties back to railroads for that poor service. That's critical. It costs the grain-handling system dollars, and ultimately it costs me dollars as a producer.
10:45 a.m.
Conservative
10:45 a.m.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Thank you very much.
I want to follow up on the conversation that we had about rates. I recognize that both you and the agency said that there is no data available because those rates are proprietary. I think it's interesting, though, that Emerson actually addresses this in his report. There's a recommendation around the methodology that the agency uses when setting its rates. It's interesting to me that nobody really has an opinion on the difference between the commercial rate and what the agency is setting.
I will ask you to comment on the further recommendation that the agency be permitted to set interswitching rates annually to better reflect actual costs, and not only when the regulations are reviewed and published. What are your thoughts on that recommendation?
10:45 a.m.
Vice-Chair of the Board of Directors, Cereals Canada
On the first part with respect to nobody having opinions on it, I'd like to clarify. I don't have an opinion because I'm not the person who knows the differential. There may be people with an organization or company, etc., who do have that knowledge, but I don't personally.
With respect to the agency setting the rates on an annual basis, I think that is valuable because of the volatility of costs, etc. We're not working in a static environment, things do change, and I think that ought to be taken into account so that all players are competitive. For the railways, the cost of their operations ought to be properly reflected, as with shipper costs. Having that done in a transparent, timely, regular fashion, I think is beneficial.
10:45 a.m.
Executive Director, Grain Growers of Canada
I would add that I think transparency is the key word here, whether it be rates, or the actual regulations and how they work, because they are quite complex. I think the more transparency you can get, the better for the market.
10:45 a.m.
Vice-President, Canadian Federation of Agriculture
Truthfully, I think that everyone within this grain value chain here realizes that there needs to be a profit.
If the rates are set when legislation is put in and then the costs go up and railways are losing money moving that grain, that's a challenge to us. We can't have any part of the chain in a negative position because it will break the chain. To have those rates set, whether annually or biannually—at a regular time—I think is very important to making sure that no part of the chain is left in a weak position.
10:50 a.m.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Thank you.
I have one final question.
Do you support maintaining the revenue cap?
10:50 a.m.
Executive Director, Grain Growers of Canada
Yes, we do for now, until the service issues are addressed.
10:50 a.m.
Vice-President, Canadian Federation of Agriculture
We look at the revenue entitlement; it's what they can charge us to move grain. It isn't a cap. It's based upon volumes moved per year and volume miles moved per year. It's not truly a cap on revenue; it's an entitlement they have to move the grain that we produce to export position. We support that fully into the future, and we would push for a costing review to see that the revenue entitlement is at the level it needs to be to be fair to both sides of this equation.
10:50 a.m.
Conservative