Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 12 - Evidence - Meeting of May 13, 2014
OTTAWA, Tuesday, May 13, 2014
The Standing Senate Committee on Agriculture and Forestry, to which was
referred Bill C-30, An Act to amend the Canada Grain Act and the Canada
Transportation Act and to provide for other measures, met this day at 6:15 p.m.
to give consideration to the bill.
Senator Percy Mockler (Chair) in the chair.
The Chair: Honourable senators, welcome to this meeting of the
Standing Senate Committee on Agriculture and Forestry. Minister, thank you for
being here this evening. I will introduce you formally a bit later.
My name is Percy Mockler, Senator from New Brunswick and Chair of the
Committee. I would ask senators to introduce themselves beginning with the
Senator Mercer: Senator Terry Mercer from Nova Scotia.
Senator Robichaud: Fernand Robichaud, Saint-Louis-de-Kent, New
Senator Tardif: Claudette Tardif from the province of Alberta.
Senator Maltais: Ghislain Maltais, Quebec.
Senator Oh: Senator Oh, Ontario.
Senator Dagenais: Jean-Guy Dagenais, Quebec.
Senator Eaton: Nicky Eaton, Ontario.
Senator Plett: Don Plett from Manitoba.
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Thank you, senators. Today, we will begin the study of Bill
C-30, An Act to amend the Canada Grain Act and the Canada Transportation Act and
to provide for other measures. It is known as the proposed Fair Rail for Grain
The first panel consists of the Honourable Gerry Ritz, P.C., M.P., Minister
of Agriculture and Agri-Food Canada. For the record, thank you, minister, for
being here this evening to share your comments and vision with us.
With the minister, we have Greg Meredith, Assistant Deputy Minister,
Strategic Policy Branch, Agriculture and Agri-Food Canada; and Lenore Duff,
Director General, Surface Transportation Policy, Surface Freight Policy,
Transport Canada. I thank officials for accompanying the minister.
I will invite the minister to make his presentation, to be followed by a
question and answer session. Each senator will be given five minutes to ask
questions before the chair recognizes another senator. We will have as many
rounds as questions made available.
On that note, Mr. Minister, you have the floor.
Hon. Gerry Ritz, P.C., M.P., Minister Agriculture and Agri-Food: Thank
you, Mr. Chair. I'm pleased to be here this evening to speak to Bill C-30. I
want to thank senators for their efforts thus far in moving this bill forward.
Bill C-30 is good news for farmers, all commodity shippers and our Canadian
economy. Canada's hardworking agriculture and food producers and processors
generate close to 7 per cent of Canada's GDP and nearly $100 billion in annual
sales. The agriculture and food industry is the largest manufacturing employer
in Canada generating one in eight jobs, with record exports topping some $50
billion for the first time in Canada's history. Close to half of those exports
were generated by grain alone. On average, 50 per cent of our wheat, barley,
canola, peas, lentils and other world-class grain and oilseed crops are shipped
to our customers here and around the world.
Our government continues to work collaboratively to modernize Canada's grain
industry so it can capture exciting new opportunities in the global market
place. We delivered on our commitment to bring marketing freedom to western
grain farmers. We are investing in research into new disease-resistant
productive crop varieties that will keep farmers competitive while helping them
to meet the growing global demand for high quality foods and while lightening
their environmental footprint.
We're opening up new markets around the world through the most aggressive
trade agenda in Canadian history, including signing free trade agreements with
key agricultural markets like the European Union and South Korea. Our customers
in both of these markets are eager to have greater access to our quality
Canadian food products under these new FTAs.
Last month I was in Korea, along with representatives from across our
Canadian agricultural industry, to promote that agreement. While there, I met
with the SPC Group, a major Korean buyer of Canadian wheat, that plans to
purchase roughly 50 per cent more Canadian wheat to grow their market share in
To meet this new demand, Mr. Chair, Canada's farmers require an efficient,
reliable and predictable transportation system to get those crops to market, all
the more so this year given that Western farmers brought in a record harvest
that was close to 50 per cent above the average. This year's record crop,
combined with poor rail service, has led to a severe backlog of grains in
Western Canada, as well as many other bulk commodities.
While the grain has started to move, thanks to the order-in-council issued on
March 7, we must ensure that it keeps moving. Under the order-in-council,
Canadian National and Canadian Pacific are currently required to carry some
500,000 metric tonnes of grain each per week. This weekly tonnage target is set
according to CN's and CP's ability to move this volume without negatively
affecting other commodities. The OIC's volume and reporting requirements will
effectively expire on June 1, due to the reporting of the crop week. This
legislation intends to extend these same volume requirements until the beginning
of the new crop year, August 1. With seeding season upon us, it's absolutely
critical to keep the grain moving so farmers can free up storage space for this
Bill C-30 will require rail companies to move 1 million tonnes of grain every
week through to August 3, extending the volume requirement from the
order-in-council. The act will allow us to set ambitious, achievable volume
requirements for railways moving forward. It will give shippers of all
commodities in the three Prairie provinces more rail options by extending
interswitching rights. It will give the government powers to strengthen farmers'
contracts with the grain companies.
It will also strengthen the accountability between shippers and the railways,
thanks to an amendment passed at the House of Commons Agricultural Committee.
The amendment would allow shippers who enter service-level agreements to be
directly compensated for expenses they incur as a result of the railway's
failure to meet their service obligations.
This amendment is a market-based solution to meet stakeholder requests for
more balanced accountabilities between railways and shippers. For example, if a
grain shipper has a service-level agreement with a rail company, and if the rail
company does not meet those obligations — triggering demurrage fees, for example
— the grain shipper can ask the Canadian Transportation Agency to require the
railway to provide compensation for those out-of-pocket expenses.
As well, our government will require the Canadian Transportation Agency to
consult with the railways and other supply chain partners to discuss their plans
regarding the movement of grain and other commodities during the upcoming year.
The goal is to proactively bring together all the players in the chain to ensure
the conversation happens up front at the beginning of the season.
We will also be able to ask for updated analyses, as needed, throughout the
year. The Canadian Transportation Agency will then provide advice and
information that will help the Minister of Transport and the Minister of
Agriculture to determine further volume requirements going forward based upon
this hard data. Furthermore, our government will also require the railways to
provide more timely and detailed data regarding the movement of grain on a
Mr. Chair, together, these measures will ensure that Canadian shippers have
access to a world-class logistic system that gets Canada's agricultural products
and other commodities to market in a predictable and timely way. The grain
industry and shippers across Canada support Bill C-30. With this legislation,
our government is taking immediate concrete action to get the grain moving
faster to port so Canada can meet its international sales commitments.
It's not the final step, however. Higher crop yields and better crop
performance are the new normal, and we must be prepared for that. Our government
will continue to engage the full value chain and the provinces to look at the
challenges of transporting not only this year's record harvest but future
harvests as well. We're encouraged to see the investments in new capacity across
For the immediate term, there are a number of risk-management tools available
to farmers as spring seeding gets under way. Producers are making good use of
available risk-management tools, including the Advance Payments Program, which
is specifically designed to assist with producers' cash flow pressures while
commodities remain on farm.
Looking ahead, the future is bright for this core economic driver. With our
highly skilled producers and our abundant land and water resources, Canadian
agriculture is well positioned to meet growing demand in the global marketplace.
Our government will continue to work with the Canadian agricultural and food
industries to drive transformative change and lay down the conditions required
to unlock this sector's full economic potential.
This committee continues to work hard for the Canadian agricultural sector,
and I thank you for that. I urge you to give this bill your careful
consideration while moving it forward as expeditiously as possible. Thank you. I
look forward to your questions.
Senator Mercer: Mr. Minister, thank you for being here again. It is
always good to see you. Since the hammer is coming down here and there are time
limits, I'll try to be quick.
You mentioned the 500,000 metric tonnes per week, per railroad, directed
under the order-in-council. Are they meeting those requirements?
