Grain crisis calls for more than words
By Bruce Johnstone, The Starphoenix February 8, 2014
What does it take to get Premier Brad Wall exercised about the fact that much of Saskatchewan's record harvest is sitting in grain elevators or farmers' fields, thanks to a grain transportation system that's failed to deliver the goods and a donothing federal government content to sit on its hands? Apparently, the threat of strike action.
Until this week, Wall has barely said a word about the massive backlog of grain that's costing farmers potentially billions of dollars in foregone income. A search of the government's website reveals one press release on the subject of the backlog of grain that has plagued western farmers since early December.
The release posted Wednesday says the province "supports recent federal initiatives to increase grain movement and urged the railways to improve services to move this year's record crop to port.'' And what federal initiatives are those? The Harper government recently announced enhancements to the Grain Monitoring Program, in the form of $1.5 million for a five-year transportation study. Apparently, the feds are going to force the railways to report on their performance (or lack thereof) once a month, rather than every three months.
"Our government knows that action is needed now,'' says Agriculture Minister Gerry Ritz.
If that's Ritz's idea of what action is needed, it's certainly not what farm groups are looking for. "We can monitor it all day long, but the bottom line is we've got a pile of grain to get rid of,'' says Dan Mazier of Keystone Agricultural Producers.
Ritz added that railways need to deliver railcars when they're needed, not whenever they get around do it. "Right now, it's anybody's guess where cars are going to show up and that's just not a good way to run anything. ''
Of course, Ritz conveniently neglects to mention that his own government is partly responsible for the logjam by getting rid of the Canadian Wheat Board's longtime role in managing logistics and allocating railcars for producers and grain companies.
Norm Hall of the Agricultural Producers Association of Saskatchewan contends grain companies and railways are on a "steep learning curve'' when it comes to handling a normal crop, let alone a record one. "It couldn't have come at a worse time, because any little mistake they make now gets accentuated so badly.''
Of course, exacerbating the problem is the huge increase in shipping oil by rail, which has grown exponentially with the shortage of pipeline capacity to the U.S. and Eastern Canada.
And the railways have complained about the "polar vortex,'' which has caused them to shorten trains, increasing fuel consumption and delaying shipments. But let's not let the railways off the hook too easily. While weather conditions have been less than ideal and the 95-million-tonne crop is 30 per cent larger than the previous year's, it doesn't help matters when the railways are paring back their staff and rolling stock to "maximize shareholder value."
Under former CN boss Hunter Harrison, CP has reduced engines and railcars by 43 and 35 per cent, respectively, and plans to chop 4,500 employees from the payroll by 2016. Idling 400 locomotives and taking 2,700 railcars out of service may impress Bay Street, but it doesn't do anything to move the biggest grain crop in history to port.
And those West Coast ports have as many as 40 ships waiting to be loaded, running up demurrage charges of up to $25,000 a day for the grain companies. This will only add to the bill that Canadian producers will be paying when their ships finally come in.
Based on his own "quick and dirty" calculations, Hall estimates canola producers are going to be out $1.2 billion and wheat producers $800 million because of the backlog at the ports and threemonth delays in delivering grain. In essence, Canadian farmers
could be taking a $2-billion haircut on this tie-up on the grainbelt.
So it was a bit surprising that Wall was only motivated to speak out when the Teamsters union threatened strike action against CN this weekend. Fortunately, the dispute was settled late Wednesday, making Wall look both forceful and prophetic.
Unfortunately, Wall's tough talk won't do much to help farmers recoup $2 billion in lost income. bjohnstone@leaderpost.com
By Bruce Johnstone, The Starphoenix February 8, 2014
What does it take to get Premier Brad Wall exercised about the fact that much of Saskatchewan's record harvest is sitting in grain elevators or farmers' fields, thanks to a grain transportation system that's failed to deliver the goods and a donothing federal government content to sit on its hands? Apparently, the threat of strike action.
Until this week, Wall has barely said a word about the massive backlog of grain that's costing farmers potentially billions of dollars in foregone income. A search of the government's website reveals one press release on the subject of the backlog of grain that has plagued western farmers since early December.
The release posted Wednesday says the province "supports recent federal initiatives to increase grain movement and urged the railways to improve services to move this year's record crop to port.'' And what federal initiatives are those? The Harper government recently announced enhancements to the Grain Monitoring Program, in the form of $1.5 million for a five-year transportation study. Apparently, the feds are going to force the railways to report on their performance (or lack thereof) once a month, rather than every three months.
"Our government knows that action is needed now,'' says Agriculture Minister Gerry Ritz.
If that's Ritz's idea of what action is needed, it's certainly not what farm groups are looking for. "We can monitor it all day long, but the bottom line is we've got a pile of grain to get rid of,'' says Dan Mazier of Keystone Agricultural Producers.
Ritz added that railways need to deliver railcars when they're needed, not whenever they get around do it. "Right now, it's anybody's guess where cars are going to show up and that's just not a good way to run anything. ''
Of course, Ritz conveniently neglects to mention that his own government is partly responsible for the logjam by getting rid of the Canadian Wheat Board's longtime role in managing logistics and allocating railcars for producers and grain companies.
Norm Hall of the Agricultural Producers Association of Saskatchewan contends grain companies and railways are on a "steep learning curve'' when it comes to handling a normal crop, let alone a record one. "It couldn't have come at a worse time, because any little mistake they make now gets accentuated so badly.''
Of course, exacerbating the problem is the huge increase in shipping oil by rail, which has grown exponentially with the shortage of pipeline capacity to the U.S. and Eastern Canada.
And the railways have complained about the "polar vortex,'' which has caused them to shorten trains, increasing fuel consumption and delaying shipments. But let's not let the railways off the hook too easily. While weather conditions have been less than ideal and the 95-million-tonne crop is 30 per cent larger than the previous year's, it doesn't help matters when the railways are paring back their staff and rolling stock to "maximize shareholder value."
Under former CN boss Hunter Harrison, CP has reduced engines and railcars by 43 and 35 per cent, respectively, and plans to chop 4,500 employees from the payroll by 2016. Idling 400 locomotives and taking 2,700 railcars out of service may impress Bay Street, but it doesn't do anything to move the biggest grain crop in history to port.
And those West Coast ports have as many as 40 ships waiting to be loaded, running up demurrage charges of up to $25,000 a day for the grain companies. This will only add to the bill that Canadian producers will be paying when their ships finally come in.
Based on his own "quick and dirty" calculations, Hall estimates canola producers are going to be out $1.2 billion and wheat producers $800 million because of the backlog at the ports and threemonth delays in delivering grain. In essence, Canadian farmers
could be taking a $2-billion haircut on this tie-up on the grainbelt.
So it was a bit surprising that Wall was only motivated to speak out when the Teamsters union threatened strike action against CN this weekend. Fortunately, the dispute was settled late Wednesday, making Wall look both forceful and prophetic.
Unfortunately, Wall's tough talk won't do much to help farmers recoup $2 billion in lost income. bjohnstone@leaderpost.com