The Right to Producer Car Access

Background

The right to load producer cars was established because of railways acting with elevator companies to prevent farmers from loading their own cars.  The right was first legislated in the 1900 Manitoba Grain Act, and then strengthened in the 1902 Sintaluta Case when the Territorial Grain Growers won a lawsuit against the CPR.  Most recently legislated access to producer cars was embodied in the Canada Grain Act 1970 and reaffirmed by Emmett Hall, chair of the Grain Handling and Transportation Commission (1975-77).

Following the Sintaluta case, producer car usage reached a high point of 51,000 by 1912-13.  Usage of producer cars declined to low ebb by the early 1940s and remained low until the late 1970s when elevators became congested with non-Board feed grain and later as shipping canola by producer car to be priced at port became popular.  (See Allan Dawson, Manitoba Cooperator, Sept. 17/09) 

At least three major developments account for this historical ebb and flow of producer car usage – the degree of regulatory intervention by policy makers to protect the interests of primary producers, the level of direct market intervention through producer ownership of grain handling facilities, and the expansion, or contraction, of the grain handling system.

1. Enacted in 1900 because of farmer dissatisfaction with unfair treatment in an unregulated market, the Manitoba Grain Act has been described as the ‘Magna Carta of western farmers’.  Building on that success, farmers continued to work through their organizations to influence policy makers to end abusive weighing and grading practices, which culminated in the Canada Grain Act of 1912.  That Act set up the Board of Grain Commissioners, which ultimately became the Canadian Grain Commission (CGC) in 1971.  The CGC is mandated to protect producers’ interests through the establishment and enforcement of grading standards for farmers’ grain deliveries.  We can see that farmers, once granted the right by the 1902 Sintaluta case, turned to producer cars when the need was greatest.  It may be more than a coincidence that the peak of 51,000 occurred in the year the Board of Grain Commissioners was created, establishing fair practices for the grain buying market and enforcing them.

2. Formed in 1906 out of the Territorial Grain Growers that had won the Sintaluta case, the Saskatchewan Grain Growers Association (SGGA), immediately created the Grain Growers Grain Company (GGGC).  The GGGC eventually grew into two steams of cooperative producer presence in the marketplace – the creation of Saskatchewan Co-operative Elevator Ltd. (SCEL) in 1911 and, through GGGC amalgamation with the Alberta Cooperative Elevator Company, into United Grain Growers in 1917.  Later efforts to establish farmer controlled grain pools after World War I resulted in the creation of Saskatchewan Wheat Pool (SWP) in 1924, which purchased the SCEL system in 1926.  Ownership of their own companies (SWP and UGG) gave producers direct control over weighing and grading practices in the lion’s share of the grain handling market, reinforcing the protection of producers rights established through the legislated standards over the years that eventually became the responsibility of the CGC.  

3. Producer car usage was also affected as the commercial grain handling and transportation system reached out to grain producers through an expanding branch line network and the rapid growth in the number of primary elevators.  By 1950, there were more than 3,000 elevators in western Canada, the majority producer owned, providing localized service and contributing to declining interest in producer cars as their use ebbed in the 1940s.

The rapid rise, then slow decline, in producer car loadings is directly correlated with the advancement of statutory protection of producers’ interests, the growth of direct producer ownership of facilities in the grain handling system, and an expanding commercial system.  The flip side of this correlation also appears to be true, i.e. that the recent rise in producer car loadings is an outgrowth of deregulation of freight rates and, to some extent, of grain standards and CGC involvement, the elimination through privatization of most of the direct producer control over weighing and grading through producer ownership, the abandonment of branch lines, and the rapid consolidation of the primary elevator system. 

As of October 30, 2009, we have a total of 316 primary elevators in western Canada compared to about 2,750 as recently as 1970 (Encyclopedia of Saskatchewan) with two major outcomes:  a) hauling distances and scheduling demands have risen dramatically; and b) most of the 316 elevators (79%), are owned by six private, non-producer companies, reducing competitive options for producers.  Both of these outcomes have increased the value of producer car loading sites.  At the same time, branch line abandonment has stimulated investment in shortline railways to fill the void, for which producer cars are virtually the only option available to producers.

Not surprisingly, over the past 10 years producer car use has risen dramatically, as measured by shipment of CWB grain, up from about 2,850 in 1998-99 to a record of 12,457 in 2008-09.  

The Issue: CN Delisting 53 Producer Car Sites

Situation

Process

Analysis


         
  •  The 60 day notice is inadequate.
 
  •  There is no provision for public discussions.
 
  •  There is no provision for producer participation in the decision making.

Acting on Behalf of Producers

Policy Implications

In essence, the universally acknowledged right to producer cars is no right at all if there is no practical way for producers to access loading sites that not only meets their individual business needs but serve the system as a whole.  This principle is becoming more and more important as rationalization of system continues through grain handling consolidation and unilateral decisions by the railways like the CN delisting, not to mention the potential impact of further grain marketing deregulation. 

It is important to note that, prior to the current CN delisting, some 55 producer car sites were delisted by the two railways in the previous four years.  The network of sites is being changed as we speak and the practical right of reasonable access is being eliminated by serial cuts to the system without consideration of the overall impact, especially potential future needs.  Piecemeal changes to the overall configuration of producer car sites through ad hoc and self-interested decisions by the railways will not serve the future needs of all stakeholders, including non-agricultural businesses in rural areas that use such sites.  It is also noteworthy that rural development in the province may be hampered by continuing site abandonment since ready access to a public loading site might be a deciding factor for those seeking to establish businesses in rural areas. 

There is need to go beyond the narrow issue of how producer cars are delisted by establishing a process and/or responsible agency for recognizing the role of producer cars in the system and regulating how they are managed and maintained.  We need a plan for keeping a serviceable network of producer car sites and proactively managing them that would achieve at least the following outcomes:

Action Taken

APAS, KAP, and WRAP have jointly asked the Commons Standing Committee on Agriculture to hear these recommendations about producer involvement in managing the future network of producer car loading sites.  This action is consistent with the fact that we already have a commitment (Manitoba Cooperator, September 17/09) from the spokesperson of the Minister of State (Transport) that the Agriculture Committee will be asked to re-examine federal legislation to ensure it meets producer car shippers’ needs. 

APAS, KAP, and WRAP have jointly written the Minister of State (Transport) asking that the CN decision to delist 53 producer car sites be reversed and that the many issues of public access and railway service to producer cars and their sites be examined by the Rail Freight Service Review.

These actions are consistent with transportation related resolutions passed at the APAS mid term meeting, December 4/09:


 

 

Breaking News!

December 8, 2009

On December 8, the Agriculture and Agri-food Committee agreed on the following motion:  

“That the Committee recommend to the Minister of Agriculture and Agri-Food and the Minister of Transport, Infrastructure and Communities that the Government of Canada take such steps, commence such inquires and/or amend such Canadian legislations or regulations as may be required to forthwith prevent the delisting and subsequent closure, for which notice was given by Canadian National, of 53 designated producer car loading sites in Manitoba, Saskatchewan and Alberta and the removal of the shunt lines providing service to such sites, for such period of time that the Government of Canada, in its opinion and in consultation with all stakeholders, determines advisable and in the best interest of all concerned.” 

Click to download the Letter sent to the Standing Committee by APAS/KAP/WRAP regarding Rail Freight Service.

To learn more about Producer Shipper Cars, click [HERE] to review the presentations made to the delegates at the 2009 APAS Winter Mid Term Meeting by: