“It’s great to have legislation (saying) that we can get producer cars, but if there’s nowhere to drop them off, it’s not going to help anybody,” says Todd Lewis, president of APAS.

With new legislation and reciprocal penalties coming in, the grain shipping industry is in a time of transition, Lewis says. APAS doesn’t want to see any more infrastructure lost right now, he says. The producer group has asked Federal Transport Minister Marc Garneau for a moratorium on producer car loading sites until railway costs have been reviewed. APAS is also asking for an extension of the 60-day notice before CP closes the 10 sidings.

“If they discontinue service there, it’s not going to save farmers a nickel,” says Lewis, because under the Maximum Revenue Entitlement, railways are still compensated for those closed sidings.

Lewis also questions whether CP has spent much money servicing these sidings. “If they’re not getting used, they’re not servicing them, either,” he adds.

James Nolan, professor of ag resources and economics at the University of Saskatchewan, agrees that CP should hold off on closing more sidings until the new bill is in place, and all parties have had a chance to use it. Nolan adds that “that the government needs to get off the proverbial pot” and do a full rail costing review.

CP says it’s about safety

CP spokesperson Jeremy Berry says switches are a source of risk, as they “have moveable components and require mechanical fastenings to join the components to the main track structure.”

“Removing a producer car site that is not being used is necessary to keep communities where we operate and our employees safe by removing a track switch, which can increase the risk of an incident,” says Berry.

In some cases, CP doesn’t own the adjacent land, and so the sidings are inaccessible, Berry says. In other cases, CP doesn’t own the infrastructure itself, he adds.

There are other shipping locations within 20 km of the sites CP plans to close, Berry says. Most of the sidings on the closure list haven’t been used in years, he adds.

The typical siding on the closure list was once beside a grain elevator that is now gone, Lewis says. Lewis farms south of Regina, about 15 miles from the Wilcox siding, which is one of the sites slated for closure.

Lewis says he hasn’t used that siding, as producer car service has been too unpredictable. The 2013/2014 shipping year scared off many producer car shippers, he adds.

But he views the planned closures as lost opportunities in an evolving grain market. For example, Lewis spoke to a smaller grain company interested in shipping soybeans in Lewis’ area with producer cars.

Producer cars are also a “good balance to the basis rates” with the elevator companies, says Lewis. “If it gets too far out of whack, you can save thousands of dollars if you go the producer car route.”

Berry says CP has placed ads announcing the planned closures in local papers. The sites won’t be discontinued for at least 60 days following those notifications, he says.

“CP remains firmly committed to delivering outstanding service to our grain customers, which is our largest line of business,” says Berry.

APAS notes the following sidings could be closed by mid-September:

• Tompkins – RM of Gull Lake
• Midale – RM of Cymri
• Cupar – RM of Cupar
• Markinch – RM of Cupar
• Grand Coulee – RM of Lumsden
• Wilcox – RM of Bratt’s Lake
• Moosomin – RM of Moosomin
• Tisdale – RM of Connaught/Tisdale
• Qu’Appelle – RM of South Qu’Appelle
• Duval – RM of Last Mountain Valley

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The provincial government on Wednesday rolled out a budget designed to dial back the province’s reliance on resource revenue in the face of slumping markets for oil and potash, while substantially boosting provincial revenue from consumption taxes.

For farmers, one of the biggest changes in Finance Minister Kevin Doherty’s budget is the elimination of the tax exemption for bulk purchases of gasoline starting April 1, along with a cut in the related exemption for bulk diesel, down to 80 per cent of the purchase.

That measure alone, the province said, “impacts farmers and other primary producers and increases fuel tax revenue by $40.2 million.”

The cuts to farm fuel exemptions, the province said, “reflect the changing nature of farming and primary production operations and on-road and personal use of this fuel.”

Pre-budget discussion about farmers’ fuel tax exemptions had already spurred Todd Lewis, president of the Agricultural Producers Association of Saskatchewan (APAS), to write an open letter Monday emphasizing such exemptions “are not subsidies” for farmers.

The “vast majority of tax exempt fuel is not used on the provincial highway system, but is used for field work, or for hauling on the rural municipal roads that farmers already pay for through our property taxes,” he wrote.

“Tax exemptions for farm inputs and machinery do not cost any other taxpayer a nickel. Just like tax exemptions on children’s’ clothes or home heating do not cost anything to other provincial taxpayers.”

