Commodity groups optimistic new rail legislation will improve grain transportation

Farm and crop industry groups are welcoming the legislation introduced by Transport Minister Marc Garneau on Tuesday.

Bill C-49 would, among other things, give shippers the ability to charge reciprocal penalties to railways for poor performance, clarify of the definition of “adequate and suitable” service, and increase requirements for railway reporting and contingency planning — all longstanding requests of the agriculture sector dating back to the 2013-14 rail backlog and beyond.

The amendments to the Canada Transportation Act would also create a new long-haul interswitching option for distances up to 1,200km (more on this in the interview below), and maintain the maximum revenue entitlement (or revenue cap) for grain, with some changes that could make it easier for railways to invest in grain handling capital.

“We’ve all been waiting for this bill to come forward, and certainly Minister Garneau heard our concerns in crafting this bill. At initial glance, it looks like the bill has been positioned to strike some balance between shippers and railways,” says Rick White, CEO of the Canadian Canola Growers Association, in the interview below. “To be honest, it looks like it’s going farther than many previous attempts at addressing long-standing complaints from the grain industry and farmers.”

While optimistic, there’s some cautiousness in how farm groups are responding as they review the details of the proposed changes.

“While we have yet to fully analyze the proposed legislation, we are cautiously optimistic that with the introduction of reciprocal penalties this is the beginning of a balanced transportation system for Western Canada’s farmers,” says Jason Lenz, chair of Alberta Barley, in a news release.

Rick White of the Canadian Canola Growers Association and Kelvin Heppner discuss the proposed federal rail legislation:

“While the most important part of the legislation is the increase in railway accountability, all of these provisions are important,” notes Cam Dahl, president of Cereals Canada. “Improving CTA processes are important to ensure problems are caught and addressed before they snowball into major failures. Together with clarification to the meaning of adequate and suitable railway service this will help ensure that the Canadian transportation system meets the expectations of our customers – both within Canada and internationally.”

The Alberta Wheat Commission is also seeking further clarification of what some of hte changes mean, but says it’s pleased to see the focus on improving railway accountability, including the ability of shippers to seek reciprocal financial penalties.

“We appreciate that the Government of Canada has taken steps that will address longstanding transportation issues faced by farmers,” says AWC chair Kevin Auch. “Better rail service will in-turn strengthen our ability to build competitive advantage in the international marketplace. It reassures our global customers that our government places a high priority on a robust export environment.”

Pulse Canada and the Canadian Special Crops Association say they expect to see increased rail freight capacity and improved levels of service as a result of the legislation.

The changes to the maximum revenue entitlement (MRE) include the removal of containerized grain, which significantly impact the pulse and special crop sectors.

“As an industry we will look closely at this change to the MRE to understand both what the government intends as an outcome and the impact on our industry” says Gordon Bacon, CEO of Pulse Canada and the CSCA. “The industry expectation is that change must lead to improved containerized service, capacity and performance at competitive rates. Having clearly defined performance measures in place will be key to determining if the removal of container traffic from the MRE has achieved the intended results.”

The Western Canadian Wheat Growers Association also says the bill contains “positive changes for improved service and accountability in the grain handling and transportation system, which the Wheat Growers have been requesting for some time,” noting the changes to the MRE will allow railways to receive credit individually for their capital investments.

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