Farm­ers plagued by rail car wor­ries

Bumper crop har­vested, but ship­ping it un­cer­tain

Winnipeg Free Press - - FRONT PAGE - DY­LAN ROBERT­SON

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.

RUTH BON­NEVILLE / WIN­NIPEG FREE PRESS

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.

BORIS MINKEVICH / WIN­NIPEG FREE PRESS FILES

KAP boss Dan Mazier says Man­i­toba farm­ers have har­vested above-av­er­age crops this year.

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