- Rail transportation costs represent one of the highest expenses for western grain farmers – upwards of 35% of their total costs are allocated to transportation.
- The 2013-14 transportation crisis resulted in an estimated loss of $6.5 billion due to an inability to transport grain to export markets in a timely fashion.
- The most recent costing review of railway costs was conducted in 1992.
Working Toward Solutions:
CFA has prioritized grain transportation issues over the last year, working hard to advocate for solutions that will make a positive difference for farmers. Our executives have met with parliamentarians, given formal presentations to the Transport Ministers and parliamentary committees, and we have submitted a discussion paper as part of the government’s most recent consultation process. Throughout these activities, we have proposed a series of recommendations.
- Keep the Maximum Revenue Entitlement (MRE) program in place and update it to ensure protection from monopolistic practices by rail companies. The current MRE is an inflation index, and does not take into account new efficiencies and technologies in the transportation system (i.e a reduction from over a 1000 grain elevators in the prairies to just 240, allowing trains to pick up more grain with less stops).
- Undertake a full costing review of railway costs to ensure the MRE is accurate and fair for both producers and shippers.
- Government must ensure necessary infrastructure funding to create an efficient and reliable grain transportation system in Canada.
- A comprehensive export strategy is needed to rebuild damaged trade relationships and ensure consistent delivery of grain.
During the crop years 2013-14, an inability to transport grain to export markets in a timely fashion resulted in an estimated loss of $6.5 billion. In response to this crisis, the government passed emergency measures under Bill C-30, which helped to alleviate problems and introduced effective ways to improve competitiveness. Key among these was the expansion of the regulated interswitching limit to 160 kms from 30 kms, and the ability for shippers to be “directly compensated for any expenses” incurred if railways fail to meet level-of-service obligations under the Canada Transportation Act.
In July 2016, the federal government released the Canada Transportation Act Review, otherwise known as the Emerson report. Farmers were concerned as the report recommended several items that were a detriment to farmers, including:
- The eventual phase-out of the MRE program over the next seven years.
- Allowing the increased interswitching range to sunset and return to 30 kms.
Farmers are concerned that these recommendations will give an unfair advantage to the rail companies, as the vast majority of farmers only have access to one freight provider making them vulnerable to monopolistic practices.
Markets and demand for Canadian grain will continue to grow, especially in the pacific Rim. It is vital that we improve handling and logistics systems, and that we ensure infrastructure capacity is in place to meet these demands.