Mr. Ritz: Yes. The short answer is yes, senator.
Senator Mercer: Has there been any week when they haven't met that
Mr. Ritz: There was a gradual build-up to the last two weeks, when
they met the requirement full on.
Senator Mercer: So they've only met the requirement for the last two
Mr. Ritz: That was part of the program under the OIC. They gained
capacity each week, moving up to the beginning of May, up to that 500,000 metric
Senator Mercer: So no fines have been levied?
Mr. Ritz: Not that I'm aware of.
Senator Mercer: The drafting of the legislation and the amendments to
the legislation in the House of Commons ran into a snag or two when the report
came back from committee, and then an improper amendment was discovered or
appealed to the Speaker, and he ruled that it had to go back to the committee.
It took 42 days to get that done, and now it comes here and we're under the
gun to get it done. I'm not suggesting we're not going to get it done; I think
we will. But I get frustrated when legislation gets bogged down because of
drafting legislation or improper amendments being made. Would you care to
comment on that?
Mr. Ritz: I was disappointed, too, senator. We undertook an amendment.
We thought we were on the right track, moving it through as we did. There was
unanimous consent moving forward.
There was some question as to whether or not the committee had the ability to
do that in the way they did. The Speaker's ruling took some time with the Easter
break, as you well point out. I'm not sure if 42 days is accurate or not. I
didn't count them. I know each day mattered. At the end of the day, the railways
were still under the OIC, and will be until June 2, I think, the date of that
crop week. So the grain continued to move.
I was concerned, like you, that there was time lost, but at the end of the
day we hope to make that up.
Senator Mercer: The service-level agreements that are referred to in
the act and were referred to under the transportation amendments that took place
recently do not specifically define ''adequate and suitable.'' Why wouldn't we
do that? This is the second or third bill we've had, or at least the second
bill, where we've talked about ''adequate and suitable.'' It doesn't appear in
this bill either, but you're going to try to define it in regulations.
One of the complaints since we passed the last piece of legislation on this
was the fact that it didn't have a strong enough definition and, indeed, that
there were no teeth in the legislation — so that we don't find ourselves in this
position next year, when maybe the crop will be even bigger.
Mr. Ritz: There's always that potential, senator.
We have a very strong legislative outline here with the amendment that was
eventually passed by the committee and brought back to the house at the report
and third reading stages. Then you underscore the backbone of that, as I said,
in legislation with good regulations. The reason for regulations is that they
are flexible. There are a number of commodities at risk here and we're not going
to increase grain movement at the expense of coal, potash, timber and the other
bulk commodities, containers and so on.
The definition of ''adequate and suitable,'' for one, may be different for
the next. To keep it as flexible as possible, the regulatory package will
address that in each service-level agreement that is struck between the shipper
of record and the railway of record.
Senator Mercer: Yes, but there are multiple shippers of record and
railways of record. Let me move on, because I know my time is short.
I've talked to a number of farmers in Western Canada and some of them have
suggested that the dismantling of the single desk at the Wheat Board contributed
to the problems we're seeing with the amount of grain being transported. In
particular, without getting into the debate of the Wheat Board again, but
talking about the fact that you proceeded with getting rid of the single desk,
but there didn't seem to be a plan in place to replace some of the things that
the Wheat Board did. They had a role to play in booking transportation of grain.
Mr. Ritz: I would question the fact that you spoke to a number of
farmers. I could name two or three who would give you that argument, not a lot.
At the end of the day, the single desk removal has worked extremely well. You
also have to recognize that this is the second year of freedom for western
The first year worked exceptionally well. There was a large crop then and a
good volume was moved well ahead of schedule. Even this year, with the problems
we've had, we had 30 per cent off the combine. That's called cash flow in
anybody's books. Literally what happened is the wheels fell off in early
December and the railways never tucked them back up under the cars again as we
came back after the Christmas break. That was the problem this year.
Anybody who says the old single desk would have fixed this — the only thing I
would give them in that regard is that the single desk dribbled the sales out so
slowly that there never was a strain on the rail system.
Senator Mercer: My final question is again about the movement of
grain. When we had the Wheat Board debate there was great discussion here about
the availability of trucks moving grain south into the United States. Specific
farmers I've talked to have told me that this is an issue: getting trucks out to
do this and having enough available rolling stock to get the product moving.
Have you had reports of that?
Mr. Ritz: There was some concern that more product may be moved south
because the railways weren't. That was one of the corridors they weren't
addressing, and still aren't in a significant way. The order-in-council says get
the volumes to the coast where the boats are sitting and causing demurrage
charges. There is a shortage of product moving to the States in a timely way.
It's starting to move down there. There was some concern. I know Cargill
undertook moving a lot by truck to keep the feed mills operating, the General
Mills and others down there. It's far more expensive and not as environmentally
reasonable to move by truck as by rail. That's one of the reasons we moved to
interswitching at 160 kilometres, with the ability to expand that.
Senator Mercer: I think that is a good move.
Mr. Ritz: I agree. Rather than a handful of elevators that have the
ability to do that, we now have close to 200, plus the ability for Burlington
Northern, who also partners with CP stateside, to come up and take that product
south. At the end of the day, that will address a lot of those concerns.
Senator Plett: Thank you, minister. I want to make a comment, since my
friend brought up the single desk. I also see one of the problems that doing
away with the single desk has created. Farmers seeded 2 million more acres of
wheat than they did under the single desk because they were happy they could go
out and sell it on the free market, which has created that much more crop out
there. That, as I said in my speech, is what you call proof in the pudding.
I want to talk a bit about interswitching. It's important to me, as you know,
minister, being from Manitoba and having the Port of Churchill there. You
briefly touched on this, but I would like you, if you would, to explain more
about interswitching and how it increases competition between railways.
Specifically, our government has taken action to ensure that the Port of
Churchill continues to be an important northern shipping port, including an
important option through which farmers ship their grain to market. Will the
increased interswitching distances improve things for the Port of Churchill, for
Omnitracs and possibly other short-line railways?
Mr. Ritz: The short answer on the Churchill sub is, yes, it will help
them. They will have a larger catchment area throughout Manitoba in order to
feed up through there.
We've actually exceeded the dollars that were allowed under the changes in
the single desk. There was an allocation that would drive product with that same
capacity through Churchill, and we surpassed that last year. This year it has
already been fully subscribed, and it looks like we'll have another banner year
up in Churchill. The interswitching will help Omnitracs in that catchment area.
There is a map we've done up, and I can leave a copy with you, that shows the
circles and how they overlap. When interswitching first was put in in 1987, it
was increased in 1987 to 30 kilometres, which reflected some 66 per cent of the
grain elevators. This was before rationalization of a lot of the rail lines and
elevators. Now, rather than some 2,000 elevators, we're down to a couple hundred
major points. The old interswitching at 30 kilometres no longer addressed the
ability to move grain from one area to another railway.
By moving to 160 kilometres, we're now back to a higher percentage of all of
the elevators having that ability, the buyers and the shippers themselves.
One of the demands was ''Let's have joint running rights.'' Of course, it's
easier said than done, with safety factors, who dispatches and how you keep
track of it.
What the railways have done, to their credit, is that they each spent about
$100 million last year on infrastructure through Western Canada. What they did
is lengthened their sidings so they can get the longer trains off to let the
other train come back through. There's been a lot of work done in that regard.
What that pointed out is there's more work to be done on the infrastructure from
the rail perspective. They're certainly not against doing that. This bill will
help them along that way.
Senator Plett: I know there has been talk about it also extending
because of the interswitching, and it extends now into the United States. Could
you touch a bit on the impact of that, where that will help us the most?
Mr. Ritz: There are two major corridors across the northern tier of
the U.S. One feeds into the Chicago and Thunder Bay market that's really
under-tapped right now. The other one takes it out to Seattle and loads at that
facility. There's been some push back saying that all those Canadian jobs are
gone, but once it's on the railway there are not a lot of Canadian jobs
involved. It's a bulk commodity.
