GOODALE: THIS IS THE GRAIN SYSTEM HARPER DESIGNED
Posted: Sun Mar 02, 2014 10:46 amGOODALE: THIS IS THE GRAIN SYSTEM HARPER DESIGNED
[ http://www.ralphgoodale.ca/blog/grain-s ... -designed/ ]
RALPH GOODALE’S REPORT - A commentary by the Member of Parliament for Wascana
goodale@sasktel.net February 28th, 2014
The western grain handling and transportation system has collapsed in failure this winter and that is squarely the responsibility of the Harper government. They designed it. They implemented it. It was entirely their idea. And they seem utterly incapable of fixing it.
The consequences of this breathtaking incompetence are painful. Millions of tonnes of grain sit unmovable and unsold on thousands of prairie farms. Grain shipments are months behind. Port terminals are half empty. More than 50 ships are waiting. Valuable customers like Japan have gone elsewhere. Added costs like demurrage and extended producer debt charges, lost sales and deflated prices will take some $5-billion out of western Canada’s farm economy this year, maybe more.
The Conservatives like to blame the railways, and no doubt they’ve done a lousy job. Railways say the weather has been too cold for their locomotives to work, but it gets cold every year. And if they needed more locomotive power or hopper cars, why didn’t they go lease them long ago. Why did CP Rail actually reduce its grain fleet in the midst of this mess?
There is nothing redeeming in the railways’ behavior. But here’s the key question – why did the Harper Conservatives design a system that put railways and grain companies in complete control, leaving producers totally at their mercy with no competitive alternatives and no legal recourse to get damages?
Clearly, there’s not enough grain handling and transportation capacity to move a better-than-average crop in a timely commercial manner. No one is coordinating the efficient use of prairie delivery points, car allocations, rail shipments, terminal utilization and ship movements. There’s no transparency. There’s no credible, comprehensive monitoring, measuring and public reporting on the activities of all the players in the system, or the results being obtained.
With the railways being a closed duopoly and grain companies a tight oligopoly, there’s no genuine “market” at work here. No competition. Farmers have no voice, no legal clout. No one in this system can stand-up and fight for producers’ rights. And that’s exactly how Stephen Harper designed it.
His minions say the real culprit is that legislated “Revenue Cap” that places some modest limitations on the amount of money railways can extract for moving grain in any one year. But getting rid of that Cap offers no assurance of better service. It’s only an absolute guarantee that grain freight rates will quickly double (to American levels), while farmers remain stranded as captive shippers.
Beyond emergency action to expand grain capacity in the system, provide more businesslike transparency and coordination (instead of a secretive, costly free-for-all), exploit all possible shipment alternatives (including through the US, if necessary), and shift at least some of the incremental costs this year onto the shoulders of the delinquents who have performed so badly – the Government of Canada should undertake at least two other initiatives:
- They should launch a completely up-to-date “Costing Review” to examine grain movement costs and revenues, and how they are being shared (or not) throughout the system; and
- They should amend their hopelessly defective Rail Service Legislation to provide a precise definition of “service levels”, ways to measure performance, and liquidated damages to farmers when performance fails.
At least this would be a start. -30-
[ http://www.ralphgoodale.ca/blog/grain-s ... -designed/ ]
RALPH GOODALE’S REPORT - A commentary by the Member of Parliament for Wascana
goodale@sasktel.net February 28th, 2014
The western grain handling and transportation system has collapsed in failure this winter and that is squarely the responsibility of the Harper government. They designed it. They implemented it. It was entirely their idea. And they seem utterly incapable of fixing it.
The consequences of this breathtaking incompetence are painful. Millions of tonnes of grain sit unmovable and unsold on thousands of prairie farms. Grain shipments are months behind. Port terminals are half empty. More than 50 ships are waiting. Valuable customers like Japan have gone elsewhere. Added costs like demurrage and extended producer debt charges, lost sales and deflated prices will take some $5-billion out of western Canada’s farm economy this year, maybe more.
The Conservatives like to blame the railways, and no doubt they’ve done a lousy job. Railways say the weather has been too cold for their locomotives to work, but it gets cold every year. And if they needed more locomotive power or hopper cars, why didn’t they go lease them long ago. Why did CP Rail actually reduce its grain fleet in the midst of this mess?
There is nothing redeeming in the railways’ behavior. But here’s the key question – why did the Harper Conservatives design a system that put railways and grain companies in complete control, leaving producers totally at their mercy with no competitive alternatives and no legal recourse to get damages?
Clearly, there’s not enough grain handling and transportation capacity to move a better-than-average crop in a timely commercial manner. No one is coordinating the efficient use of prairie delivery points, car allocations, rail shipments, terminal utilization and ship movements. There’s no transparency. There’s no credible, comprehensive monitoring, measuring and public reporting on the activities of all the players in the system, or the results being obtained.
With the railways being a closed duopoly and grain companies a tight oligopoly, there’s no genuine “market” at work here. No competition. Farmers have no voice, no legal clout. No one in this system can stand-up and fight for producers’ rights. And that’s exactly how Stephen Harper designed it.
His minions say the real culprit is that legislated “Revenue Cap” that places some modest limitations on the amount of money railways can extract for moving grain in any one year. But getting rid of that Cap offers no assurance of better service. It’s only an absolute guarantee that grain freight rates will quickly double (to American levels), while farmers remain stranded as captive shippers.
Beyond emergency action to expand grain capacity in the system, provide more businesslike transparency and coordination (instead of a secretive, costly free-for-all), exploit all possible shipment alternatives (including through the US, if necessary), and shift at least some of the incremental costs this year onto the shoulders of the delinquents who have performed so badly – the Government of Canada should undertake at least two other initiatives:
- They should launch a completely up-to-date “Costing Review” to examine grain movement costs and revenues, and how they are being shared (or not) throughout the system; and
- They should amend their hopelessly defective Rail Service Legislation to provide a precise definition of “service levels”, ways to measure performance, and liquidated damages to farmers when performance fails.
At least this would be a start. -30-