This winter’s congestion in the grain transportation system is giving federal agriculture minister Ralph Goodale an unexpected international political headache.
In three weeks, when the minister leads a delegation of food and agriculture traders and business people on a 10-day selling trip to Asia, the theme is supposed to be expansion of Canadian food sales into that booming economic region.
Suddenly, Goodale has had to add to his schedule the unsettling task of trying to convince nervous Japanese grain buyers that they can continue to rely on Canada as a grain seller.
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Deliveries to Japan are delayed. The Japanese have been reading the reports of ships waiting and branch-line services cancelled for the winter.
“When I meet our customers in Tokyo next month, they will not be easily reassured about the reliability of the Canadian grain transportation system,” Goodale told the House of Commons Feb. 13 during a day-long transportation debate inspired by the Reform party.
He noted Japanese buyers want security of supply and with Canada’s spotty record, they could begin looking elsewhere for grain.
“It is not just this year,” he said. “The bad reputation tends to linger for years to come.”
When Japanese buyers question Canada’s reliability, as they did after a contract dispute disrupted exports in 1995, it is a high-stakes issue for grain exporters.
Last year, Japan imported more than 1.5 million tonnes of wheat and almost 400,000 tonnes of barley.
Goodale said the potential lost sales revenue are just part of the penalty imposed on farmers when there are grain transportation tie-ups.
They end up paying tens of millions of dollars in demurrage costs to ships waiting at Vancouver and then often are forced to sell later into a lower-priced market, losing again.
Meanwhile, everyone else in the system eventually recoups their losses.
“Grain companies will ultimately collect their handling fees as the product moves through their facilities sooner or later,” said the minister. “Railways will ultimately collect their freight rates. Politicians, officials and others will continue to collect their salaries. For farmers, it is not that simple. They are at the end of the line when it comes to picking up the tab.”
Quick action required
He said he wants action “sooner rather than later” to write performance obligations into the grain handling system.
It would mean that farmers would not have to pick up the tab if the railways, or some other player, is responsible for the congestion.
Performance standards would “ensure those who have obligations to perform, pay the penalty that should logically occur when they do not perform up to the standards that should be expected of them.”
For Reform listeners, the question was: haven’t we heard this before?
Reform MPs blamed Goodale and the Liberals for helping create the problem by getting rid of the old regulatory rules of the Western Grain Transportation Act without ensuring that real competition was injected into the system.
They scoffed at Goodale’s plan to call a meeting of industry leaders last week.
“The minister of agriculture loves meetings and he loves reports which he can ignore if he so chooses but he has little taste for constructive action,” said Swift Current, Sask. MP Lee Morrison. “This (meeting) will probably result in yet one more stillbirth.”
