Winnipeg Free Press - PRINT EDITION

Grain glut needs total solution

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Canada's two major railways were a convenient and familiar target when their ability to move grain this season was hit with a perfect storm, a record crop combined with one of the coldest winters on record.

Farmers and the grain companies howled in anger as their unprecedented product gathered dust in elevators and farm bins, even though the problem was more complicated than the idea Big Rail was once again ignoring producers and their agents.

The federal government responded to the problem politically, first with an order in council and then legislation mandating CN and CP rail to deliver more hopper cars or face stiff financial penalties.

The government has wrongly heaped all the blame on the railways instead of using the crisis to stimulate a much larger discussion about grain marketing and rail transportation in western Canada.

CN president Claude Mongeau told the Free Press editorial board Wednesday more regulation of the rail industry is not a solution. He said he prefers a collaborative approach to improving efficiency, but added if the government is intent on regulation it should regulate the entire grain-handling and transportation system.

Mr. Mongeau says grain companies must assume more responsibility for problems in the supply chain, including their failure to place orders for railcars earlier last year and their own lack of capacity for loading and unloading grain in a timely way.

The Canadian Wheat Board used to have a levelling effect on railcar distribution by ordering cars across the year, but that stopped when its monopoly ended two years ago.

Even if the board still enjoyed its monopoly on export grain, however, grain elevators would still be overflowing because the year was unprecedented.

The American system is more market-oriented and works better than Canada's in ensuring grain companies receive the railcars they need on time. But unlike Canada, where companies can order thousands of cars even if they are not used, grain firms in the U.S. pay for the cars they order, even when they are not used.

Nevertheless, U.S. farmers, who suffered bottlenecks this year for similar reasons, have also been complaining about the railways' inability to move their grain.

In North Dakota, for example, farmers have accused the railways of being more interested in moving oil than grain, the same baseless complaint levelled here.

Instead of picking on one component of the supply chain, Ottawa should organize a conference of all the partners -- farmers, marketing companies, terminal operators and railways -- to develop a comprehensive solution to the problem.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition April 10, 2014 A10

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