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All Oils Are Not Equal: Canola Farmers Endure “Dismal” Rail Service

by on June 12, 2014

It’s the wrong kind of oil.

That’s the message that Canada’s two largest railways, CN and CP, have apparently sent to Canadian canola farmers.

In response to what the farmers are referring to as “dismal” rail service levels, they’ve added their voices to the chorus of dissent from prairie grain farmers in filing a formal complaint to The Canadian Transportation Agency.

The Canadian Canola Growers Association claims that Canadian National Railway and Canadian Pacific Railway have not fulfilled their obligation to move western Canadian grain and oilseed to market this crop year.

Feds Order Railways to Better Serve Grain Growers

Back in March, the federal government in Ottawa announced that they would be introducing an order-in-council that would force the railways to move a minimum of 500,000 tonnes of grain a week, (5,500 grain cars) or face fines of up to $100,000 a day if the requirement wasn’t met.

Transport Minister: Action Needed to Protect Grower’s Reputation

Said Transport Minister Lisa Raitt of the government’s action to prod railways to better assist the grain industry; “Canada is at risk of losing its reputation around the world as a dependable supplier of grain if the backlog isn’t addressed. We have to demonstrate that Canada can maintain an efficient transportation system which is capable of moving our grain to market. This is an issue of great significance and we have to address it in a timely manner.”

Agriculture Minister Gerry Ritz was even more blunt, simply saying that railway companies have “dropped the ball.”

So, it’s more than a little disconcerting that after receiving such scathing criticism, that the canola growers should find themselves having little choice but to seek help from Ottawa as well in getting their crop to market.

Rail More Concerned About Crude Profits

In contrast, the railways have been more than able to accommodate unprecedented increases in crude oil shipments. Shipments of oil by rail from the Alberta tar sands increased 9 times over a two year period.

CN says that transporting oil is a growing part of their business. Says CN’s Mark Hallman: “The economics of sending crude by rail is very powerful, it allows the producers to be able to capture the best profit margins for their product.”

Unlike, of course, prairie farmers that saw part of their crop left to rot in the field while they waited for rail service…

Referring to the quantity of crude being shipped through British Columbia, Hallman said that “We don’t talk about volumes.” Hallman said that wasconfidential, sensitive information to CN customers.”

Yes, given the concerns raised about rail service by the lumber industry, grain farmers, and canola producers, I can completely see why that would be a sensitive topic.

1,000,000 Barrels of Crude-By-Rail in 2015

However, James Cairns, vice-president of petroleum and chemicals for CN, during an interview for the industry’s Daily Oil Bulletin that planned rail facilities will allow for 1,000,000 barrels of crude PER DAY takeaway capacity from Canada by late 2015.

Randy Meyer, formerly of CN’s crude-by-rail division, and now VP of business development and logistics with Calgary-based Altex, (the company that pioneered crude transloading businesses in Canada) is apparently “annoyed” by the federal governments’ “consistent lobbying in favour of both pipelines,” (Keystone XL and Northern Gateway.)

Meyer notes that the feds rarely mention oil by rail. “That looks to me like government’s interfering in the free market,” he quipped.

Is Rail Meddling with Canola?

So, would that mean that rail has also meddled with the free market for canola farmers, given that a backlog of rail cars, unable to meet the need for increased service during a bumper crop year has contributed to a jump in canola stockpiles? According to Oil World (a food, not crude, organization) the resulting stockpiling of crop that hasn’t been shipped out has led to forecasts of a drop in global output of canola and a reduced harvest this season.

Canada is the world’s largest producer of canola.

Or, at least as long as they can get their product to market while big rail pursues its obsession with “the other kind of oil.”

 

xxx

 

Sources for this article include:

CBC News Saskatchewan online, “Ottawa orders railways to move grain each week,” March 7, 2014

CKNW News 1130 online, “More oil moving by train, some through BC: National Energy Board,” May 5, 2014

Vancouver Sun, “Rapeseed, sunflower harvests are likely to drop,” June 4, 2014

Junewarren-nickle’s energy group, online, “Crude-by-rail boosters say train transport best suited to moving heavy cargoes,” June 1, 2014

Vancouver Sun, “Farmers complain about train service,” May 27, 2014

 

© Copyright 2014 RailandReason.com

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3 Comments
  1. Representatives of the rail industry never fail to shout their claims that they are driving force of our economy & should not be hindered, yet in the same breath they will refuse to transport our grain. The only force I behold is their ability to drive their own profits!

    • trainjane permalink

      I agree with you Ed; it’s troubling to see that some rail customers seem to be more important (to the railways, at least) than others, particularly oil customers.
      There’s no doubt about the importance of rail to our economy, which is why it is vital that all rail clients receive the same level of service, rather than the preferential treatment that one industry (oil) has sure seemed to be getting over others.

      This is particularly important for “captive” customers, such as our grain farmers, who have no other way to get their products to market, and often, only one rail company to ship it for them.

      More competition – and choice – is needed for industries and businesses dependent on rail.

      It’s ironic that, while stressing its importance to the economy, that the impact of rail on communities in many locales is having what I believe to be a significant, negative effect on the economy. With more and more people having chronic sleep disruption due to late night rail activity, it’s my opinion that this is resulting in a marked loss of productivity on those impacted. We need a comprehensive study to determine the net effect that current rail practices are having in this regard and translate those findings into dollars.

      I think the resulting figure would be huge.

      • 7/2/2014
        Most arguments made from rail industry supporters & players such as Edward Arnold Burkhardt or Jeff Willsie are for the most part misdirection. Being ONE of the driving forces of an economy (as opposed to being THE driving force as they’d have you believe) does not support irresponsible behaviour, or put another way the irresponsible behaviour is not a requirement to being a driving force.

        What is required for our plight is political will. An oligopoly or monopoly require government intervention to level the playing field. The CRTC does this for the cell industry, Department of Finance for banking, etc, etc. The rail industry still employs locomotive technology of the 1970’s this tells me that regulation of this industry has been failing. I hate to use the cliché but if we can put a man on the moon rail companies can use rail lubricators & piston retarders to do the job & reduce squeal. They can purchase new locomotive to reduce pollution, etc, etc. Their failure to update & maintain equipment doesn’t just create noise pollution & threaten long-term health but also poses an immediate threat to our safety. At the MacMillan rail yard in Vaughan ON the TSB recorded 5 major incidents involving derailments & in some cases toxic chemical spills; the reports cited faulty equipment & lack of training in most of these.

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