The province noted Wednesday it has lowered the educational property tax (EPT) mill rates for all classes of property, but reassessments and increased property values will amount to a 9.8 per cent increase in EPT revenue.

For agricultural property, the province said, the 2017 EPT mill rate will be 1.43, down from 2.67 in 2016, but EPT revenues from agricultural land are still expected to rise to $46.1 million, up from $39 million in 2016.

In a move affecting all Saskatchewan residents, provincial sales tax (PST) will rise to six per cent, from five, and various PST exemptions — such as for construction and renovation services, restaurant meals, snack foods and children’s clothing — will also end, effective April 1.

A PST exemption for insurance premiums will also end starting July 1, the province said.

Effective April 1, the value of a trade-in will also no longer be deductible in determining PST on the purchase of a new vehicle, though the PST exemption for used vehicles will continue.

Grain cars for sale

The province on Wednesday also set a request for offer (RFO) deadline of May 12 for buyers interested in the fleet of about 900 grain hopper rail cars owned by the Saskatchewan Grain Car Corporation (SGCC), as that operation is to be wound down.

“By selling the fleet now, the cars will still move Saskatchewan grain,” David Marit, the provincial minister for SGCC, said in a separate release. “At the same time, the province will get a higher return by selling the cars while they still have significant useful service life left.”

Saskatchewan’s 13 commercial shortline railways will be given “the first opportunity” to purchase the rail cars, the province said.

Under Association of American Railroads rules, the province said, rail cars can be interchanged between railways for up to 50 years, meaning SGCC’s cars have about 14 years of service life left. The replacement cost for SGCC’s original fleet of 1,000 cars is estimated at $100 million.

Pasture program ending

The province on Wednesday also announced it would end the 95-year-old Saskatchewan Pastures Program (SPP), which today oversees 51 pastures on about 780,000 acres.

An online survey will run starting Monday (March 27) until May 8, in tandem with consultations including stakeholders, First Nations and the Metis community, on how the affected pasture land should be managed in the future, the province said.

Set up in 1922, the SPP was developed to help Saskatchewan’s agriculture industry diversify by providing assistance to small cattle producers, but “the agriculture industry has evolved, as have the needs of producers, and the program is no longer necessary,” the government said Wednesday.

In 2015, the province said, the SPP supported about five per cent of the provincial cattle herd. Based on 2011 census data, about 12 per cent (1,300) of Saskatchewan cattle producers use the SPP.

Overall agricultural programming in Wednesday’s budget will see $264.1 million earmarked for business risk management (BRM) programs, up nearly four per cent, with $71.2 million for Growing Forward 2 “strategic initiatives,” $26.8 million for ag research and $172.2 million for crop insurance premiums and program delivery.

Among other changes announced in the budget, personal income tax rates will be cut in half-point increments in July 2017 and July 2019, as will general corporation income tax rates.

Sin tax hikes will see tobacco taxes rise by two cents per cigarette starting Thursday and wholesale markups rise on liquor — most notably by 6.8 per cent on most types of beer — starting April 1.

Milk containers will be added to the provincial beverage container recycling program starting April 1, allowing milk containers to be returned to SARCAN depots for refunds of a paid deposit. Deposits on most other types of containers, including cans, cartons and tetra paks, will also increase.

The province also announced it will wind down the Crown-subsidized bus company, STC, affecting 224 employees. Passenger services are to end May 31 and freight will be accepted for delivery until May 19. — AGCanada.com Network

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Agriculture Minister Gerry Ritz and Transport Minister Lisa Raitt announced the federal government won’t renew the mandatory minimums, which are due to expire Saturday.

The order in council, which was launched last March, extended in May, renewed in August and extended in November, “has done its job and can be reinstated if required,” Ritz said in a release Saturday.

The government, he added, will “continue to monitor performance and encourages the full supply chain to be more collaborative in the long run.”

Since the mandatory minimum weekly requirements were introduced in March last year, the government said, “Canada’s overall grain exports have improved and (Western Canada’s) projected carry-out going into this new crop year is within the average range historically,” at 10 million tonnes.

Specifically, the government said, grain shipments out of Western Canada through ports are 31 per cent higher than last year, and 25 per cent higher than the five-year average.

Canadian National Railway (CN) and Canadian Pacific Railway (CP), during the periods covered by the order in council, moved over 50 million tonnes of grain, exceeding the total mandatory minimums by 5.5 million tonnes, the government added.

