DISTURBING NEWS IN THE GRAINS INDUSTRY There have been several unsettling news reports in the past few days about issues affecting the western Canadian grains industry. In the wake of last years multi-billion-dollar fiasco in grain handling and transportation, the Harper governments order to the railways to move certain minimum volumes of grain per week expired last month. It was replaced with a new order, involving less ambitious volumes, lasting until next spring. Given this years more modest crop, there will be a somewhat smaller volume to move this winter and that will take a bit of pressure off the system. But due to widely varying weather conditions through the fall, crop quality is also widely variable - meaning the logistics of assembling grain cars and trains across the prairies will likely be more complex. So were not out of the woods yet. The most recent expert calculations indicate costs and losses from last years mess totalled more than $5-billion. Farmers simply cannot afford a repeat of that sorry performance - especially since the fines the government promised for failures to meet the weekly targets seem to be largely rhetorical and unenforceable. The new order does not reflect the quality variability issue. It does not attempt to achieve any equity among shipping corridors west, east, north and south. The government mentions, but does nothing tangible about the needs of producer-car shippers or short-line rail operators. There is nothing to ensure decent service to domestic grain users. At the bottom-line, the grain handling and transportation system remains inadequate with little ability to cope with volume surges or adverse weather. Shippers remain captive with no competitive commercial alternatives and no legal recourse when the system fails. And threatened fines, to be paid to the government, have no real impact and are no substitute for liquidated damages payable directly to affected shippers. In a recent survey by RBC Capital Markets, more than three-quarters of shippers label the rail service they have received recently as just fair or poor. That level of dissatisfaction is way up from less than one-third of shippers who were complaining a year ago. The lingering consequence of transportation failures is the damage done to Canadas reputation as a reliable global supplier. Some excellent traditional customers for Canadian grain, like Japan, just walked away last winter. And there are growing signs of another troubling dimension to Canadian unreliability. Customer concerns are rising about defective grain quality issues. High quality and consistency used to be well recognized Canadian strengths. But following drastic cuts and other changes at the Canadian Grain Commission, weaker inspection systems are allowing serious mistakes on protein levels, weights and gluten. Canadas reputation is taking another hit. Finally, theres the news about the governments secret machinations to dispose of the vandalized remains of the Canadian Wheat Board. Among farmers, views about the CWB differ profoundly. But whether you loved it or hated it, surely the process of changing from the single-desk selling system should be intelligently managed. Instead, blinded by ideological rage, the Harper government has made no effort to maximize the return to farmers and taxpayers from the Boards demise. By eliminating the CWBs single-desk, the Conservatives acceded to what has been the US governments Number One demand in its trading relationship with Canada. The Americans disliked the Board because it was their toughest competition. Getting rid of it gives the US a big leg up in global markets. So what did Canada get in return for this huge trade concession? Absolutely nothing. Mr. Harper totally squandered what could have been a major bargaining chip. Canada gained nothing on guaranteed access to US markets, nothing on insidious country-of-origin labelling, nothing on approval of the KeystoneXL pipeline, nothing at all on anything. And thats just dumb. Compounding this blundering is the way in which the government is privatizing the CWB. The process is totally opaque. Theres no transparency or accountability - even though the Boards assets are derived entirely from its past marketing success on behalf of farmers, back-stopped by a federal financial guarantee. Theres no proper Annual Report or even audited financial statements. Barring some last minute change, the Harper government seems determined to gift the CWB, free-of-charge, to a US multinational grain corporation. Again, farmers and taxpayers will get nothing in return. And the premium Canada Brand in world grain markets will be dead.
Posted on: Fri, 05 Dec 2014 14:26:25 +0000
Trending Topics
Recently Viewed Topics
© 2015