GrainsWest Fall 2018

Fall 2018 Grains West 40 FEATURE Canada on Oct. 1, regarding the railways’ plan to tackle winter grain movement. All the new rail plans and provisions to hold CN and CP to account are music to the ears of central Alberta farmer and Grain Growers of Canada president Jeff Nielsen. “We want to ensure that grain gets to the export position. We want to know that when we have ships coming, the grain will be there,” he said. “The railroads are saying that they are all caught up and looking for work. That sounds great from their perspective. They missed the boat back in January to March; we lost those sales. Now, we have to look for new sales for the carryout and that could affect new crop prices.” Despite being optimistic about the new legislation, Nielsen is a realist and posits it will still be another full year before the true effect of C-49 is felt throughout the value chain. This is largely driven by the SLAs and the likely arbitration that is to follow between shippers and railways, all of which will be mediated by the CTA. “Realistically, for this upcoming crop year, it’s a huge leap of faith that we as grain producers see the changes needed so customers get our product,” he said. “That lays cleanly on the railways to make sure they get that product in position so our customers don’t have to wait for it.” Indeed, questions still abound, not about the quality of Canada’s grain, but the ability to move it to tidewater. Each winter, industry groups fan out across the globe on new crop missions, meeting with buyers and hearing what they have to say about Canada and its grain chain. “We still get questions about our logistics system and we’re five years out from the backlog of 2013/14, so, that’s an indication that we’re still having to prove that our system is fluid and efficient,” said Steve. “I think we did pretty well up until this year and we had some hiccups again. It wasn’t nearly as serious as 2013/14, but our most reliable customers, like Japan, still ask about the ability of our logistics system and are concerned if there’s going to be another breakdown.” One of the people monitoring the logistics will be Mark Hemmes of Quorum Corporation in Edmonton. His company has monitored all rail movement since June of 2001. The biggest issues he cited heading into the fall are total supply of grain, carry forward stocks and what the railways will offer in the form of capacity to move that supply. A recent estimate suggests the carryout from this past year could be more than 12 million tonnes, on top of what is predicted to be at least an average Prairie harvest of 70 MMT. Hemmes likes the LHI provision and the idea of accountability through SLAs yet wonders about the timeliness and cost to ensure both are effective tools. “My doubts are on how soon the industry will be able to determine their value because of the lead times involved. SLAs will likely take quite a bit longer to negotiate and consequently, to evaluate their value and effectiveness,” he said. It’s a similar story for Steve, who is thinking about the incoming crop and what will happen between now and spring of 2019. “The capacity of the railways to handle that new crop is key,” he said. “If they aren’t ready or if we have extraordinary circumstances like weather and get behind, it’s very difficult to catch up, the sales opportunities are lost and those never come back. You essentially are left with a carryover from lost opportunities.” With help from the Senate Standing Committee on Transportation and Communciations, transport minister Marc Garneau overhauled Bill C-49.