The government’s order, Raitt said, “had its intended effect and that the movement of grain by rail is once again running at a rate that contributes to strong economic growth.”

Mandatory minimums will remain an option” if the grain supply chain compromises farmers’ livelihoods, the economy or Canada’s international reputation as a reliable shipper,” the government added.

CP and CN, meanwhile, were urged “to continue to address shipper-specific issues so shippers across Canada can grow and build their businesses.”

The Ag Transport Coalition, with federal backing, continues to report by corridor on weekly rail car supply “to help individual shippers make business decisions,” the government said.

With input from grain industry stakeholders through the Crop Logistics Working Group and Ag Transport Coalition, the government said Saturday it will review its Grain Monitor program before the new crop year, “to determine how more effective data can be collected to find efficiencies in the supply chain.”

Before the end of the year, the government added, its Canada Transportation Act review will bring out recommendations to “help inform long-term supply chain improvements.”

More grain monitoring statistics are now publicly available, the government noted Saturday. A summary of the grain volume shipped by rail from August 2014 to January 2015 is now available on the Grain Monitor’s website, where new weekly and monthly reports will also be posted.

“Missed opportunity”

The Ag Transport Coalition’s weekly reports, which include data covering 90 per cent of grain movement originating in the West, continue to paint a less than rosy picture of grain car deliveries and shipments.

In its latest report, released Wednesday and covering shipping week 30, the coalition said CN and CP supplied 2,302 of the 6,228 hopper cars ordered for delivery that week, plus 4,202 cars filling orders from previous weeks.

In week 30, traffic destined to West Coast bulk terminals got a higher percentage of cars (41 per cent) than traffic destined to other corridors such as Canadian domestic buyers, Vancouver transload sites and delivery points in the U.S. and Mexico, which combined got 26 per cent of cars ordered for delivery.

“Each order not filled in the week it is requested can represent a lost or deferred sale for the shipper, and missed opportunity for a farmer to deliver their grain, which is particularly relevant as spring weight restrictions come into effect,” the coalition warned in Wednesday’s release.

Grain sales deferred or lost due to weekly unfulfilled rail car demand can result in extra costs to the supply chain, the coalition said.

Among those costs, it said, are “higher inventory carrying costs, payment of contract penalties by shippers, payment of container detention fees, payment of demurrage for waiting vessels, risk premiums charged by downstream supply chain partners and ultimately, loss of future sales to customers.”

In the crop year to date, the coalition said, the accumulation of each week’s unfulfilled demand for hopper cars has reached nearly 24,000 cars — representing the total volume of missed and deferred shipper orders. Net unfulfilled demand now sits at 9,539 orders, the coalition added. — AGCanada.com Network

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If anyone should be outraged by the railways’ poor service, it’s Gerry Ritz.

The federal agriculture minister has diligently worked on market access for Canadian agricultural products. And, in November 2011 Ritz told a legislative committee that the single desk’s end would mean better rail service “because we won’t be dragging our sales out at the rate of one-12th every month, as the wheat board does now.”

“There will be a lot more moving off the combine and a lot more going to market positions earlier, getting us away from starting our trucks and our augers at -40 C in January,” Ritz said.

Well, that obviously hasn’t happened. Last year’s bin buster has exposed the holes in our grain transportation system. And it’s costing the ag industry big time in demurrage charges, lost customers and lost income for farmers.

Ritz ought to be worried about the railways unravelling his work securing foreign markets. And you’d think he’d be furious on behalf of farmers, grain elevators and the rest of the industry.

There’s little doubt that CN and CP should shoulder most of the responsibility. After all, western Canadian shipments are 51,000 cars behind, Greg Cherewyk of Pulse Canada told the House agriculture committee Feb. 10.

And the railways don’t seem inclined to bump up car shipments. They’re only providing between 3,000 and 4,000 cars per week right now, Wade Sobkowich, executive director of the Western Grain Elevators Association, told the committee.

For some historical perspective, in late 1983-84, in one week Thunder Bay unloaded over 9,500 grain cars and Vancouver handled over 3,000.

Why, exactly, are the railways stiffing the agriculture industry on hoppers these days? Mark Hallman, CN’s spokesperson, told me the polar vortex was slowing service, and Ed Greenberg of CP cited extreme weather as a challenge, too (see “Delays caused by harsh winter,” Grainews, March 4, 2014, page 1; click HERE for a PDF of the March 4 issue).

