We are embarking on a once-in-a generation opportunity to revamp the regulatory environment for grain transportation.
We must get it right.
Eighteen farm groups finally met with federal Transport Minister Marc Garneau in Saskatoon last week.
The meeting partly made up for a gaping hole in the consultation process related to the Canada Transportation Act review. Before this, only a few farm groups had been heard from, a baffling limitation considering the vital importance of the rail system to Canada’s grain industry.
Following the meeting, the heads of the three prairie provincial general farm organizations and the Canadian Federation of Agriculture were pleased with the attention they received from Garneau and Agriculture Minister Lawrence MacAulay.
The ministers were open to hearing the farm groups’ frank assessments of the transportation system. The farmers thought the ministers understood when they talked about the need for base line information on railway costs and to monitor performance in real time.
The meeting came at a crucial time as the government wraps up consultation on the CTA review, which included a wide-ranging report by former cabinet minister David Emerson.
One of Emerson’s recommendations was to immediately modernize the maximum revenue entitlements and then eliminate them within seven years as the system becomes “commercially grounded.”
Most farm groups want to retain the MREs as their protection against the near monopoly the two main line railways have in Western Canada, where most grain delivery points are served by only one rail company.
The timing was also important because the 2016-17 shipping season could be as frustrating as 2013, when shipping delays caused lost sales and soaring basis levels that cost farmers billions in lost revenue.
This year, wet weather is delaying harvest of another big crop, creating a wide variety of grades and quality and adding complexity to the marketing campaign.
One way to ensure that bottlenecks do not develop again is to improve timely communication among all the players in the system: farmers, grain companies and railways.
Information gathering has improved since 2013, but the farm groups believe more could be done to bring the players to one table to discuss how to use the data to improve performance.
Data — specifically the railways’ costs of moving grain — are also critical in the discussion about the MREs.
A full costing review has not been done since 1992, and the MRE process was created in 2000. Revenue adjustments since then were applied to that base year.
The grain collection system has changed immensely in the intervening 16 years, including elevator consolidation, branch line abandonments, more efficient locomotives and longer trains.
Many of these efficiencies added to the railways’ bottom lines but downloaded costs to the farmer and the taxpayer. For example, instead of hauling a few miles to a nearby elevator, the farmer’s haul is now often 50 kilometres or more, adding to his costs and causing much more wear on taxpayer funded provincial roads.
A costing review would lead to a fairer allocation of efficiency dividends and identify sources of revenue to replace the aging fleet of government-owned hopper cars.