Canada Markets

Canada's federal government announced on the weekend that it will not extend the Order in Council which has mandated weekly gain market volumes for Canada's two railways for just over a year. While the original order was announced in March 2014, it has since been extended, renewed and extended again as recently as last November.

Federal Agriculture Minister Gerry Ritz stated in a government press release, "Our government took decisive action to protect Canadian farmers, our economy and our reputation as a reliable exporter. The order in council has done its job and can be reinstated if required. Our government will continue to monitor performance and encourages the full supply chain to be more collaborative in the long run." The press release goes on to suggest that mandatory minimums could continue to be an option if "the grain supply chain compromises farmers' livelihoods, the economy or Canada's international reputation as a reliable shipper."

Perhaps the government has a case. On March 27, Quorum Corporation released its first Grain Monitoring Program Report covering January. Quorum is a firm tasked by the federal government to report on grain transportation performance. Primary elevator shipments for the first six months of the crop year were 21 million tons and represent record movement. Shipments from ports are 31% higher than last year and 25% higher than the three-year average, with both CN and CP reportedly exceeding their mandated volumes by 5.5 mmt.

This data could be viewed to be consistent with the railways' own statements, with CN CEO Claude Mongeau stating, "Contrary to claims by the new Ag Transport Coalition that CN is somehow failing to meet demand, we know we're responding very efficiently to all the demands from our customers."

Then there is the Ag Transport Coalition's data. This group, made up of grain shippers, commodity groups or associations and oilseed processors and supported with federal/provincial funding representing 90% of grain shipped, paints a far less rosy picture of the situation facing the industry. The most recent data suggests that the two railways combined spotted just 37% of the cars ordered for week 30, or the week ending March 1, which was the best week reported in the past seven weeks since the report was first released. Up to March 1, the railway failed to spot 23,295 hopper cars, amounting to 11% of the year-to-date demand, while just 43% of the cars ordered year-to-date were spotted in the week ordered, a number which has fallen 2% since the first report was released for week 24. This report also keys on difficulties faced in certain corridors as the railways have focused on directional shipping that will allow for quickest turnarounds and best allow them to meet their mandates.

So we have one government-funded report suggesting things are good, while another report, also partially funded by government which is even more up-to-date suggesting that challenges continue. Who decides at what point farmers' livelihoods are affected before the government wades back into the waters? Who draws the line between a lack of service and a "missed opportunity," as some of the media has used to describe the Ag Coalition's data?

Further muddying the waters is perhaps an opinion piece written by Robert Arnason for the Western Producer titled "Have farm groups become federal cheerleaders?" Arnason discusses the regular use of affirmative verbs such as "applaud", "commend" and "congratulate" in communication strategies used by certain commodity groups used in response to federal government announcements. The question remains whether these groups will take the government to task on this or any issue even when it's in the best interest of producers.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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