But this excuse wears thin. Winter rolls in every year. It’s often miserable on the Prairies. How many more winters do the railways need to experience before they adapt?

Ritz has made some positive announcements in the last few weeks. He’s called for more frequent reporting of grain movement. And the federal government is kicking in $1.5 million for a five-year study, led by Pulse Canada, to examine the grain transportation and logistics system.

But Ritz was singing a different tune last fall. In November, he told reporters in Winnipeg that although he wasn’t a railway apologist, “I do agree with (CN). Putting more cars on the freeway at rush hour doesn’t make it more efficient.”

And when asked about rail service issues last December in Edmonton, Ritz told reporters “I think those who are complaining should look in the mirror and realize that there are efficiencies that they can do themselves.”

While grain companies don’t do a perfect job, one imagines they’re highly motivated to avoid demurrage and fill contracts. And efficiency will only get them so far when they’re getting fewer than 4,000 cars a week.

Ritz’s solution last fall was to chop the revenue cap. In Winnipeg last November, he said, “in a market-driven economy, that needs to be looked at.”

Ritz seems to be confused about the difference between a “market-driven economy” and a “monopoly” or “duopoly.” This is perplexing, given his work dismantling the Canadian Wheat Board’s single desk.

Ritz should know that a duopoly exists when two companies own the entire market for a service or product. The railways are, at best, duopolies. And since most grain elevators only have access to one railway, the ag industry is basically dealing with separate monopolies.

I’m no economist, but that doesn’t sound like a market-driven economy to me. Removing the revenue cap seems like a good way to further beef up the railways’ bottom lines at the agriculture industry’s expense.

Not everyone is surprised by this year’s grain transportation gong show, by the way. Richard Phillips, who is part of the Canada Grains Council and the National Rail Shipper’s Coalition, told me shippers predicted the system would melt down once we had a huge harvest.

The railways are not being competitive, and so the government needs to give them a nudge, Phillips said. “With the understanding that if you don’t like this nudge, then there will be something more than a nudge. Next time it will be a push.”

Last year Ritz and his colleagues pushed through legislation meant to bind railways to service agreements with shippers, if the shippers request them. The Fair Rail Freight Service Act would slap railways with penalties if they refuse to meet agreements, or, as Ritz told Country Guide’s Maggie Van Camp, “make the railways play nice in the sandbox.”

But the grain companies have not negotiated service agreements. Phillips told me the regulations have no teeth.

And what shippers would want to go up against a railway, which they depend completely on to move their products, when all they have are toothless regulations?

After all, the railways don’t seem like the type to play nice in the sandbox, despite Ritz’s lukewarm efforts to referee. They seem more likely to kick in your sandcastle and blame it on someone or something else (polar vortexes, disorganized grain companies, rail operation costs). And then complain about the sand between their toes.

“People do perceive that if they speak out too strongly their service may suffer,” Phillips told me. He stressed that he doesn’t know whether railways will actually cut service in retribution for complaining.

But, in a way, it doesn’t matter, does it? A perceived threat is a great way to silence squeaky wheels.

Minister of Transport Lisa Raitt should be the one to nudge CN and CP back on track. But we’re not likely to see much positive action from her department. The Office of the Commissioner of Lobbying of Canada, which tracks meetings between paid lobbyists and government, reported 39 meetings between Transport Canada officials, including Raitt, and CN lobbyists last year.

CP met with Transport Canada officials 12 times in 2013. The Railway Association of Canada, which counts CP and CN as members, also met with Transport Canada 12 times.

But railway lobbyists had few meetings with Agriculture and Agri-Food Canada officials — in fact CN only met with federal agriculture officials twice last year and CP and the Railway Association didn’t meet with AAFC once. The database doesn’t include 2014 numbers yet, but there are no records of the railways’ lobbyists meeting with Ritz since May 2012.

Although Ritz has been slow to champion the agriculture industry in this whole mess, he is still our best hope. He’s a free market disciple and it seems the railways haven’t been whispering in his ear.

So come on, Minister Ritz. It’s time to put on your ostrich cowboy boots, march into the sandbox, and give the railways a hard nudge. The rest of the agriculture industry will be right behind you.

— Lisa Guenther is a field editor for Grainews at Livelong, Sask. Includes files from articles by Allan Dawson, AGCanada.com, Country Guide, iPOLITICS, Reuters and The Canadian Press.

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