New rules aimed at changing the way producer cars are ordered, managed and allocated should result in a system that is more efficient and less subject to backlogs and delays, according to the Canadian Grain Commission.
On July 31, the CGC announced a series of changes to the producer car program, which allows grain growers to order their own hopper cars, fill them at designated sites and avoid terminal elevation fees.
The rule changes took effect Aug. 1 and are intended to improve communication and weed out car orders that are no longer current or required.
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“We hadn’t done a review of the program for several years,” said Catherine Jaworski, manager of producer protection at the commission. “With all of the major changes that happened in the industry … we decided that we should do an internal review … with a view to making the system as streamlined and efficient as possible.”
The program includes several changes:
- A new system for issuing identification numbers to producer car users.
- A new rule requiring that each producer car order include the producer’s email address.
- Mandatory email confirmations to ensure requests for cars are current and that every carload of grain has a confirmed sale.
- New backlog and allocation rules that streamline the car allocation procedure and limit the number of orders that any single producer or company can have on the books.
- A new provision that allows producer car administrators to submit an optional weekly shipping request list that specifies which car orders should be given priority for the coming week.
According to Jaworski, the changes are designed to ensure the orderly allocation of producer cars and to ensure that unwanted or phantom orders can be identified and eliminated rather than left in the system to cause congestion.
They are also designed to ensure that all cars arriving at a port destination have a designated buyer and permission to unload.
“The rules are mostly to make sure that we have a lot more clarity on how allocation works and to build in a little bit of flexibility so we can try to address what the industry was telling us,” Jaworski said.
The performance of the CGC producer car program has prompted criticism over the past two years, primarily from producer car shippers who complained that car spotting times were too long and communication between railway companies, the CGC and producer car loaders had broken down.
In 2014, many grain growers who ordered producer cars faced wait times of six months or longer.
As a result, many growers abandoned their orders and sought other delivery options.
The elimination of the Canadian Wheat Board’s single desk marketing authority, combined with an unusually difficult winter shipping season in late 2013 and early 2014, created a perfect storm of conditions for the producer car program, Jaworski said.
Limited train movement during the winter, a newly deregulated grain marketing environment and congestion throughout the prairie elevator system led to an unprecedented demand for producer cars during the 2013-14 crop year.
In some cases, producers desperate to move grain were ordering cars without confirmed sale.
More commonly, producers expecting cars grew frustrated as wait times grew longer and sales opportunities disappeared.
Jaworski conceded that 2013-14 was a challenging year for the program. The CGC received nearly 21,000 applications for producer cars and submitted more than 16,000 orders to Canada’s major railway companies.
Of those, approximately 15,600 were filled.
Demand was down slightly in 2014-15, but still above average.
Unofficial figures show more than 17,300 cars were requested in 2014-15. Of those, roughly 9,900 orders were submitted to the railways and the remainder, nearly 7,500, were deemed unavailable, meaning they were cancelled, rejected or pending.
Of the 9,900 requests processed by the CGC, it is unclear how many cars were spotted and filled.
Despite the program’s recent shortcomings, Jaworski said the system is still a good alternative.
“I still think it’s a viable option for producers,” she said. “I think (last year’s issues) were the result of a huge carryover from 2013-14.
“There was just so much interest in producer cars …. It took a long time to clean that up.”
CGC’s new backlog rules limit the number of cars allocated to any producer or company to twice the maximum car spot at any given loading site.
