Farmers plagued by rail car worries
Bumper crop harvested, but shipping it uncertain
OTTAWA — Manitoba farmers say their bumper crop could be left sitting in storage bins — and they could be out millions — if limited rail capacity prevents it from being shipped to market.
Dan Mazier, president of Keystone Agricultural Producers, says Manitoba farmers have harvested above-average canola and cereal crops this year, but they worry about another disastrous rail backlog such as the one that occurred three years ago.
“Can that happen again? Yes, most definitely, and it just about happened last winter,” Mazier said, citing an unwieldy corporate system and expired federal legislation.
In 2013-14, grain farmers saw an unprecedented harvest, yielding onethird more wheat and canola than the previous year, thanks to favourable weather and improvements in crop technology.
But Canada’s railways couldn’t keep up. Harsh winter rail conditions, combined with a lack of co-ordination, meant barns and grain elevators sat full for months as farmers lost out on billions.
A study last spring by the Canada West Foundation concluded that lack of capacity cost farmers across Canada a combined $6.5 billion in 2013-14 and 2014-15.
Five years ago, the former Conservative government disbanded the Canadian Wheat Board’s monopoly, which some claim would have better managed rail capacity. But the foundation’s study suggests there was simply too much grain to move.
That opinion is shared by Mark Hemmes, president of Quorum Corp., which is commissioned by the federal government to assess how smoothly grain shipments are rolling.
He says it’s too early to tell whether this year’s harvest will cause a backlog. “At this point in time, it’s a curiosity; I wouldn’t say it’s a concern,” Hemmes said.
“The government hasn’t (got) the capability to do anything about it, but they do track it. And we’re talking to them pretty much daily lately, because they’re very keen to understand that everything is working well.”
He said last year’s late harvest showed a frailty in Canada’s rail network. Shipping giant Hanjin declared bankruptcy, causing a container backlog in Vancouver shipyards. Mazier says that “rattled the industry,” but he said CP Rail didn’t have enough stock to get grain shipped out of southwestern Manitoba and southeastern Saskatchewan.
Currently, farmers have industry groups request rail cars, and the two major rail companies, CN Rail and CP Rail, chose how many cars to provide based on their stock and demand from other customers, such as oil companies.
“It’s quite a logistical nightmare to try to make the two systems operate properly and efficiently,” Mazier said. “That’s the way our system works right now, and it’s bizarre.”
“It pecks away at our integrity, as far as being a reliable supplier of grain in the world.”
The Ag Transport Coalition, which tallies industry requests for cars versus how many were shipped, shows decent numbers for last week: CN filled 81 per cent of orders, while CP filled 92 per cent.
But a year ago, when CN filled 93 per cent of queries, CP lagged at 74 per cent.
Mazier said rail companies have accused farmers of over-requesting rail cars, in anticipation of not getting their full order. He couldn’t say whether that has happened.
Neither CN Rail nor CP Rail responded to requests for an interview Thursday.
A CN report earlier this year said the company would tabulate grain supply at elevators, ports and terminals, to boost efficiency this fall. “Surplus rail cars are being positioned in strategic locations across Western Canada in preparation for the post-harvest surge in rail car demand,” reads the report.
CP noted it’s two months into shipping this year’s grain, and placed a record number of empty cars at Prairie elevators in September. The company’s assistant vice-president for sales said in a statement he anticipates a smooth year.
“Last year’s 72-million-tonne western Canadian harvest was a nearrecord, yet we experienced minimal issues in delivering our share of it,” wrote Murray Hamilton. “I believe this proves we have the capacity to get the job done.”
He noted that 75 per cent of the company’s grain business runs on designated unit trains, meaning all connected wagons haul the same type of product to eliminate time-consuming stops to separate the fleet.
In Ottawa, Department of Agriculture officials said they’re aware of this year’s bumper crop.
New regulations are also in the works. The 2013-14 crisis sparked temporary rules to keep grain moving on rail, which expired in August.
In their place, Transport Minister Marc Garneau tabled legislation in May that would let shippers seek compensation from railway companies, define service standards and compel companies to report performance data.
Bill C-49 would allow “interswitching,” in which farmers can access a competing railway under certain conditions. The bill hasn’t yet been approved.
This spring, the Liberals also extended an industry working group that keeps an eye on supply-chain efficiency, as well as the monitoring program led by Hemmes. In their last budget, the Liberals set aside $2 billion to improve the reliability of trade corridors.
A study found that Canadian farmers lost $6.5 billion in recent years because there weren’t enough rail cars to move crops to market.
KAP boss Dan Mazier says Manitoba farmers have harvested above-average crops this year.