To see CP take it south on one of those corridors, they have agreements with
BNSF. As I say, they partner up with them in the U.S. now. They have the ability
to do that. BNSF engines come up and hook on and take cars south and either go
west, east or straight south. It gives us a lot more options.
It's funny, when I went out to Calgary to do the roundtable with bulk
shippers there, we left the airport and were heading downtown to where the
meeting was, and there was a CP train sitting and waiting for another one to go
by. It had CP engines and BNSF engines on a CP train. They're already doing
those partnerships, so it's not a big leap to see more grain have access out
through the West Coast at Seattle, as opposed to Vancouver, if it is required,
or the same thing going through to Thunder Bay and the Chicago market, which is
virtually untapped at this point.
Senator Plett: Minister, I understand this legislation takes a staged
approach and will be in place in a minimum of two years. As far as the Canada
Transportation Act review, the next step is putting into force the regulations
around this legislation.
After that, I understand you are proposing an expedited, more fulsome review
of the Canada Transportation Act. Could you touch on that a bit?
Mr. Ritz: Sure. The CTA review happens every 10 years. It was due
again in 2015, so what we've done is pulled the railway component forward into
this year, and we'll be setting up the review of the railway actually a year
ahead of schedule. It was supposed to start in June of 2015, if I remember
correctly, and it's going to start this summer and work through. By the time it
was actually to start, we will have the response we need just on the railway
component of it.
The regulation package is actually under way right now, with concerted work
between my shop and Transport as to the regulation package. We're hoping to have
that coincide with the passage of the bill at Royal Assent so we have a better,
more fulsome package to go out and do the final consultations ahead of the end
of the crop year.
The CTA review and the regulation package are two separate things; and the
overall CTA review for everything else in Transport will begin in June 2015, as
Senator Tardif: Thank you. Minister, this bill is certainly a step in
the right direction, and I know that farmers in the Prairie provinces are
extremely pleased to see their grain going to market after having it sitting
around for so many months.
However, some farmers have indicated, as well as the Minister of Agriculture
from Saskatchewan, that the bill does not go far enough, that it doesn't have
enough teeth. What would your response be to that?
Mr. Ritz: At this point we have the dentures and the teeth will be
inserted with the regulatory package. I think I would coach my friend and
colleague, Minister Stewart, to just bide his time and be patient. We've had
these discussions. I know they wanted almost 3,000 cars allocated, but that's
beyond the scope of what the railways have said they could do without
interfering with other bulk commodities. I know that's important for
Saskatchewan, with the amount of potash that has to move to market.
Senator Tardif: How was the target of 1 million metric tonnes of wheat
per week established?
Mr. Ritz: That was established in numbers that railways brought
forward and said they could move, roughly 5,500 cars to move that, half of that
amount each. So, 11,000 cars was the number they thought they could cycle
without having any detrimental effect on other bulk shipments. That is a
Senator Tardif: That's a minimum.
Does this volume requirement affect other commodity groups that will
transport their products?
Mr. Ritz: Not negatively, no.
Senator Tardif: The volume requirement is an aggregate number. How can
we make sure that the railways do not simply concentrate on low-hanging fruits
to meet their targets?
Mr. Ritz: Part of the problem right now, senator, is, under the
order-in-council, it's a blunt instrument and they do concentrate on where they
can get the volumes to maintain.
We will have corridor-by-corridor specificity once this bill is passed, both
in data, so we can establish what routes are required. There are longer cycle
times when you start running south. I know some of the concerns are we never
railed enough straight on through to Montreal or Quebec or some of the other
facilities farther out from Thunder Bay at other times of the year, and on that
we will have better reporting and better data so we can start to do those
assessments as well.
Senator Tardif: In this whole consideration of transportation, number
of cars and the volume, do you feel it would have been important to have
included something in the bill on the short lines and producer cars in order to
make a change to how the transportation will go?
Mr. Ritz: The producer cars are, under the Canadian Grain Act, already
administered by the Canadian Grain Commission. They never were a creature of the
single desk. A lot of people would have you believe that, but it's not true. So
the allocation of producer cars is there. There has been a demand for more
producer cars than ever, and the demand has been filled to a higher level than
With this bill and service-level agreements, a short-line rail with catchment
area, too, will have the ability to sign a service-level agreement with CN or
Senator Tardif: Farmers I know, certainly from southern Alberta around
the Cypress Hills area, are asking for more producer cars and short lines, from
what I understand.
Mr. Ritz: And they will be able to do that. As I say, they'll be able
to sign the service-level agreements. They will also, with the interswitching,
have the ability to move products south and east and west for the designation,
should they decide to.
Senator Tardif: Do you have a sense of the volume of grain from last
year that will be carried over to this year's harvest?
Mr. Ritz: Every year, there is a carry-over. On average, it runs
between 5 and 8 million tonnes; it has always been in that ballpark. With this
one, with the extra tonnage that was produced, the carry-over will be somewhere
in the 18 to 21 million tonne range, basically a creature of the oversized crop.
Senator Tardif: And will the capacity be there to handle that by
Mr. Ritz: That's the whole point of having the hard data that we will
require on the corridor-by-corridor breakdown, so we can decide where that
overage is sitting. We will sit down with the shippers and the railways to map
out a program going forward.
The most egregious point I heard this year is there was one boat sitting in
Vancouver for 60 days waiting for 15 more cars of a specific malt barley, and
they couldn't get those cars spotted where that barley was and move to fill that
ship. Sixty days of demurrage on that one boat. That's a creature of no one
talking to the other person and the people that should be listening.
Senator Tardif: I'll leave it for now, chair.
Senator Eaton: I think this problem, minister, certainly shows how
successful getting rid of the Wheat Board has been made, that you have the
You're talking about overages. Every year there is leftover. Does the grain
Mr. Ritz: Not if it's stored properly, and it depends on the product.
If it's canola, you have to be much more careful storing it because it will take
on moisture and spoil a lot faster. If it's in a good bin that has air that you
can apply to it, you have to watch it. You have to manage your grain in store.
But wheat is a very hardy product. It can last quite a while. There's always the
stories about it being in the pyramids, take it out and it will still grow.
Barley can deteriorate from a malt quality down to a feed quality. There are
some changes that can happen.
As for any grain that was stored on the ground, as I travelled through
Western Canada — I do that a lot — there's not a lot still stored outside. There
are the new grain bags and so on that are being used, and a lot of product that
was moved; those have either been binned or sold.
Senator Eaton: Are you going to keep on with these volumes? Is it 1
million tonnes of wheat we're insisting the railways ship?
Mr. Ritz: It will take more than that to catch up at the end of the
Senator Eaton: I understand that, but will they keep on going until
they have caught up? Will it just be a regular fact of life now?
Mr. Ritz: That's the point that needs to be underscored. The whole
thing will change drastically, depending on how late this crop gets seeded,
which means it will be harvested late, and that gives you the period between the
start of the crop year, August 1. Until last year, really, there wasn't
substantive amount of product off until mid-September. It was a late fall, and
then moving forward from that, which really threw off everybody's numbers. So if
we have that period this year, we'll catch up on a lot of that overage, and if
we have an above average crop again, we will be still looking to be moving those
types of tonnages.
Senator Eaton: You'll eventually catch up. In other words, you'll keep
on going until you catch up?
Mr. Ritz: Yes.
Senator Eaton: How long do you think that will be?
Mr. Ritz: Straight at a million tonnes, you would not catch up, but it
all depends on when harvest comes into full swing. They have a six-week period.
Like last year, where those tonnages could be moved, there are buyers and there
still is demand. So you would gain a lot of that in those six weeks.
Senator Eaton: Before the next harvest comes in.
