Grain transportation measures four years in the making will be in place for the next crop year now that Bill C-49 has received Royal Assent.
Then, the analysis of its effectiveness will begin.
Most farm organizations widely lauded the legislation and lobbied for its passage even while acknowledging it isn’t perfect.
Jeff Nielsen, president of Grain Growers of Canada, said farmers have been waiting for a legislative fix to the rail system that has caused two grain backlogs in the last four years.
“Bill C-49 will improve the long-term competitiveness of the grain supply chain and it is welcome news that these measures will become law,” he said.
The bill provides for reciprocal penalties in service level agreements, long haul interswitching and more data transparency from the railways.
“We’re going to have to, as farm groups, be diligent in trying to ask for transparency,” said Steve Pratte, Canadian Canola Growers Association policy manager.
With regard to long haul switching, for example, these will be commercial agreements, he said.
There is no measuring stick and no requirement for the Canada Transportation Agency to publish details about the agreements, he said.
Rail analyst Malcolm Cairns said LHI in particular is one of the provisions that will bear watching.
“Basically it is a rate limiting regulation,” he said. “You can’t always tell whether it’s successful or not.”
Cairns said its success will depend on the CTA’s behaviour when it comes to setting rates.
And, he said it will take a year or two to find out if LHI is being used at all.
The measure is similar to the former Competitive Line Rate provision that was never used.
Western Grain Elevator Association executive director Wade Sobkowich said that’s because shippers had to get permission or approval from the competing carrier through an established rate.
“The competing carrier never would provide a rate, and therefore we were unable to use the provisions,” he said. “LHI on the other hand doesn’t need permission from the competing carrier.
“Simply put, under CLRs the second railway could refuse to move the grain. Under LHI they can’t.”
Jean-Marc Ruest, vice-president at Richardson, said he can see times when LHI might work.
“You have certain years where one Canadian railway is performing significantly better than the other,” he said. “I think that long-haul interswitching would be an interesting remedy in those circumstances.”
Sobkowich also said his organization is particularly happy with reciprocal penalty provisions that give teeth to service contracts.
Other industry representatives who attended the celebration of C-49 near Winnipeg last week agreed that only time will tell if the bill works.
“It’s a first step,” said GGC vice-president and Manitoba farmer Art Enns. “I don’t think any bill is perfect … but it’s a huge step forward where we are going to be able to hold railways accountable.”
Keystone Agricultural Producers president Dan Mazier said getting the legislation on the books is important. Following it up will be equally important.
“Considering the farm groups got so wrapped up in this it would be nice to know three years down the line that it’s actually working,” added the CCGA’s Pratte.
“There was a fair bit of political capital that was spent.”
Canadian National Railway vice-president Sean Finn said all industry players invested a lot of time in the new legislation, beginning with the Emerson review in 2014.
He said he likes the fact that the railways will have to provide plans about how they intend move each year’s grain crop, along with winter plans they will develop with other supply chain players.
“Even though it’s not perfect for anybody, no doubt both sides of the spectrum will have comments about the good and bad in the bill, but overall this shows that when you provide a stable regulatory environment that allows the railways to invest in the network, to improve its service to customers, that’s win-win,” Finn said.