Pointing the finger at the feds

By Bruce Johnstone,
Leader-Post February 28, 2014

REGINA — There’s plenty of blame to go around when looking for those responsible for the $5-billion backlog in the grainhandling system.

The railways, for putting the interests of their shareholders ahead of their customers. The grain companies, for failing to anticipate the increased demand on grain handling system created by the largest crop in Canadian history. The government, for failing to ensure that both the railways and the grain companies lived up to their obligations under federal legislation.

But if you’re looking for the architects of the gigantic schemozzle that has left much of the record 2013 crop in grain bins, elevators or in farmers’ fields, look no further than the Harper government.

First of all, it was the Harperites who moved with lightning speed to eliminate the single desk marketing authority of the Canadian Wheat Board, the legislated monopoly over western wheat and barley export sales that existed for nearly 80 years. One of the consequences of the dismantling of the single desk was the removal of the CWB’s role in logistics — moving the $5 billion to $6 billion worth of grain produced in Western Canada every year to export markets.

But in their ideologically driven haste to bring “marketing freedom’’ to western farmers, the Harperites conveniently ignored the warnings of farmers, academics and the industry that such a wrenching change would require several years, if not decades, of transition.

Back in 2006, University of Saskatchewan agricultural economist Murray Fulton warned about the consequences of removing the single desk powers of the CWB. Specifically, Fulton raised concern about the loss of the marketing clout and logistical expertise of the CWB.

“The removal of the CWB’s single-desk selling powers will fundamentally transform the Canadian grain handling and transportation system … These changes include a shift in marketing power towards the grain companies and the railways, a loss of political power for farmers, and modifications to transportation policy.”

Eight years later Fulton’s words seem eerily prophetic as we enter year two of “marketing freedom.’’  While Fulton says getting rid of the single desk isn’t the only cause of the problems in grain transportation, it certainly has exacerbated them.

“It’s the perfect storm,’’ Fulton said, referring to the abnormally cold weather and an abnormally large crop, combined with a grain handling system that’s out of control like a runaway train and a government that, in the words of Agriculture Minister Gerry Ritz, is “loath to regulate.’’

While Fulton doesn’t claim any prescience in predicting the dire consequences of eliminating the single desk, the results are there for all to see.

For example, Premier Brad Wall is now calling for grain companies to ship their Canadian grain south using U.S. railways to remove the grain backlog. The problem is U.S. railways are not bound by the revenue cap as CN and CP are. That means farmers paying freight rates that are twice as high as Canadian rates.

So let’s get rid of the revenue cap, as some farm groups, like the Western Canadian Wheat Growers, are suggesting. Having given the railways a slap on the wrist for not moving grain, the feds are now supposed to give them the keys to the candy store and charge whatever they want to move Canada’s grain to port?

Wall also called on Ottawa to legislate service agreements between the railways and grain companies to ease the grain backlog. But as Deputy Leader Leader Ralph Goodale points out, the Harper government rejected amendments to the Rail Service Review legislation that would have done just that.

“Clearly, there’s not enough grain handling and transportation capacity to move a better-than-average crop in a timely manner. No one is co-ordinating the efficient use of prairie delivery points, car allocations, rail shipment, terminal utilization and ship movements,’’ Goodale said in recent commentary.

Sounds like a job for … the CWB, as Fulton noted in his 2006 study.

“Since the CWB has control over all export grain from Western Canada, it can often negotiate better freight rates than could a number of grain companies acting independently. Similarly, the CWB is in a position to negotiate better service terms from the railways.”

Unfortunately, those days are gone and, thanks to the Harper government, they’re never coming back.

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