Mr. Ritz: Yes, before the next harvest comes in. Then the size, the
quantity and quality of next year's harvest will then tell you what kind of
volumes you will have to move to move that to marketplace.
Senator Eaton: Say you have a window of a month, and I'm not asking
you to give firm numbers because you can't because of the planting and the
cropping, but if we have another bumper crop, will we just keep on going? Is
this something that you hope will permanently be in place?
Mr. Ritz: As I said earlier on, there has always been an overage every
year. You never sell everything you have.
Senator Eaton: Yes, but, there are overages and overages.
Mr. Ritz: There are always overages. We will try to get back down to
normalcy. It's always a percentage of the overall crop. This year it's a bigger
percentage because it was a bigger crop.
Senator Eaton: What is the percentage of a normal overage?
Mr. Ritz: Maybe 8 or 9 per cent, something like that.
Senator Eaton: What is it now?
Mr. Ritz: Right now, it's probably a little more than double that.
Senator Eaton: So this is why the hurry.
Mr. Ritz: And a potential to be almost triple that if we didn't get on
top of this. Every million bushels we move is cash flow for farmers, and that's
the whole point, to get as much as of that out as we possibly could, to get them
paid for their hard work.
Senator Eaton: Do you feel the railways are looking at this long term
and are going to build more track and cars?
Mr. Ritz: In what I've seen, senator, it's not a problem with track.
It's a problem with engines and crews. The cars are there and the track is there
to handle it. They've expanded their sidings, so they can get these longer
trains that they run in the summertime.
The concern this winter was it was a cold winter. Yes, we've had them before.
We didn't have the snow problems this year that we've had other years, but at
the end of the day, I understand the need for safety to run a shorter, slower
train. I get that, but then they ran half as many trains. All bulk commodities,
even Canpotex, who own their own cars — they're a single-desk marketer for
potash internationally — were several hundred thousand tonnes short of the
capacity they needed.
Senator Eaton: Because of the winter?
Mr. Ritz: Because they couldn't get engines.
Senator Eaton: Did the railways see that?
Mr. Ritz: Yes. That's part of the reason I'm having the new data that
we have never had access to. Mark Hemmes and his crew at Quorum will be doing
that assessment. They'll be getting data on a week-by-week basis, corridor by
corridor, which we have never been able to do before, and that will tell us
where the shortfalls are. We — the Minister of Transport and the Minister of
Agriculture — will sit down with the shippers and the railways in August of each
year and work out the surge capacity that's required. If there's a 700,000-tonne
sale of potash to India or China, when does it have to go out, so we can start
to overlay it all in?
I'm buoyed by the fact that Hunter Harrison, the CEO of CP, is saying that we
have to sit down and talk. He's absolutely right. That's what we need to do and
that's what will happen in August, once this bill is passed.
Senator Eaton: Looks good. Thank you.
Senator Robichaud: Mr. Minister, you said in your presentation that
this new legislation will allow us to meet our international sales commitments.
Prior to May, prior to everything being set in motion to get the grain
moving, were we lagging behind in meeting our international sales commitments?
Mr. Ritz: No, we were not. We were as high as 50-some vessels sitting
on the West Coast waiting to be finally filled or to be put in line to be
filled. The average is 10 to 12.
Senator Robichaud: So we were not meeting our commitments?
Mr. Ritz: The boats were sitting there waiting to be loaded.
The elevators on the Prairies were 95 per cent full, which means that they
are full, and the terminals were in the 30 per cent range. It should be the
other way around.
Senator Robichaud: So we have some catching up to do on our
international markets. How soon will that be met?
Mr. Ritz: We're getting very close. There are roughly 25 to 30 vessels
sitting at the West Coast points right now. A lot of those are new vessels that
have come in. The others have been loaded and gone; that's one of the purposes I
made to our major buyers in Korea and Japan. I talked about Korea, but I didn't
mention Japan. I talked to all the major grain buyers and millers in those two
markets, which are very important for us as they're premium markets, assuring
them we were on top of this, that we were cognizant of the fact that any kind of
delay in their getting their grain also put pressure on them. They were at an
average of some 40 days later than they thought they had, but they had enough
volume on hand that nothing slowed down and no mills stopped. Nobody stopped
producing flour. So we were able to keep that flow going.
Senator Robichaud: Did we lose any customers?
Mr. Ritz: Not that I'm aware of. There was one Japanese vessel that
pulled into Vancouver and was going to buy on spec. When they saw the lineup
they moved, but that's the only one I'm aware of.
There were some contracts bought out and some where the boat went out light
because we couldn't get the final cars on board, so a few of those things
happened that aren't good. That's an embarrassment.
Senator Robichaud: That's too bad.
Mr. Ritz: It has happened before, senator.
Senator Robichaud: I have another question. You mention the Port of
Seattle. That's to move grain overseas, isn't it?
Mr. Ritz: Yes.
Senator Robichaud: Is that because the ports in British Columbia
cannot deliver and load the vessels that come for the grain?
Mr. Ritz: No, we have the capacity and there are actually some major
improvements going on with capacity to some of those terminals. As well, there
are discussions under way to build one more large-capacity terminal; a
consortium is looking at putting one together. That's all good, but there are
times of the year where, if we have an avalanche in the mountains and the train
can't get through, you'd have that as a safety valve.
Senator Robichaud: Will all the regions of the Prairies — because this
is a large territory — receive equivalent services, and one region will not be
advantaged over another?
Mr. Ritz: By having the data that we've never had access to on a
week-by-week basis, corridor by corridor, we will be able to ascertain whether
somebody is getting left behind. Certainly it's easy and business will flow
where it's easiest to make money.
There will be times where we'll have to say no, there are cars needed up
here. The shippers will also do that because the major terminals are scattered
throughout that whole area. There are some independents that fill some of the
gaps. They will be driving it and saying, ''We need cars and our service-level
agreement says we have to get 100 cars a week. If we only got 80 last week, you
owe me for 20.'' The service-level agreements will drive them out into some of
those areas to make sure they're not lost in service.
Senator Robichaud: Who will have the authority?
Mr. Ritz: The Canadian Transportation Agency will have the tribunal
quasi-judicial authority to say, ''You haven't measured up. We have a complaint
here from X terminal in Grand Prairie. You didn't get their cars last
week and they got a complaint. Here is what you owe them for not getting them
there on time.''
Senator Robichaud: They will have —
Mr. Ritz: Teeth.
Senator Robichaud: Okay. That's where the teeth come in?
Mr. Ritz: Yes.
Senator Maltais: Thank you for being here, Mr. Minister. I imagine
that most of the grain from the west is shipped to ports in Vancouver, Churchill
or Prince Rupert. What percentage of grain is exported to British Columbia, if I
can put it that way, for Asia? What is the percentage of all grain shipped from
the west to the west?
Mr. Ritz: Our largest buyer is still the United States. The bulk of
the product still flows south. The Pacific Rim is growing in demand every year.
We're just starting to get into the Chinese market. The biggest commodity going
into China is canola, both oil and canola seed to be crushed. The value of that
for the last three years has been an average of $2 billion, just the canola.
Japan is a primary wheat buyer and a lot of barley as well. Korea is a smaller
buyer, but premium products. We want to make sure we have the ability to address
The bulk of our product is still going south. I would say — I'm going to out
throw numbers; correct me if I am wrong, Greg — 60 per cent offshore.
Senator Maltais: In the case of connections to the east, Thunder Bay
and the Great Lakes for Chicago, are we facing the same problems with cars,
particularly for shipping to the Pacific?
Mr. Ritz: Yes, we were. The railways were saying the problem was in
the cycle times. They couldn't get cars to Thunder Bay and bring them back into
service. They were about half again as long as taking them to Vancouver and
bringing them back into service. That was their decision not to tie up cars for
that long as they strove just for volumes.
There's more capacity in Thunder Bay that they're addressing now. There are
buyers in South America, Europe and up into Africa, Morocco, Turkey and so on,
that buy a lot of our pulses. Those either go out through Churchill or Thunder
Bay, and there's a growing demand for those products in that European theatre.
