As the volume of grain backed up on farms in Western Canada grows, proposed transportation legislation that could help grain shippers address poor rail service remains stalled in the Senate.
As it’s written right now, Bill C-49 — originally introduced in the House of Commons last spring — would give grain shippers the right to charge railways with reciprocal penalties for poor service, increase the powers of the Canadian Transportation Agency, and clarify the definition of “adequate and suitable” service by railways — changes that grain industry stakeholders and farm groups have been requesting for many years.
Farm groups are eager to put the proposed measures to the test, as railways continue to fall behind on shipping grain from elevators. According to the Ag Transport Coalition, only 38 percent of hopper car orders were fulfilled last week, with CN Rail only delivering 17 percent. (See below for more on CN’s view of the situation.)
“It’s a crisis right now. The levels are astronomically bad. Farmers are banding together and we’re trying to get something done,” says Daryl Fransoo, farmer at Meota, Sask., and director for the Western Canadian Wheat Growers Association.
The rail problems were top of mind for producers attending the Wheat Growers’ convention in Washington, DC and the Canadian Federation of Agriculture’s annual meeting in Ottawa this week.
We sat down to discuss the rail situation with Fransoo and Jeff Nielsen, president of Grain Growers of Canada, in Washington on Wednesday.
“There are producers that have several month-old contracts that they haven’t been able to deliver, and we’re hearing of new contract availability not being allowed because there such a backlog of grain,” notes Nielsen.
The Grain Growers’ president flew from D.C. to Ottawa to stand alongside leaders from the Canadian Federation of Agriculture, the Agricultural Producers Association of Saskatchewan, Alberta Federation of Agriculture and Keystone Agricultural Producers in a press conference in Ottawa on Thursday, calling on Senators and MPs to expedite amendments to C-49 and pass the legislation as soon as possible.
While poor rail performance is creating an urgent cash flow crunch, the timeline for potential passage of the Bill C-49 keeps getting pushed back, with a growing risk it will run into the new crop year, beginning August 1.
Senators are headed into a two week break for the first half of March, after which they only be back for two weeks before rising for a two-week Easter break in early April. As Nielsen notes, the Senate will likely make amendments to the bill, which means it will have to go back to the House of Commons. Parliament has another week off in May and MPs are scheduled to go home for summer as of June 22nd, leaving an increasingly tight timeframe for getting C-49 to Royal Assent.
“And you don’t know where it’s going to be on the (House of Commons) Order Sheet as far as the priority the government is going to place on getting this bill finally to Royal Assent,” says Nielsen. “I hate to say it, but we could be out for this crop year. It would be good if we can get it in soon to see if we can start the process of trying some reciprocal penalties, start getting that process vetted and see if that process actually works.”
Several farm groups, including Pulse Canada and Grain Growers, are among the transportation stakeholders asking the Senate to make amendments to the bill regarding the interswitching provisions. Nielsen says senators have told them these amendments will not slow the process of passing the bill.
“There are other amendments (unrelated to grain) because it’s an omnibus bill. They figure the few amendments the grain sector is putting forward isn’t going to delay things,” he says.
Fransoo acknowledges the C-49 isn’t perfect legislation for farmers, but “it’s a heckuva good start.”
Listen to the conversation with Daryl Fransoo and Jeff Nielsen here:
A CN Rail spokesperson speaking at the CFA meeting in Ottawa said the railway temporarily stopped taking new frac sand orders for a week in February, and referenced a “growth pause” in crude oil shipments.
CN maintains it should only be expected to move 4,000 cars of grain per week in winter. The company says it has averaged 3,973 through the winter, but the average in February dropped to 3,016.
The company says it is adding locomotives, and has received around 100 locomotives out of 130 short-term leases, with the balance coming by the end of March. To go along with the new power, the company says it’s adding about 400 new qualified conductors by the end of March, with another 375 by the end of June. A $3.2 billion capital investment program to address capacity constraints — almost 20 percent more than last year — is planned to begin when the ground thaws, says CN.