Reaction has been swift and steady from many corners of the agriculture community since the Federal Government’s Order in Council Friday to set minimum quotas on the amount of grain the railways have to transport in a month, so much in fact, you could fill dozens of grain cars with it.
Canadian Pacific Railway spokesperson Ed Greenberg tells Rural Roots Canada they will comply with the OIC, however they are disappointed with the decision as it doesn’t take into account the whole supply chain.
“Canadian Pacific is disappointed with what we feel is an unfortunate Order in Council. CP believes the actions of the Federal Government raises more questions than it answers and only focuses on the railway and not the entire supply chain,” said Greenberg. “It has always been CP’s position and it’s one that remains that moving grain from the farm to the port is a complex pipeline that involving many parties, it requires all participants of the Canadian handling of the grain transportation system to work together that requires a 24-7 commitment similar to the railways. ”
“Despite an extraordinary crop size that was not forecasted by anyone and periods of extreme winter weather. Our railway is committed to matching the record amounts of grain we moved in the Fall, which will comply with the order. CP expects to move 240,000 car loads of Canadian grain, which is a 20 per cent increase over last year. We believe the OIC fails to identify and doesn’t focus on the main issue, which is a supply chain issue.”
Canadian National Railway echoed CP’s sentiment, CN President and Chief Executive Officer Claude Mongeau says in a statement it is very possible to meet what they call aggressive targets although the entire supply chain will have to work together like they have never done before to make it happen.
“CN will do its part to meet the challenge of moving this 100-year record grain crop,” said Mongeau. “Our assessment shows that an upper limit of around 5,500 cars per week may be achievable, but only if all members of the supply chain work together closely. This is broadly in line with what was mandated by the government in today’s Order in Council. But we all have to recognize that the challenge we jointly face is unprecedented, and it will require a new level of collaboration to succeed.”
Mongeau was quick to add though that last year’s bumper crop made it impossible for anybody to handle the increase.
He also pointed out the weather also contributed to a shortfall of around 10,000 carloads (around one million tonnes) compared to the grain flow of most winters.
“Our Western Canada employees have spent the last three months working day and night in the most frigid temperatures we’ve seen across the prairies in at least the last 50 years. Despite the best efforts and personal sacrifices of our employees, we have not been able to keep up with a normal winter grain flow during this polar vortex.”
CN is also disappointed with Minister Gerry Ritz talking about more regulation, calling it both ill-advised and seriously counter-productive.
“More regulation would lead to adversarial relationships within the supply chain, at a time when collaboration is essential,” said Mongeau. “Sound policy calls for exactly the opposite: a more collaborative and commercial framework is what Canada needs to support a world-class grain-growing sector.”
Producer Groups Give Thumbs Up to OIC
The Grain Growers of Canada is welcoming the news, President Gary Stanford says it is clear the Federal Government were listening when they met with them.
“We believe that this action should help to alleviate the backlog and get our grain moving again, and that is good news for farmers and for the Canadian economy,” said Stanford.
The Alberta Wheat Commission is fully behind the Federal Government on the OIC.
“Today’s announcement demonstrates that the government is committed to ensuring Canada remains a primary and reliable supplier of agriculture products, and recognizes the long-term, negative impact that poor rail service can have on Canada’s international reputation,” said Kent Erickson, Chair of AWC. “The rail backlog has resulted in significant costs to the agriculture industry, and AWC applauds the actions of the government for the immediate and long-term solutions that are being implemented.”
Alberta Barley was more than pleased to get the news of the OIC, and its Chairman Matt Sawyer believes it is a step in the right direction.
“The measures enacted by the federal government is a positive first step,” said Sawyer. “With legislation in place, we finally have clear and achievable solutions to get our grain moving again.”
Pulse Canada says this sends a clear message that the rail system must have the capacity to meet the needs of its users.
“Friday’s announcement sends a clear message that rail freight capacity must rise to meet Canada’s productive and marketing capacity,” says Greg Cherewyk, COO of Pulse Canada and CSCA. “All Canadian businesses maintain reserve capacity, mitigate risk and absorb costs as they compete for business. From a customer’s point of view, there are no excuses for falling short and today’s action emphasizes the fact that every supply chain stakeholder has a role to play in ensuring Canada meets
the needs of its customers,” said Cherewyk.
The Canadian Special Crops Association is also in the same boat.
“Customers are asking when Canada’s supply chain will recover. Friday’s announcement is a first step in providing them with evidence that we are on the path to improving our performance”, said President Murad Al-Katib.
The Canadian Canola Growers Association President Brett Halstead had much the same to say as other producer groups
“Farmers have one of the biggest and best crops ever and customers to buy it, yet we’re facing a cash flow crisis with grain movement stalled,” said Halstead. “This action taken by the Government of Canada to get the grain moving quickly is a positive step forward for farmers and for our reputation as a reliable exporter of quality food products. We truly appreciate the Government’s actions on our behalf.”
Provincial Government’s React:
Alberta’s Government was quick to give a thumbs up to the decision.
In a statement, Agriculture Minister Verlyn Olson says the weekly delivery levels for rail companies, penalties for non-compliance, and emergency legislation will further improve service.
“Alberta has long-sought greater accountability within the grain handling transportation system, and we look forward to all segments of the supply chain working together to get this year’s bumper crop to market.”
Saskatchewan Premier Brad Wall and Agriculture Minister Lyle Stewart, who have been loud and clear over the past few weeks about putting something in place, were pleased with the announcement saying they will continue to stand up for grain farmers and get this grain moved.
“Friday’s federal Order in Council with interim measures is a good first step and we look forward to working closely with the federal government to ensure the emergency legislation includes mandatory service level agreements, reciprocal penalties for grain shippers and railways, and specific commitments for tonnage of grain delivered,” said Stewart.
The new quotas require the railways to increase the volumes carried each week, over a period of four weeks, to a combined target of 1,000,000 metric tonnes per week. A number, which would double the volume of grain currently being moved.
Both CN and CP face penalties of $100,000 per day that they are not in compliance.
This is not the end either, Agriculture Minister Gerry Ritz says there is legislation on the way when Parliament returns to establish measures to get the products to market more efficiently.
They are urging the entire supply grain supply chain to work together to get the grain moving in a timely manner and find medium and long-term solutions.