Canada's transportation strategy to address fair rail for grain farmers

by Holly Demaree
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The new proposed legislation will be voted on in 2017.
 
WASHINGTON, D.C., U.S. — On Nov. 3, 2016, the Transport Minister of Canada, Marc Garneau, announced the Transportation 2030 strategy, which proposed legislation be introduced to ensure efficient rail movements of goods, including agriculture, to global markets. Legislation to modernize the Canada Transportation Act is expected in the spring of 2017, the U.S Department of Agriculture’s (USDA) Foreign Agricultural Services (FAS) said in a Nov. 18 report.

The proposed legislation will be discussed and voted upon in the 2017 Parliamentary session. Garneau said the plan will:

  • establish the ability to apply reciprocal penalties between railway companies and their customers in their service level agreements,
  • better define “adequate and suitable service,”
  • improve access and timelines for Canadian Transportation Agency decisions; and
  • address the future of the Maximum Revenue Entitlement and extended interswitching

The plan elements appear to be aligned with recommendations of Canadian industry stakeholders along the supply chain, including the Grain Growers of Canada and the Western Grain Elevator Association. Industry consultations began shortly after, during which the House of Commons Transport Committee heard from witnesses beginning in March 2016. The committee held its last meeting on Sept. 29.

According to the report, Canada is a significant producer and exporter of grains, much of which takes place in the land-locked western provinces and must therefore rely on rail infrastructure for delivery to export markets.

Efficient movement of Canada’s grain to export markets will be one focus of the modernization effort with legislative changes based in part on the Fair Rail for Grain Farmers Act. The act was passed as a result of the inadequacies exposed in Canada’s rail system handling of the record 2013 crop. Proposed changes may not address concerns of the reliability of Canada’s rail system to service grain customers.

The act included the following amendments to the legislation, some of which are anticipated to be made permanent in the future revision of the Canada Transportation Act:

  •  Authorized the Governor in Council to set grain transport volume requirements, in extraordinary circumstances, at the joint recommendation of the Minister of Transport and the Minister of Agriculture and Agri-Food. The consequence for failure to comply with these volume requirements may result in penalties of up to C$100,000 per day upon conviction.
  • Created regulatory authority to allow the Canadian Transportation Agency to extend the interswitching distances in Saskatchewan, Alberta and Manitoba to 160 km, for all commodities, to increase competition among railways and give shippers’ access to alternative rail services.
  • Create the regulatory authorities to add greater specificity to operational requirements in Service Level Agreements.
  • Establish regulatory authorities in the Canada Grain Act to address non-performance by grain companies in their contracts with producers.

Although the act was set to expire in August 2016, the House of Commons voted unanimously on June 8 to extend the Fair Rail for Grain Farmers Act emergency legislation for one year.

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