Industry backbone needs muscle to work

The railways have been claiming that Bill C-52, the Fair Rail Freight Service Act, is unnecessary, stifles innovation and puts the “engine of the country’s economic growth at risk.”

Canadian National Railway chief executive officer Claude Mongeau declared this fall that it is “best for the Canadian government to stick with a commercial approach to rail service instead of adding layers of regulations.”

It is fair to say that shippers expect to bargain commercially with the railways.

However, with only two major railways operating in Canada, there continues to be an inability to fairly negotiate adequate services and prices for freight.

The railways, on the other hand, can unilaterally impose penalties and conditions on shippers or refuse to provide any service at all.

Farmers, the vast majority of whom have single railway access at their local elevators, have attempted to have rail service issues addressed for more than a decade. It is not like dealing with city cable and telephone companies.

Farmers cannot switch their business to another railway company if they receive poor service when only one rail line comes through their town.

This is why Grain Growers of Canada, working within the Coalition of Rail Shippers, have long called for balance through legislation.

Legislation was one of the recommendations made by the independent Rail Freight Service Review Panel, which stated in its 2010 report that “it has long been recognized in transportation law that regulations are required to address the potential abuse of market power by the railways.”

Granted, rail service for grain shipments has generally improved since the rail service review process began. Farmers will be counting on the new legislation to backstop and enhance these improvements for the long term.

In a speech this fall, Mongeau called the railways the “true backbone of the Canadian economy.”

But if the railways are the backbone, then we also need to recognize that agriculture puts the meat on those bones by contributing more than $18 billion a year to the Canadian economy.

Canada is the world’s fifth largest exporter of agriculture and food products, with more than 90 percent of our farmers’ livelihoods dependent on the sale of products that are exported or export priced.

The grain industry spends $1.4 billion on rail freight annually, exporting 35 million tonnes of grain.

And farmers need to get their crops to port.

Getting a better rail service deal that provides balance so that Canadian farmers and the grain industry can count on the rail cars arriving on time is not optional.

It is essential for the agriculture industry to grow and for the Canadian economy as a whole to prosper. Canada’s export competitiveness in the global market is hindered when trains are late without explanation, and it is just not fair when penalties are one-sided against shippers.

This is why the new rail service legislation is needed and why the Grain Growers supports the federal government’s move to introduce this bill to assure more balance in dealing with the railways.

We were glad to see that the legislation included a right to a service level agreement, an arbitration process when negotiations fail and consequences for the railways when they don’t live up to their obligations.

Hopefully, the “true backbone,” as CN likes to call itself, can take a step back from the rhetoric and try to understand these are the bare bones that shippers, including farmers, need to meet Canada’s growth potential.

Richard Phillips is a farmer from Saskatchewan and executive director of Grain Growers of Canada.

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