WINNIPEG – The federal government is proposing legislation to level the playing field for grain shippers and counter the railways’ near monopoly, says agriculture minister Gerry Ritz.
During a news conference at a grain elevator northwest of Winnipeg March 18, Ritz and transport minister Rob Merrifield released the federal government’s response to the Rail Freight Service Review, a process initiated in 2008 to address concerns about rail service in Canada.
The government, Merrifield announced, will introduce legislation that gives shippers the right to a service agreement with a railway.
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“This process, this legislation that we’re proposing, will make sure that the farmers and the shippers of farm products are listened to,” Ritz said, following the event in Winnipeg.
“Right now there’s no ability to keep people at the table, negotiating towards a commercial agreement…. That’s what legislation does. It creates a hammer that can be used if need be.”
If a shipper and a railway cannot negotiate a commercial agreement, the bill will “provide the process to establish a service agreement,” Merrifield said.
Henri Ritchot, general manager of Paterson Global Foods’ elevator near Winnipeg, said a requirement for a commercial arrangement between grain shippers and railways is welcome news.
At the moment, railways have all the power and can issue financial penalties if elevators fail to meet loading deadlines, he said. For instance, penalties can be as high as $90,000 if the elevator fails to load a 100-car train in a specified period of time.
“Hopefully the (elevator) companies can negotiate a penalty where if they (railways) don’t deliver, they have to owe us money…. So we’re not always the ones paying out when we miss our targets,” Ritchot said.
Canadian National and Canadian Pacific Railway both said the additional regulations would cause inefficiencies and complicate an already complex system.
The government’s announcement comes at an appropriate time, said Rick White, Canadian Canola Growers Association general manager.
Oilseed and grain movement has been “near its worst” on parts of the Prairies this year, White said.
Ritz said he has heard the complaints this winter regarding the railways’ grain shipping performance.
“CN has done a reasonable job of measuring up…. CP has had some problems. They haven’t taken us seriously…. If I have any words of advice for CP, it would be pull up your socks and get in this race.
“If they want to be at the finish line and keep serving Canadian farmers, then they’re going to have to start to measure up,” said Ritz.
Granting shippers the right to a service agreement is only one part of the government’s response to the service review.
The government also proposed:
• that railways provide shippers 10 days advance notice of service changes;
• a fair, timely and cost-effective commercial dispute resolution mechanism;
• the development of a template service agreement, produced in consultation with shippers, railways and other stakeholders;
• creation of a Commodity Supply Chain Table to address issues that affect the freight logistics system and evaluate the performance of the supply chain.
Gordon Bacon, chief executive officer with Pulse Canada, was encouraged by the government plan to monitor shipping throughout the entire value chain.
“That’s one of the things I liked hearing today, was taking a supply chain approach, where we look at the role that every player is responsible for,” he said.
“We have a lack of predictability in the system, by many measurements, and what we’re trying to do is improve the predictability of service.”
In a few weeks the federal government is expected to appoint a facilitator to work out the details of the government’s plan, Merrifield said.
The facilitator will have six-months to craft a template service agreement and a dispute resolution process.
Overall, the government’s proposals are a step forward for farmers and shippers of grain in Western Canada, said Doug Chorney, Keystone Agricultural Producers president. But, he added, farmers will have to wait and see how this all plays out.
“We’ll be interested to see how the process unfolds and hope that it does lead to actual (improvements) that are seen in the countryside.”
