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Grain-transport review

Feds and firm unite to revamp strained system

Agriculture Minister Gerry Ritz said Tuesday the losses to farmers because of the railcar backlog might be impossible to calculate.


Agriculture Minister Gerry Ritz said Tuesday the losses to farmers because of the railcar backlog might be impossible to calculate.

Canada's reputation as a reliable supplier of grain to markets around the world is tarnished, industry leaders say, and not just because of the current historic backlog of grain shipments.

Many of them were huddled in a Winnipeg hotel on Tuesday with representatives of the railroad industry as well as federal Agriculture Minister Gerry Ritz to start a planning process to make it better.

As it stands, shipments of this year's bumper grain crop are now 40,000 railcars behind and the rail system is fully congested. The reality for some farmers that they might not be able to ship this year's crop -- or get paid -- before they seed next year's, is starting to sink in.

But with improved farm technologies and crop genetics producing ever-greater yields, industry officials say the entire grain logistics system needs to be upgraded for the future to handle what many say is the new normal that was experienced with the 2013 crop.

To help address that, Ritz and Gordon Bacon, CEO of Pulse Canada, announced a five-year, $3.2-million review of the entire grain-transportation logistics system with the view to make it more efficient, reliable and cost-effective.

"The question we all have to tackle is how to become more efficient," Bacon said. "It is about the competitiveness of Canadian farmers and about the reputation of the Canadian grain industry in supplying customers around the world. An initiative like this is designed to improve the performance so that we can come up with concrete results that improve that reputation."

Ritz said it was probably not possible to estimate the cost of the losses to Prairie farmers this year as they struggle to move a crop that produced more than 20 million more tonnes of grain in 2013 than in 2012.

Ritz said he refused to point fingers, and other industry leaders toned down the rhetoric of accusing the railroads of being unresponsive to their grain customers.

"Filling farmers' capacity needs and increased shipping volume means more business for the railways," said Gary Stanford, president of Grain Growers of Canada. "We hope to see action coming out of this meeting and look forward to continuing a direct dialogue with the railways."

But the approach of the five-year study, called Enhancing the Competitiveness of the Agriculture Supply Chain, is not going to come up with any quick-fix solutions.

Bacon said the focus of the review will be to enhance the sophistication of the system through technology, innovation and figuring out ways to ensure accurate and credible information so there can be performance measurement.

"We have a very complex supply chain in terms of the number of players involved," Bacon said. "For instance, if we look at container movement. Grains and specialty crops go to a trans-loading facility in Vancouver. The container has to be there, the steamship line has to be booked, the Vancouver Port has to be alerted so that product can get in. The pieces have to fit and the communication has to be linked. Currently there are improvements that can be made."

So while many are saying the railroads need to put more grain cars and locomotives on the system, Ritz said the review will take a holistic approach.

Mark Hallman, director of communications and public affairs for Canadian National Railway Company, agrees with that strategy.

"At the end of the day, the key to an optimal grain supply chain is having all supply-chain partners coming together to maximize end-to-end throughput on a consistent basis," he said in an email exchange. "Prompt car-loading in the Prairies, steady railway movements from the country to port and efficient car-unloading at port terminals are critical to solid hopper car fleet velocity so that the cars can be brought back to the countryside to meet new orders in a timely way."

Considering the size of the enterprise -- exports of grains and canola have increased to $21 billion in 2012 from $7.5 billion in 2000 -- the need for constant improvement and heightened sophistication in the system is not surprising.

Ritz said with Canada striking free-trade agreements with Europe and another one in the works with South Korea, accessing additional markets will not be worth as much for the Canadian agricultural sector if the logistics system is not up to speed to be able to take advantage of all those new opportunities.



Updated on Wednesday, January 22, 2014 at 7:05 AM CST:
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