CALGARY, AB: The Western Canadian Wheat Growers Association sees some positive elements in legislation tabled yesterday in the House of Commons, however Bill C-30 does not go nearly far enough to address the serious breakdown in grain shipping capacity on the prairies.

“These measures do not adequately tackle the backlog in grain shipments,” says Levi Wood, President of the Wheat Growers. “They also do not position our industry to meet the long-term needs of prairie farmers or our customers.”

The Wheat Growers are disappointed the minimum grain shipping requirement remains fixed at one million tonnes per week from April 7 to August 3, 2014. This means the grain carryout on prairie farms will exceed 20 million tonnes heading into this year’s harvest, resulting in the continuation of severe price discounts (i.e. wide basis levels) for the foreseeable future. The Wheat Growers had asked that the minimum grain shipments be increased to 13,000 railcars per week (approximately 1.2 million tonnes) instead of 11,000 railcars per week. The backlog of grain orders is over 68,000 railcars representing six million tonnes of grain.

“Grain prices to farmers will remain artificially depressed until the backlog is cleared up and the elevator system has the capacity available to offer competitive bids for our grain,” says Wood. “As long as the elevator system remains plugged, price offers to farmers are likely to remain below market value.”

The Wheat Growers had proposed several recommendations to expand rail shipping capacity in the longer term, including an incentive-based revenue cap and measures that would allow shortlines and other rail operators to add capacity to the network when CN and CP are unable or unwilling to meet customer demand. These improvements were not included in the legislation.

The Wheat Growers see some positives in the legislation including the proposed increase in interswitching distances and the potential for incorporating meaningful performance provisions, including reciprocal penalties, in service agreements negotiated between grain shippers and the railways. The implementation of a dispute resolution process in the Canada Grain Act should also help improve grain company contracts with farmers, although the Wheat Growers note that having adequate shipping capacity and restoring good working capacity throughout the elevator system is the best means of restoring balanced contractual relationships between farmers and grain companies.

“Having plenty of competition for our grain is the best way to improve contract terms,” says Wood. “That can’t be achieved until we fix the underlying problems in our rail transportation system.”

The Wheat Growers will continue to press for changes in legislation that meet the needs of farmers and our customers and positions Canada to once again be a reliable supplier of grain in world markets. 

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