Thank you and good afternoon, Mr. Chair and members of this committee. My name is Rick White. I'm the CEO of the Canadian Canola Growers Association. Thank you for inviting me here today to contribute to your committee's investigation into the current grain transportation backlog.

The Canadian Canola Growers Association is a national association governed by a board of farmer–directors that represents the voice of Canada's 43,000 canola farmers from Ontario west to British Columbia. In crop year 2017-18, Canadian farmers harvested an estimated 21.3 million tonnes of canola, and that is an all-time record.

Canada is the world's largest exporter of this highly valued oil seed, and we grow a truly global crop. In any given year, over 90% of Canadian canola, in the form of the raw seed or the processed products of canola oil or canola meal, is ultimately destined for export markets in more than 50 countries around the world.

Canola farmers critically rely on rail transportation to move our products to customers and keep those products price competitive within the global oilseed market. We have no alternative. The competitiveness and reliability of the canola industry, which currently contributes over $26 billion annually to the Canadian economy, is highly dependent on the supply chain providing timely, efficient, and reliable service.

Last year, Canada's railways transported over 50.7 million tonnes of grain originating in western Canada. It is a complex system, but we need to make it work to the benefit of all parties and the broader national economy as a whole. Farmers occupy a unique position in the grain supply chain, and this is what fundamentally differentiates this supply chain from that of other commodities. Farmers are not the legal shippers, but we bear the cost of transport, as it is reflected in the price we are offered for our products from the buyers of our grains and oilseeds, who are the shippers.

Simply put, farmers do not book the train or boat, but they ultimately pay for it. Transportation and logistics costs, whatever they may be at a point in time, are passed back and paid for by the farmer. Transportation of grain is one of several commercial elements that directly affect the price offered to farmers across western Canada. When issues arise in the supply chain, the price farmers receive for their grain can drop, even at times when commodity prices may be high in the global marketplace.

Another transportation-related issue for farmers is that until their grain is delivered to the buyer, they are not paid. Cash flow depends on grain delivery, regardless of the terms or dates that may be specified on a contract.

When transportation issues disrupt the typical commercial flow out of a bulk elevator or process facility, it affects the ability of the buyer to accept the contracted grain in the agreed-upon window, as there may be no physical space available. When this becomes highly unpredictable or there is a sustained lack of rail service, weeks or months in length, the reverberations extend back directly to the farm gate. It also extends forward to final purchasers in export markets, as grains do not arrive when planned, damaging the reputation of Canada as a solid and dependable source.

This is a primary reason that western Canadian farmers have such an interest in transportation: it directly affects personal farmer income.

Beyond that, farmers critically rely on the service of Canada's railways to move grain to export position. The last several years of reasonably good overall total movement and relative fluidity of the supply chain should not lessen our focus on seeking to improve and do better, as a sector and a nation, as fundamental issues continue to exist.

The current transportation predicament can essentially be grouped into three related but separate issues. The first is that the current rail service issues have created a backlog of grain. The second is the need for immediate government action, and third is the linkage to Bill C-49.

Starting with rail service, one of Canada's class I railways has incurred what we can politely characterize as a system-wide sustained operational failure on its network. As it has conceded, this was largely a problem of its own internal business forecasting and planning, which then was exacerbated by the effects of annual winter operations and various other disruptions.

The other has had better performance overall this year, but at times still at unacceptable levels. The dismal service level sends signals to elevators to not accept grain and in turn to producers to not ship grain. Producers who need to pay bills and purchase inputs for seeding cannot do so, at no fault of their own, and there are no options. Poor rail service causes disruptions in the market for producers, for shippers, and for our export customers. The level of service seen over the past period has been simply unacceptable.

In terms of the second issue, the role for government starts with a recognition that Canada is served by two major railways that operate in essentially monopoly positions. There are no alternatives to move our large volumes of grain. Governments need to play a role in balancing the power of these railways. We were pleased that Minister MacAulay and Minister Garneau have directly communicated with the railways and demanded an action plan, but this should not be needed. Rail should move regularly and predictably on a permanent basis. Bill C-49 can help in that regard.

For farmers impacted by the poor rail service, cash flow can be a problem. A proactive policy measure available to government could be to increase the maximum limit available under the well-established federal advance payments program. The increase would expand farmers' access to competitive financing while the backlog clears the system, maintain flexibility in grain marketing and farm management, and be at no cost and low risk to the government.

The program maximum is currently set at $400,000. Aside from the transportation challenges being discussed today, a compelling business case for an increase already exists. Since the limit was last set in 2006, farm size and demographics have evolved, farm expenses have grown, inflation has increased, and the grain marketing environment has become more volatile. A limit increase would work to ensure that the program remains relevant and continues to help farmers finance their operating requirements, especially in times like these. Increasing the limit would provide an additional tool for farmers to manage cash flow and finalize 2018 production plans, with spring seeding close on the horizon.

The railways have committed to take steps to improve service, with action plans already set in motion to obtain resourcing. With winter almost over, we expect to begin seeing service improvements in the coming weeks, but an increase to the limit under the APP could offer a tool to help farmers who have been directly affected by the current backlog.

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