Senator Maltais: I am from northern Quebec, a region where there are a
lot of grain stores belonging to Cargill, Bunge and various companies, because
the shipping season on the St. Lawrence River unfortunately does not last 12
months of the year. Are the storage areas in Montreal, Quebec City, Baie-Comeau
and Port Cartier sufficient?
Mr. Ritz: And Trois-Rivières.
Senator Maltais: Are they sufficient for storing enough grain for the
sales capacity for your clients?
Mr. Ritz: There hasn't been a problem to this point, senator. They've
had the capacity. They're more transfer sites than storage sites so there are
ships. There are lakers that come down through from Thunder Bay, off-load at
some of those terminals and then from there they're put on the panamaxes, the
salties, the ocean-going ships. So they're transfer sites. They've had the
There have been changes in the ownership of some of those. The Canadian Wheat
Board, as a private entity now, actually owns a major terminal in Thunder Bay
and that also came with terminals in Trois-Rivières and one other spot in
Quebec, I think. I'm not sure. They're transfer sites then.
Senator Maltais: When the St. Lawrence River is frozen, there are only
three shipping ports: Quebec City, Baie-Comeau and Port Cartier. There are not
any others. Is the storage capacity sufficient for your clients' demand?
Mr. Ritz: Yes, and the other major one on the East Coast is Halifax.
The railway can go straight through to that, but again it's a longer cycle time.
Senator Oh: Thank you, minister, for coming. My question is about the
Canada Grain Act. An important part of this bill is the changes to contractual
obligation between farmers and grain companies. It is well known that some
farmers have been not able to deliver their grains for contracts that are months
old, some going back to November. At the same time, the grain elevators are
unwilling to take the grain they have contracted for and are paying cash for
grain at a lower price.
Can you please explain why it is important to make these changes to the
Canada Grain Act, and how does this play into the overall theme of strengthening
the supply chain as a whole?
Mr. Ritz: The one thing we noticed from last fall as the prices
started to tail off — in the contracts that the major grain companies had put in
place with farmers — is that they have a clause in the contract that says
they'll take it at their time and place. So we wanted something back from the
farmers' side that said, ''Okay, you choose when and where you're going to
honour that contract. It says October shipment, you didn't take it and then
after 30 days, by the end of November, if you haven't honoured your October
contact, then you will start paying the farmer storage on that grain and the
interest on the value of that contract going forward.'' So, the longer they
delay in fulfilling that contract, they will actually pay the farmer for it. It
stimulates the elevator company to honour the contract.
We saw the basis price — the price that was offered — stretch down to where
it was ridiculous, simply because the system was plugged, but also because they
didn't want to honour the contracts and bring them in at the same time.
This will actually level the playing field. It gives predictability to the
producer and the contractor — the grain company that issued the contract. They
will have to honour it within that time frame or start to pay storage and
penalty. They're going to ask the railways, or the railways are going to ask of
them — it puts the farmer into that loop, as well, to collect damages if there's
Senator Oh: So, the faster they move, the better for everybody?
Mr. Ritz: Exactly. It's cash flow, just like in any business.
Senator Dagenais: We have spoken a lot about trains and railway
companies. The railways have described this bill as an intrusion into rail
transport. How would you respond to the railways?
Mr. Ritz: Politely?
Senator Dagenais: As you wish.
Mr. Ritz: Well, I mean, we're not a government that meddles in
business. We don't do that. We actually set the playing field so that business
can adapt and adjust to itself. We keep our taxes low; we look at our
regulations to make sure they're not burdensome; and in agriculture we work with
our partners in the provinces to identify regulations that are
counterproductive. If there are overlap and gaps, we want to make sure we don't
have too many overlaps.
I don't see it as an intrusion. I see it as strengthening the ability of the
railways to provide the service they're paid to. Both railways, CP especially,
have fine-tuned their operations to the point where they're based on velocity,
not on volume. That's going to be a problem for them.
They let go of some 400-plus engines, a number of crews — 4,000 to 6,000
people, depending on who you talk to — and some 11,000 railcars for various
commodities. At the end of the day, that gives them a tremendous bottom line
that the shareholders like, but they're not able to provide the service that we
We are landlocked. Saskatchewan has 47 million arable acres and we're a long
way from tidewater. We export between 50 and 85 per cent of what we produce, so
we need railways that are on target, on time, predictable and manageable.
We're not controlling the cost to the railway. They have what's called an
entitlement for hauling grain. It's not restrictive in any way, shape or form.
But at end of the day, we expect them to provide service to counter that
The Chair: Looking at the time, the minister had committed to one
hour. Thank you for that, minister. We can start on a second round.
Senator Mercer: With respect to the time, minister, I'll give you two
questions and a comment, and then you can respond.
You used the term ''oversized crop.'' Shouldn't we be hoping this is not an
oversized crop, but a new baseline?
Mr. Ritz: Yes.
Senator Mercer: Second, how many farmers have availed themselves of
the $100,000 interest-free bridge loans that are available?
While you're figuring out your answer to that one, my comment is that there
may be a backlog in Thunder Bay, but not in Halifax. There is a lot of capacity
in Halifax; we can handle 50,000 bushels of grain per hour. Our port is much
closer to most of the markets that we're shipping to when we go east.
That's a comment. Can you answer the other question about the $100,000?
Mr. Ritz: Right. Yes, I agree with you that this was a large crop. In
my estimation, we've been saying that, with the demand out there in the global
marketplace, Canada will have to produce between 50 and 70 per cent more than we
do now in order to meet that growing demand. The middle class in China are some
400 million people now. For the first time in history, bread has surpassed rice
as a staple in Japan. We're seeing those kinds of changes. India is buying more.
We're going to have to start producing these types of quantities on a regular
basis, and we can do that through biotechnology, innovative farming practices
and so on. This is a wake-up call and a dress rehearsal to say this is what
we'll have to be prepared to do over the next 5 to 10 years to get to that
Senator Mercer: Hopefully, we won't be back here every year for the
next five years as we were doing it.
Mr. Ritz: Absolutely. That's why the regulatory package with the
flexibility in it will address that.
There are roughly 2,700 farmers who have applied this year. It's up 10 per
cent from a normal year. The number of farmers is up, but the actually loan per
farmer is down slightly — whatever made that happen. That's still only about 30
to 35 per cent of farmers who are taking advantage of even the $100,000
Senator Mercer: And I assume we have 100 per cent payback?
Mr. Ritz: Yes, we do. It's extremely good. It's based on what they
have in the bin or what they are going to produce.
Senator Plett: My first question is simply out of curiosity; it
doesn't really have to do with the legislation. You talked about a ship going
into Vancouver, I think you said, and the line-up was too long and it took off.
Where did it come from and where did it go?
Mr. Ritz: It was a Japanese vessel, and they headed stateside.
Senator Plett: So they must have known they could go to Seattle or
Mr. Ritz: You get those types of boats that show up; they're on a
backhaul and they're hoping to take something back with them. Truckers do that
all the time. There's no reason to think boats wouldn't also. They're close and
in the area.
As I understood, it was a Japanese vessel. They would have picked something
up on spec, and they would have waited too long to make that happen.
Senator Plett: I know that Senator Mercer rightfully plugs the Port of
Halifax on a regular basis, as I try to do with the Port of Churchill, even
though it's much smaller. But the problem isn't that there's backlog at the Port
of Thunder Bay; the problem is getting it to the Port of Thunder Bay, as it is
Senator Dagenais asked about how the railways had accepted this. Obviously,
you did some consultations around the country on this. Tell me, how did other
stakeholders — Senator Tardif talked about the Minister of Agriculture in
Saskatchewan not really being happy — but how about other ministers and
stakeholders? What has been the reception you have seen on this legislation so
Mr. Ritz: Extremely good. We had a number of roundtables, as we
recognized in early January that the railways were not picking up their game,
regardless of the cold and the winter that was out there. They weren't picking
up their game and moving the product. We started talking to a lot of the bulk
shippers. We started with grain, because that was the first one flagged. Then,
over the course of about six weeks, as we did I forget how many roundtables
across Western Canada predominantly, we started hearing from other bulk
commodity shippers, as well.
