Canadian Pacific (CP) Railway is blasting the federal government’s attempt to legislate a solution to the grain transportation backlog as unfair and potentially harmful to the economy.
The legislation would require railways to move a minimum amount of grain or face a penalty of up to $100,000 a day.
Hunter Harrison, chief executive of Calgary-based CP, says it will do nothing to boost capacity in the grain handling system and could even damage the Canadian rail transportation system.
“We are very concerned about the speed and lack of consultation by the government in making such significant changes to the rail transportation system that could result in unintended consequences for all stakeholders,” Harrison said in a statement on the company’s website.
The Prairies had a record fall harvest last year, but much of it hasn't been shipped to market because of a transportation bottleneck, prompting farmers to demand Ottawa force the railways to move it faster.
Agriculture Minister Gerry Ritz tabled the legislation Wednesday. It would also see the Canadian Grain Commission regulate how much a grain company pays a farmer if the company doesn't meet contracted delivery dates.
He completely rejects the criticism that the legislation is unfair to rail companies and will be harmful to the economy.
"We are not facing this alone," he said. "There's a growing demand for top quality products regardless of whether you are talking about coal, oil or grain or whatever the commodity is out there in the world. And if they are the weak link getting it to port then there will have to be more work done to make sure that link is strengthened."
Harrison said it’s easy to blame the railways, but it ignores the facts.
“Canada’s grain handling system is just not built to handle this record amount of grain,” he said, adding an extremely cold winter has made the job even more challenging.
“Targeting the railways when our dedicated men and women are working 24/7 to recover from some of the harshest winter operating conditions ever seen, is not only ineffective but grossly unfair.”
Ottawa is also amending what are called inter-switching limits from 30 kilometres to 160 kilometres in Alberta, Manitoba and Saskatchewan — adding more competition among railways to service grain elevators.
But Harrison warns that increasing inter-switching will harm Canadian competitiveness and put jobs at risk by transferring traffic to U.S. railroads and ports.
“We need to move away from reactionary legislative interventions that target unfairly one participant and potentially damage the Canadian economy. Instead we should all focus on commercial solutions to maximize overall capacity in the grain supply chain,” Harrison said.
Farmer welcomes legislation
Alberta farmer Matt Sawyer, whose wheat and barley has been sitting in stockpiles, welcomes the new legislation.
He estimates being unable to move his grain has cost his operation as much as $200,000.
"The shipping is way behind where we need to be. There is a huge backlog on the Prairies,” he said.
According to Alberta Wheat Commission chair Kent Erickson, who supports the legislation, there are many factors at play including the bumper crop, a shortage of grain storage and the industry’s need to adjust to the end of the Canadian Wheat Board monopoly.
"I think with the wheat board being in place for so long, certain things like on-farm storage and the way we move grain, and the way the system worked, obviously evolved and changed based on that institution. Now that we've changed that, there are some learning curves,” he said.