Evidence of meeting #68 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 railways.
A video is available from Parliament.
12:10 p.m.
Executive Director, Canadian Oilseed Processors Association
Yes, that's right.
It's not necessarily a question of more robust margins all the time. It's being able to grow and to sell more, maybe if not the same margin, to continue to produce more and add more value throughout.
12:10 p.m.
Executive Director, Western Grain Elevator Association
One of the main opportunities we see in Bill C-49 is the reciprocal penalties piece. We have long been after the ability to get commercial contracts with railways. Every other link in the chain has commercial contracts. We have contracts with farmers, with penalties on both sides for failure to perform. There are contracts with the vessel owners, with the end-use buyer. That's the way business is conducted.
Until now, we've been operating primarily on railway tariffs, so that's a unilateral set of rules and penalties imposed by the railways, supported by statute. Bill C-52 introduced the ability for service-level agreements, but it lacked teeth. There was no ability to include penalties for non-performance in those service-level agreements.
We think that this will go a long way, because now shippers have the ability to try to negotiate penalties. We're talking about balanced penalties here. With regard to the same types of penalties they charge us for certain things, we want to be able to charge them for failure to do certain things. If we can have that in place in something that resembles a normal service contract that you would find in a competitive marketplace, we think that will go a long way.
12:15 p.m.
Vice-President, Canadian Federation of Agriculture
Thank you for the question.
Farmers are not considered shippers under the act, so we're in a unique position. We pay all the costs, but we have no rights when it comes to shipping.
Monsieur Aubin asked about larger production. We are continually improving our production methods and producing larger crops, and therefore, we need larger markets. Without an efficient transportation system, all of that is for naught.
We have the right to order producer cars just in case Wade's members don't perform. We have a safety valve, but we have no right to service those producer cars from the railroads. The years 2013-14 and 2014-15 were some of the largest orders of producer cars in history, but because of poor service, a lot of those orders were cancelled, and those producers are not using producer cars again. Therefore, the railways are saying those sidings aren't being used, and they're going to shut some more down, which exacerbates the problem.
What we're looking for is a more efficient system to get our crops to export position, not always to the ports but to the U.S., to Mexico, and to the Canadian domestic users.
12:15 p.m.
Conservative
Martin Shields Conservative Bow River, AB
Thank you, Madam Chair.
We appreciate the witnesses being here, and again, hearing a variety of opinions from one panel to the next makes it an interesting morning.
Mr. Hall, in the sense of you as the producer, when costs increase, you're in a situation where you have nowhere to pass those costs on other than to just absorb them.
When we talk about soybeans hopefully being added, when you look at that list, is there any direction in the sense of producers out there? Are they going to touch crops that aren't on that list, or does it sort of dictate where you may go as the producer?
12:15 p.m.
Vice-President, Canadian Federation of Agriculture
It can. In the case of soybeans versus other crops, we're seeing that one railway will haul soybeans at the MRE rate, where the other railway hauls it at MRE plus $10 per tonne. In some cases that will affect where you haul your soybeans once you have produced them. Soybeans, canola, and crops like that are higher-value crops that produce more profit. Guys are going to continue to grow them, and they will run them to the other railway as opposed to the one that's charging more.
You're right. We have no way of getting it from the marketplace other than the cost that's offered by Wade's members and Chris's members.
12:15 p.m.
Conservative
Martin Shields Conservative Bow River, AB
We have a regulation in place that may prohibit us from growing new industries where there is a market.
12:15 p.m.
Vice-President, Canadian Federation of Agriculture
Yes. Wade's right. Canola was a small crop 30 and 40 years ago, and it has become huge. Soybean is expanding exponentially every year. What's going to be the next one? We need a flexible way of getting new crops put under schedule II.
12:15 p.m.
Conservative
Martin Shields Conservative Bow River, AB
It may be hemp if we can get it out of the Health Act and under agriculture where it should belong, because hemp's going to be a growing one.
You as the producer, in the sense of market competition going to your neighbour sitting beside you, do you have access to different places to market your grain through brokers? Is there competition for you to go to different brokers? Is it there?
12:15 p.m.
Vice-President, Canadian Federation of Agriculture
We have that opportunity. It's all on where they are going to market it and who they are going to get to ship it to, so you shop around just like you do if you're looking for a pair of shoes. You look for the best deal.
12:15 p.m.
Conservative
Martin Shields Conservative Bow River, AB
That's what you want to continue through to the other end to facilitate your broker for your product.
12:15 p.m.
Vice-President, Canadian Federation of Agriculture
Yes. Also Wade talked about service. Many times we'll have a contract with one of his members for an October delivery, and if there is not the proper service, we could be waiting for January. We have financial commitments to meet yet we have no recourse because they have no recourse, so that reciprocal penalty is a huge benefit to producers, even though we are not the shippers directly.
12:20 p.m.
Conservative
Martin Shields Conservative Bow River, AB
We've heard about the arbitration resolution process. You're a producer. Have you availed yourself of any of those services that are out there? Have you heard of them? Do you understand them?
12:20 p.m.
Vice-President, Canadian Federation of Agriculture
I understand them because I've been in this policy game for far too long, but as far as using them goes, I'm not a shipper. I can't use them unless I'm shipping a producer car directly.
12:20 p.m.
Conservative
Martin Shields Conservative Bow River, AB
For you, in terms of the regulation, you have amendments out there. You have four of them. Which one of those four would you say is critical to have changed?
12:20 p.m.
Executive Director, Western Grain Elevator Association
I'd like to put that into perspective. We started with about 80. Really, we did. We went through them and said what was not the way it's supposed to be, and we did an assessment of what we think the likelihood of success is. We whittled it down to the bare minimum of technical amendments in order to make long-haul interswitching work, for example, and those are the three. If any one of those three isn't there, then it will become like CLR. We've really done that work and have come down to those three from something that was a much larger list. Then, of course, there's the addition of soybeans, because we just don't understand why that's not there.
12:20 p.m.
Conservative
Martin Shields Conservative Bow River, AB
You're saying that it's a package? If they don't go as three, it doesn't work?
12:20 p.m.
Executive Director, Western Grain Elevator Association
Yes, it could fall apart on any one of them.
12:20 p.m.
Executive Director, Canadian Oilseed Processors Association
I'll echo Wade's comments. It really is a package deal. We did work in partnership to whittle down to those four the 80 amendments that we first identified. If we don't get the amendment on rates but we do get something in terms of nearest interchange, it still wouldn't work. We need them all together.
12:20 p.m.
Conservative
12:20 p.m.
Liberal
Sean Fraser Liberal Central Nova, NS
Thanks very much.
I appreciate your testimony. You're willing to step back and look at the bigger picture, which I find very helpful. I particularly enjoyed your comment about hiring a Sherpa with a backpack. I used to put in hay as a kid at my neighbour's cattle farm, and you'd certainly not want a train to move hay 20 metres from one place to another.
During the last panel, I had a question for the railways about why this is an appropriate comparator group. They talked about the capital investment, and it later came out that in the 500-mile range they can't even compete with trucks. From your perspective, at what point is it no longer competitive to consider trucking?
12:20 p.m.
Executive Director, Western Grain Elevator Association
It would definitely be for the short haul. Sometimes grain companies will truck grain from one facility to another. Trucking might be a viable option somewhere in the range of 100 or 200 miles, but when we're talking about the vast majority of the crop that's being exported through Vancouver, Prince Rupert, Thunder Bay, or the St. Lawrence, or into the United States, trucking isn't a viable option in the vast majority of those cases.