The name of the bill is ''fair rail for farmers,'' and they said, ''What
about us?'' We say they're included, but the name of the bill is just the name
of the bill. They were giving us stories of concern, too.
We had representatives of CN and CP at these roundtables. They were invited
to each one. They stopped coming; as the complaint level went up in the public,
they stopped coming to the meetings, which was unfortunate, because they needed
to hear what was said.
That's why I said I'm buoyed by the fact that CP's Hunter Harrison is saying,
''We have to sit down and talk,'' and he's absolutely right. What will make this
work is sharing that data and information as to what's required when, and how we
tackle that and put our best foot forward.
Senator Plett: There has been talk about the sunset clause in 2016.
Could you elaborate a bit?
I gave Senator Tardif a challenge today in the chamber that from now to 2016,
we would all collaboratively work together to try to improve already-good
legislation. Can you talk about that a bit?
Mr. Ritz: Sure. This is classed as emergency legislation, and it comes
with a two-year window, so that it is renewable simply by a motion in Parliament
— whether it takes a second one in the Senate, I'm not sure; if it does, great —
to reenact it again or to make slight changes again and go forward.
Senator Plett: So, we would have the opportunity to improve on it if
we saw fit, or you would have that opportunity?
Mr. Ritz: Yes. And the timing of the CTA review and that two-year
window all come together, so if there are things that come up in the CTA review
that are pertinent that need to be put into this bill or the next one forward,
then it's an ideal time to do it.
Senator Tardif: Minister, why did you choose the Canada Transportation
Agency rather than the Canadian Grain Commission as the agency that would
adjudicate claims and arbitrate disputes?
Mr. Ritz: Well, the CTA are experts in transportation; the CGC not so
much. They are about more varietal grain and they'll adjudicate the contracts if
there's a problem with farmer to grain buyer. The CTA is well versed and has the
capacity and the skill set required in order to do the adjudication.
Senator Tardif: I would have thought they might have been ill-equipped
to interpret service agreements.
Mr. Ritz: No, this question came up at the Standing Committee on
Agriculture and Agri-Food in the house and Minister Raitt was there that day.
She's not able to be with us today, but she responded that they have the ability
and the technical expertise to do exactly this.
Senator Eaton: Minister, have you talked to some of our biggest
customers and reassured them that they will get their grain?
Mr. Ritz: Yes, I have. I did that personally on my trips. I will be in
China coming up in June. There hasn't been a problem with China. I've also
compared notes with my colleague Tom Vilsack in the U.S. I know the
transportation agency in the U.S. had a letter condemning CP's handling of
products in the U.S. at the same time we were complaining here. There were some
concerns about what they were doing down there as well.
It's a small world when it comes to agriculture. Everybody knows everybody
and we all compare notes.
Senator Robichaud: Minister, what is the state of the rail lines on
the short-line operations? I'm asking that because you are aware in New
Brunswick that there's a section that was to be closed. It was a section of the
main line, and the minister had to announce that VIA was going to put some money
Is that a situation that, in some places, is waiting to happen?
Mr. Ritz: Absolutely. CN and CP can qualify for the Building Canada
Fund. Short-line rail can qualify for the provincial component of the Building
Canada Fund. They're all listed in there to have the ability to borrow and look
for grants and those types of things that they need.
There are a number of short-line rails in Saskatchewan; there are some in
Alberta as well. They do an excellent job of filling in gaps. They're part of
the catchment area that CN and CP need. A friend of mine, Sheldon Affleck, runs
a large one that has the whole centre of Saskatchewan and he has an agreement
with CN to take the cars into their grounds in Saskatoon to be hooked up onto
trains. It does work well.
There's always a problem with capacity and maintenance on those lines. They
tend to run slower because of the rail beds and so on that need maintenance.
They're slowly getting that back in shape. Some of them don't run locomotives
like you see on rail lines. They use a Kenworth truck that has been retooled to
run on the rail line; it was done by a company in Regina called Brandt
Senator Robichaud: You're saying they're working on it?
Mr. Ritz: Absolutely. The maintenance is never done. You're always
changing ties and working on certain things.
Senator Robichaud: Sometimes they have a tendency to wait until the
very last minute, when it's too late.
Mr. Ritz: Well, that would be their business decision.
The Chair: With that said, I want to thank the minister for being here
for the hour that you have committed. Before we conclude with the first panel,
minister, do you have any closing remarks?
Mr. Ritz: I thank you for the timeliness you are putting into this
bill. Certainly, we're looking at getting it through as quickly as we can. We
made the point that the OIC is up June 5, but the actual crop week is June 2.
That gives us three days to assess the last data that comes in. There is some
timeliness to it. We're working hard on getting the regulation package to
dovetail into that as well.
The Chair: Honourable senators being in a good mood, and in the spirit
of cooperation, minister, thank you very much.
Honourable senators, the committee will now hear from our second panel of
witnesses who are from Agriculture and Agri-Food Canada. Greg Meredith,
Assistant Deputy Minister, Strategic Policy Branch.
From Transport Canada, Lenore Duff, director general of Surface
Transportation Policy. From Justice Canada, Sara Guild, counsel with Agriculture
and Food Inspection, Legal Services — AAFC.
And Alain Langlois, Senior Legal Counsel for Transport, Legal Services,
Honourable senators, I have been informed by the clerk that there will be no
statements; so we will move to questions.
Senator Mercer: Thank you all for being here. One of my frustrations
with this process has been that we're in a situation where the clock is ticking
and we need the legislation by a certain date.
As I was doing my research for my speech today, I came upon the fact that in
the House of Commons the bill had gone to committee, and I incorrectly said they
had four sessions this afternoon; it was actually five sessions. They reported
back with an amendment and then it arrived in the House of Commons, and a member
from Edmonton rose on a point of order because one of the amendments wasn't
This is a drafting issue, the advice given by lawyers to politicians. Most
people sitting around the table, while they may be lawyers, they are not experts
on the constitutionality and niceties of drafting legislation and of amendments
going from committee back to either the House of Commons or to the Senate.
How did this happen and how can we prevent it from happening to other pieces
of legislation in the future? It delays it; it frustrates it; and it means if
it's in a piece of legislation started in the House of Commons and comes our
way, it shortens our time frame. It means that we're now under pressure to get
this bill done. We're going to do the job, but it would be a lot easier if we
could have had at least another week to get the job done.
Greg Meredith, Assistant Deputy Minister, Strategic Policy Branch,
Agriculture and Agri-Food Canada: Thank you, senator. I would point to what
the minister said a little earlier. He was not pleased with the point of order.
He was very happy that when the house reconvened there was unanimous agreement
to send it back to committee.
The one thing I think is for certain is that you wouldn't want to remove the
right of a parliamentary committee to amend legislation or to suggest
amendments; that's part of the process. As you heard the minister, he's very
anxious to get this legislation through and very appreciative of the committee
putting the time in to do that and very anxious to show the cooperation that all
parties are showing to get this legislation in place for farmers.
Senator Mercer: There are a number of references that I made earlier
today in the chamber to the service level agreements with respect to people's
comments on it, everything from Cam Dahl, the president of Cereals Canada, who
in part said the regulatory package must provide for a better and more specific
definition of ''adequate'' and ''suitable,'' whereby railway service obligations
must be met.
Again, he is only one person who has said that. Another who has said similar
things is Matt Sawyer of the Alberta Barley Commission, who said:
The definition of adequate and suitable accommodation and service
obligations within the legislation needs to be made clear.
