train tracks
The commission is urging the government to implement a model that would allow grain shippers to negotiate penalties and contract terms equal to those being charged by the major railways.
CALGARY, ALBERTA, CANADA — The Alberta Wheat Commission (AWC) has called on the government of Ottawa to address what it claims is an “imbalance of accountability and market power in Canada’s grain transportation system.” The commission has submitted a letter to Federal Transportation Minister Marc Garneau urging the government to implement a model that would allow grain shippers to negotiate penalties and contract terms equal to those being charged by the major railways.
Alberta Wheat Commission
Kevin Auch, chairman of the AWC.

“Now is the time when our government can provide long-term solutions to our grain transportation system, which will ultimately advance Canada’s economic growth,” said Kevin Auch, chairman of the AWC. “The current imbalance of market power allows railways to dictate operational terms instead of operating in a competitive commercial arrangement.”

The AWC provided three major recommendations for improving the transportation system:

• Service Level Agreements (SLAs) that include mandatory reciprocal penalties for failure to perform to binding contract terms. The ability to achieve agreements will allow shipping companies to negotiate contracts that include penalties equal to those being charged by railways today, the AWC said. SLAs will ensure costs due to poor railway performance are not downloaded to farmers by shippers.

• Retention of the Maximum Revenue Entitlement (MRE) to protect producers against excessive rate increases. The AWC said freight costs are transferred to the producer by shippers, and retaining the MRE will ensure these costs do not prevent producers from being competitive in world markets.

• Continuous improvement of interswitching. The AWC said it was pleased with the government’s actions toward extended interswitching measures from Bill C-30, but moving forward has recommended that the extended interswitching limits be made permanent and improved efficiencies are reviewed, such as increasing interchange capacities or extending limits to 250 kilometers to enable modern day train efficiencies.

“AWC believes these key recommendations will enhance Canada’s grain transportation system and create an environment that enables a competitive atmosphere to ensure Canada’s farmers are able to move their grain in a predictable and efficient manner,” Auch said.

 A Sept. 28 meeting between the AWC and provincial Transport Minister Brian Mason and Agriculture Minister Oneil Carlier was seen as an important opportunity for provincial representatives to advocate for the needs of Alberta’s cropping sector.

“Throughout the consultation process, farmers and industry members have been united in their concerns about railway market power,” Auch said.

“We are confident that our government will support our position by emphasizing the imbalance of power within the grain supply chain,” said Allison Ammeter, chair of the Alberta Pulse Growers Commission. “Improved grain transportation service through commercial means is imperative in order to continue growing and diversifying Alberta’s economy.” 

 Agriculture represents one of Alberta’s major exports with total merchandise exports of $10 billion in 2015, and more than 11 million tonnes of cropping sector commodities were exported from Alberta, almost completely by rail, and the demand for rail service is growing, according to the AWC.

“Transportation remains a key concern to Albertan grain producers, and it is necessary to have proper mechanisms in place that provide shippers the ability to negotiate penalties and contract terms that are equal to those currently charged by the railways,” said Kevin Serfas, regional director with Alberta Canola Producers Commission. 

Mike Ammeter, chair of Alberta Barley, added, “We need to create a competitive marketplace that allows growers to move grain in a predictable and efficient manner.”