WHEREAS Alberta ’s economy depends on a reliable way of delivering grain shipments to market; and

WHEREAS there is insufficient railway capacity to ship grain products to port; and

WHEREAS the Government of Canada has committed to conducting a transportation study to find ways of addressing backlogs in grain shipments;

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties lobby the Government of Alberta and the Government of Canada to enact a short-term and long-term strategy to increase railway capacity for grain shipments.

Prairie farmers are reliant on railway transportation to get their crops to port. Food manufacturers also rely on rail for the delivery of farmers’ crops to keep their processing facilities operating. Rail service along the entire supply chain plays a critical role in ensuring that food is available for Canadian consumers.

Farmers are frustrated because, despite harvesting the best bumper crop in history in 2013, grain is backed up due to elevators not getting enough shipping to move grain to port. Carryover stocks for several of the grains will be large, which could mean farmers are not being paid for last year’s harvest until after spring seeding, translating into lost sales and a serious cash flow issue for many producers.

Reports indicate that there will be increased usage of rail for oil shipments, further exacerbating the issue of insufficient capacity. With improvements in crop genetics and farming practices, bumper crops will be the new normal. Farmers are anxious to learn if the railways are formulating plans to accommodate their immediate needs and if they are working on a long-term future plan to accommodate larger volumes of  grain going forward.

Since railways do not compete, they know that they will eventually move the crop without spending more money. Ship and terminal space is sitting empty at the Vancouver port while every elevator in the prairies is full. Railways have to accommodate the increase in production.

In January 2014, the Federal Minister of Agriculture announced that the Government of Canada is providing $1.5 million to help study the problem and come up with solutions. Once solutions are identified, further funding must be committed to enact short-term and long-term strategies that will alleviate the backlog in grain shipments and allow producers to get their product to market.

5-13S: Including Rail in Alberta’s 20-Year Strategic Capital Plan

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties work with the Government of Alberta to include rail infrastructure in its 20-Year Strategic Capital Plan for the province and that the Government of Alberta seek opportunities for private-public partnerships (P3s) for additional rail infrastructure in the province. 

DEVELOPMENTS:The AAMDC accepts this response from the Government of Alberta noting that railways fall under the jurisdiction of the federal government and private industry. The AAMDC is involved in a number of rail-based initiatives through FCM including proximity and crossing issues as well as safety.  Updates will be provided through member bulletins as required.

Alberta Agriculture and Rural Development and Alberta Transportation

The Government of Alberta (GOA) is aware of the difficulties faced by producers due to a shortfall in rail capacity and service during the past winter. Following the March 7, 2014 announcement of an Order in Council requiring railways to move a minimum volume of grain each week, the federal government passed the Fair Rail for Grain Farmers Act to further enhance measures to address the logistical challenges currently facing the grain industry across western Canada.

The GOA submitted policy options for the Fair Rail for Grain Farmers Act to the federal government and the new legislation incorporates some of the improvements recommended by the GOA. As well, the federal government has just launched the review of the Canada Transportation Act.  The GOA will make a full submission to the review outlining proposals to bring better rail service and increase rail capacity. Across western Canada, production and exports of a wide variety of commodities are expected to grow, and the demand for rail service will increase.

The GOA has also created a cross-ministry Rail Transportation Task Team to work with rail shippers of all commodities to find options to improve rail service and increase rail capacity. The task team has begun meeting with key shippers and shipper associations to better understand their issues and concerns relating to rail service. 

The GOA is also working with the other western provinces to determine future transportation infrastructure needs, as well as potential legislative and regulatory changes to meet the increasing demand for rail service as the Western Canadian economy continues to grow.

The Government of Alberta has expressed interest in working with the federal government to improve the capacity and reliability of rail service for the agricultural sector. The federal government’s Fair Rail for Grain Farmers Act presented an effective short-term solution to the 2013 grain backlog, mainly by imposing temporary grain hauling quotas and penalties for non-compliance upon Canadian National and Canadian Pacific railways. The AAMDC also appreciates the Government of Alberta’s willingness to work with industry and other western provinces to address supply chain issues.

The final report of the Canada Transportation Act Review Committee was released in March 2016. The report includes several recommendations related to preventing a recurrence of the 2013 grain by rail backlog, including the following:

• An end to the current cap on the rates railways are able to charge for hauling grain by eliminating the Maximum Revenue Entitlement program
• A return of interswitching radiuses from 160km to the 30km radius that was used prior to the 2013 backlog
• Adding producer cars to the definition of “shippers” under the provisions of the Act
• Implementing incentives to encourage railways and producers to modernize their fleet of grain cars, as many are approaching retirement age in the next ten years

At this point, it is unclear how Transport Canada will review and implement the recommendations, or what impact they will have on agriculture producers. While some of the recommendations will clearly improve the movement of grain, others, such as the removal of the Maximum Revenue Entitlement Program (MREP), have a less clear benefit for the agriculture industry, as the higher prices railways will be able to charge for hauling grain will likely increase its priority during times of high demand, but assumes that agriculture producers are able to pay higher rates to have their products shipped, and compete with other commodity groups, such as oil and gas, which may not be the case. The AAMDC, along with other members of the Western Canadian Municipal Association, has formally opposed the removal of the MREP.

The AAMDC is in the process of analyzing the recommendations and looks forward to information from the Government of Canada on how the recommendations will be reviewed and implemented. 

The AAMDC deems this resolution to be Accepted in Principle, pending the review and implementation of the Canada Transportation Act review recommendations.