And the bill needs more teeth. The minister claims there are some teeth
there, but I would debate whether there are enough.
It seems that we continue to get legislation that refers to a suitable
accommodation and service obligations, and we talk about the service agreements
that came out of Bill C-52, I believe. I'm not seeing any progress here. I
continue to see people frustrated by it. I continue to see that as part of the
problem that has led to the issue.
Obviously, we don't want to be back here next year, as I mentioned to the
minister, addressing the same problem because — or at least two years, because
this has a sunset clause, but we don't want to be here doing this again.
Alain Langlois, Senior Legal Counsel, Transport, Legal Services, Justice
Canada: We can explain what the legislation does. The legislation doesn't
talk about suitable and adequate. That's already in legislation. What the
legislation does speak about is it allows the agency, when a shipper and a
railway cannot agree on the level of service agreements, to establish a level of
service agreement between the shippers and the railway. The legislation allowed
the agency to make a regulation to define what terms and conditions that could
be referred to arbitration under the existing legislation. It will provide for a
means to clarify what the broader concept of ''suitable'' and ''adequate''
Senator Mercer: How many arbitrations have there been since the bill
came into effect?
Mr. Langlois: I can't answer that. You'll have to ask the agency.
Senator Mercer: I am told by shippers they are having a difficult time
agreeing to service agreements with the railways, and that means that this is
Mr. Langlois: The choice to refer the matter to arbitration is the
shipper's choice. The current legislation entails a two-step process. The first
step is the shipper makes a request to the railway to get a service agreement.
There's a negotiation or a refusal by the railway, and there's the ability of
the shipper to refer the matter to arbitration. The decision to file for a level
of service arbitration is a shipper's decision. The shipper has that ability. If
they choose not to, it's their decision.
Senator Mercer: Thank you. That doesn't answer my question, because I
know there are some frustrated people out there and one or two around here. Many
of the witnesses that have appeared in the other place saw that the current
situation is not working as well as it had been designed to do.
Perhaps under the review that the minister referred to of the Transportation
Act, perhaps we can readdress this issue as we go through that review. I'm not
satisfied, and I know we could find hundreds of shippers who are not satisfied,
that this process is working. It sounded really good on paper, but I was a
critic of the bill in the Transport Committee when it came in, and I was very
concerned about it then and I remain very concerned about it now.
Senator Plett: We know that Canadian companies have lost some
contracts over this period of time. Japanese ships have moved to the Port of
Seattle. The minister talked a bit about that. Shippers are facing cancelled
contracts, contract penalties and demurrage charges, and these challenges are
being reflected in the prices offered to producers and elevators for their
grain. Of course, we are introducing, I think, some good solutions here to keep
the grain flowing.
Could you provide some additional evidence that the economy has been
negatively impacted by the current situation that we have?
Mr. Meredith: I think that would be difficult, senator. The minister
did talk about instances where ships, vessels, had to go light or not loaded at
The grain companies will tell you that there is a significant gap between
their marketing programs, in other words, the customers waiting for grain and
the customers getting grain. There are all kinds of penalties associated with
that. Demurrage charges can be half a million or a million dollars a vessel, and
the minister did mention the 60-day delay for that one vessel. There are all
kinds of impacts on producers who can't bring their grain into the system, and
on grain shippers who can't get the grain to their customers.
What we're very hopeful of, though, is that in the post-winter period, and
given the performance increase we've seen amongst railroads, that we're going to
catch up. That grain is still in terminals, or in the inland elevators, or on
farm in storage, so that's a very valuable asset. It's going to be significantly
richer over time than a normal harvest. As the minister said, that harvest last
year was 50 per cent higher than the 10-year average.
We're hopeful to make farmers and grain shippers whole.
Senator Plett: Senator Eaton asked the minister about whether the
grain lost its value and, of course, he said if it was stored properly, it did
not. I agree with that, but being from Western Canada and knowing many farmers,
I know that they have storage issues. Many farmers are storing their grain by
leaving it lying outside on the field.
Have a lot of producers lost value through contamination and other issues by
having to leave it on the field, not having the proper storage that they need to
tide them over?
Mr. Meredith: That was an issue that the government was very seized
with. Because we didn't know the extent of the storage problem and we didn't, at
the time, have any confidence that the railroads would move the kinds of volumes
needed to solve that problem, we looked at this very carefully.
We work very closely, as you know, with provincial governments. Their crop
inspection functions for their crop insurance were giving us feedback about the
To be honest, farmers are very astute managers of their farms. They would
only store on the ground under very unique circumstances, and it would probably
be their lowest quality, probably a feed grain. When you do hear about farmers
storing on ground, you recall the minister talked about these grain bags.
They're very big grain bags. They were not for permanent storage but, for the
time period, especially over winter, they're adequate.
In addition to those kinds of inquiries, we commissioned Statistics Canada to
do an additional survey specifically on the issue of storage. We found that
there was only about 13 or 14 per cent of grain stored that way. What farmers
had been doing was taking that grain and shipping it first or storing it if it's
good quality, and that there was significant storage capacity now that the
system had become more fluid.
We're hopeful that farmers won't be out of pocket in that situation.
Senator Plett: One more question, and this might be for Ms. Duff, I'm
We need a way forward that will benefit all shippers selling every commodity,
from grain to oil. I'm wondering, will the volume requirements that we now have
— and, of course, either one of you can answer — impact other commodities such
as coal, potash or oil?
We've all read the newspaper articles that one of the reasons that CN and CP
weren't hauling enough grain is because they were hauling more oil. They, of
course, said that wasn't the case.
Do you have some comments on whether us telling the railways, ''You have to
haul this much grain,'' will that have an impact on these other commodities?
Lenore Duff, Director General, Surface Transportation Policy, Surface
Freight Policy, Transport Canada: What I can tell you is — and I think
minister Ritz spoke about it as well — that ministers met with the railways and
established these targets for volume requirements that were ambitious but
achievable. They exceed the best numbers that the railways have ever produced
with respect to moving grain, but we're also conscious of other commodities, and
they were calibrated so as to not affect other commodities. That was in the
planning of these volume requirements, so the expectation is it will not affect
the shipment of other commodities, but it will improve the delivery of grain in
the short term.
Senator Tardif: The minister referred to the fact that now he would
have access to data, that this was something new, and that this data would allow
him to look at the corridors that were being used, the shortfalls.
Can you give us a bit more information about this? Will this data be made
public? What type of agency is gathering this data? I know he mentioned it.
Ms. Duff: There are regulations currently in the Canada Transportation
Act that provide for the collection of data from the railways, and there have
been requests to the railways to provide additional data and to add to those
regulations so that they will be able to obtain data on corridors, which
Minister Ritz mentioned. The data that's collected under the Canada
Transportation Act is confidential, but it can be released at an aggregated
level so it doesn't identify commercial sensitivities.
The other additional data that will be obtained from all participants in the
supply chain, from railways and from terminals, which Minister Ritz referred to
earlier, will be for the fall planning process where all the participants will
be asked to provide additional data that will be used for planning purposes.
That data, I would expect, will be available to all the members in terms of the
planning requirements to improve situations so the transportation crisis that
has occurred with the grain isn't repeated in the next crop year. So there will
be a better planning function going forward.
Senator Tardif: The bill that's proposed is to give the Canadian
Transportation Agency new responsibilities for providing advice to the Minister
of Transport regarding minimum tonnage to be transported, and the agency would
also be responsible for investigating whether the railway companies are
respecting these new provisions.
Will the agency receive new resources in order to take on these additional
Ms. Duff: There are no new resources that have been attached to the
bill that I'm aware of. I think it will be assumed that the agency will take
this on using existing resources.
Senator Tardif: But there is extra work, of course.
Ms. Duff: There will be extra work.
Senator Tardif: And no extra staff will be added?
Ms. Duff: I can't speak for the agency's resourcing plans or what they
Senator Tardif: But no additional resources are being considered?
