Today, the Western Canadian Wheat Growers Association responded to the Emerson review of the Canadian transportation system. 

The review report includes several positive and similar recommendations as put forward in the Wheat Growers submission to the review in June 2015, but misses on certain key issues on enhancing greater competition and service in rail shipping.

“Farmers have seen it very clearly for some time that major changes are needed in railway service for shippers, and it’s good to see some of it recognized in the Emerson review” said Jeff Prosko, who farms near Rose Valley, Saskatchewan, and serves as Director of the Wheat Growers and Chair of their Transportation Committee.  “As we said in our submission to the review ‘farmers end up shouldering the cost of system failures,’ and this has to change.

Tens of millions of tonnes—and billions of dollars—in wheat and other grains are produced and exported from western Canada every year.  Improved rail service for grain shippers is paramount to getting the grain to customers here at home and abroad, including to key markets in Asia.

“We encourage the government to accept and implement the key recommendations on railway service, some of which would help create a more competitive market and incent greater investment in the grain industry,” said Prosko.  “However, grain growers also need to see much greater competition and increased capacity among the railways—we can’t keep losing customers and valuable export markets due to system failures.” 

The Wheat Growers do see some positive recommendations for grain farmers in the review, including: modernizing the Maximum Revenue Entitlement (MRE) Program, improving level of service provisions (including for producer car shippers), performance standards, reciprocity, and creation of a dispute resolution unit within the Canadian Transportation Agency to address level of service issues and complaints.

The Wheat Growers are also pleased the report adopted our recommendations to exclude container shipments from the MRE and to properly account for capital investment in the MRE calculation for each railway.

The Wheat Growers also see some red flags in the review.  The Wheat Growers believe some form of rate regulation around the MRE will likely still be necessary in seven years, given the lack of competition among railways and the lack of alternative market channels for large segments of the prairie farm economy.  Increased competition among railways, as well as expansion in the livestock and processing sectors, is essential before any real discussion takes place of the MRE being done away with completely.  Further, the extended interswitching provision of 160 km should not automatically sunset this summer, as that will reduce competition rather than expand it.  Finally, the Wheat Growers support the move to modernize the MRE, including provisions to allow shippers to book premium service outside the revenue cap, providing such service is incremental and doesn’t adversely impact service to other grain shippers. 

The Wheat Growers submission to the Canada Transportation Act Review on June 30, 2015, can be found at: wheatgrowers.ca