Ms. Duff: At this point, there are no additional resources being
considered that I am aware of.
Senator Eaton: Ms. Duff, to follow on Senator Tardif's question, would
some commodities have priority access to corridor capacity? If so, can you
prioritize for us?
Ms. Duff: Are you asking me if the legislation provides for
Senator Eaton: Yes.
Ms. Duff: The legislation doesn't specifically provide for
prioritization for specific commodities, other than extending the volume
requirements for grain. It doesn't specify priorities with respect to specific
commodities. Those arrangements would still be made between the railways and the
shippers, as they would normally be in a commercial arrangement.
Senator Eaton: I'm sorry; I guess I'm slow. I understand what you mean
by that, but you consulted. Mr. Meredith was talking about the agriculture
ministers from the provinces consulting as to tonnages and what could be moved
when and how much. How did you gauge what the rail capacity was? You've come up
with these figures — a million tonnes a week — and no other commodity, like
potash or oil, will be impacted. Did the Canadian Transportation Agency
determine the corridor capacity, or was it the rail companies themselves?
Ms. Duff: Ministers consulted with the rail companies themselves.
Senator Eaton: And they came up with the capacity?
Ms. Duff: They identified the car amounts that Minister Ritz referred
to that they could manage within their system to deliver that much grain.
Senator Eaton: We've heard that the Canadian railways are concerned.
This extension of the interswitching distance from 30 to 160 kilometres would
give shippers greater access, but would this undermine Canadian railways? Do
they feel they're being undermined vis-à-vis American railways in doing this?
Ms. Duff: I think that the railways have expressed some concerns about
the nature of the interswitching changes or said that they're not in favour of
the interswitching changes. I believe the CN president spoke to that in a public
Senator Eaton: We're concerned with the shippers.
Ms. Duff: Those are commercial decisions with respect to their
business, but the perspective here is that it provides more competition to move
grain within this market from the three Prairie provinces and that there is some
evidence that there is insufficient capacity currently and that that's why it's
being extended — that there's grain left sitting, waiting to be delivered.
Senator Eaton: The change in interswitching applies to all
commodities, right? That would apply to potash and oil or whatever?
Ms. Duff: The interswitching applies to all commodities within the
three Prairie provinces; that's correct.
Senator Dagenais: My question is for Ms. Duff. Perhaps the other
witnesses will be able to answer as well. The Western Canadian Wheat Growers
Association claims that the requirements for the volume of grain to be
transported will not sufficiently reduce the grain stocks that might even reach
20 million tonnes when the crop is done, which is more than double over the past
two years. The association also feels that the penalties for railways are
insufficient. I would like to hear what you have to say about that.
Ms. Duff: With respect to the carry-over and what level it will be, I
think Minister Ritz spoke to that as well. There still will be a significant
carry-over, higher than it has been in past years, but, without this
legislation, it would be considerably higher. It is a record grain crop, so one
would expect that the carry-over would be larger. But this legislation goes some
distance in managing that, so I think that that's the answer to the first part
of your question.
With respect to the question about the penalties, a policy decision was made
in terms of the amount for the penalties that was reasonable. My comment would
be that it's higher than any other penalty in the Canada Transportation Act.
It's a significant measure in comparison with other provisions, and it's a daily
Senator Mercer: With respect to the review of the Canada
Transportation Act that the minister and a number of us have referred to, it
would seem to me that it would be incumbent upon the department and the minister
to reach out to all stakeholders involved, which goes beyond agriculture, of
course. It does go to all of the shippers that are there. I hope that the
consultation is a little broader than we have seen in the past and that there
will be some good public consultation.
We continue to hear the problems that I have outlined today and from others,
but I would hope that decent recommendations get to Minister Raitt. I'm
disappointed she's not here so that we could talk to her about that, but that
will be another day, on my other committee. It's important that she realizes
that there are a lot of stakeholders, not just in agriculture but also in other
areas, that are interested in this. This problem is big now. I worry that it's
not going to go away if we continue to have these record crops, and I hope we do
have the record crops that we had last year.
Senator Robichaud: And that will depend on the bees.
The Chair: That was supposed to be a question. Before we close with
Senator Plett, there will be a question from Senator Robichaud. We will finish
with Senator Plett. Rather than a comment, it will be a question.
Senator Robichaud: You can go now, so I can pick up on what you're
Senator Plett: I want the last word today.
Senator Robichaud: Bill C-30 amends two acts: the Canada Grain Act and
the Canada Transportation Act. Clause 2 talks about the commission and the
commission's powers to fix the remuneration to be paid, determining the costs
and the allocation, making binding decisions, third-party arbitrators, making
orders to comply, and further on, it talks about licence suspension, the
licensee's opportunity to be heard, and you are familiar with all of that.
Is there an appeal process for these decisions made by the commission?
Mr. Meredith: There is not an appeal process built into this
legislation, but there is always judicial review of decisions that are taken in
Senator Robichaud: Why isn't it in this bill?
Mr. Meredith: Because it's an existing facility.
Senator Robichaud: So they would have to go to court?
Mr. Meredith: Yes.
Senator Robichaud: Do you agree, Ms. Duff?
Mr. Langlois: Under federal legislation, with respect to provisions in
a federal act, in terms of appeal or judicial review mechanisms, a statutory
right of appeal will be set out in an act. However, judicial review is never set
out in an act. That is a fundamental right. If an act does not set out a right
of appeal, any decision by the administration is automatically subject to a
judicial review. It is in the country's constitution. So it is never set out in
an act. It is a fundamental right of Canada.
Senator Robichaud: I understand that part. Before the commission makes
its decision, can the party in question appeal before appearing before the
Mr. Langlois: Before the commission?
Senator Robichaud: Yes.
Sara Guild, Counsel, Agriculture and Food Inspection, Legal Services —
AAFC, Justice Canada: The way that the current act is set out, things can
become orders of the commission, and then those things can be enforced as orders
of court. That may still result in other mechanisms that exist above. They don't
need to be that express in the legislation, necessarily, to deal with it.
Senator Robichaud: When the entity in question is given a chance to
either explain or contest the decision before having to go to court, it will be
a long process and by the time you get a decision then it's too late to do
Ms. Guild: Yes. The thing is too, though, that things can be made in
orders by the commission, so with respect to licensees the commission does have
certain powers that they can assist with in that sense. That does deal with that
issue a little bit, but again, it's like Mr. Langlois says.
Senator Robichaud: You say ''a little bit.'' Okay. Thank you.
Senator Plett: I was going to almost go where Senator Robichaud went.
I want to talk about the arbitration itself. He wanted to talk about if the
arbitration didn't go the right way.
Clearly, this bill has been applauded by both shippers and farmers equally,
except for the two farmers that Senator Mercer talked to. A farmer can't take
this to arbitration. The bill really deals with the shippers and the grain
Walk me through the arbitration process, if you would, and tell me how the
arbitration process will benefit the farmer. If a shipper gets $100,000, that
does not benefit the farmer.
Mr. Meredith: No, correct. The relationship you're outlining between
the grain company or the shipper and the railway is governed under the section
of this act that deals with the Canada Transportation Act. The facility for a
farmer to have a provision put into his contract with his or her shipper is
within the section of Bill C-30 that deals with the Canada Grain Act and that
confers on the Canadian Grain Commission the authority to outline a provision
for penalties, to adjudicate between the two parties and to set a penalty or a
payment or compensation, if you will, to the farmer.
It's really, as the minister would call it, a balanced equation. There is a
provision to protect shippers with the railways and there is a provision to
protect the producer or the farmer with the grain shipper.
Senator Mercer: Is there an appeal process?
Mr. Meredith: The same appeal process.
Senator Plett: Thank you, chair.
The Chair: Honourable senators, to the officials from Agriculture and
Agri-Food Canada, Transport Canada and Justice Canada, thank you very much for