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Dictating Grain Movement - Political Brilliance

- Wednesday March 12, 2014

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David Walker
Edmonton, AB
Canada
phone: +01 780 434 7615
email: davidw@open-i.ca
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The federal government's decision to dictate grain movement by the railways is political and unlikely to have much impact on the railways or anybody else. It is, therefore, difficult to argue against it on any but a philosophical basis. The timing is without doubt brilliant and the costs minimal. (540 words)

It has, of course, been tradition for Prairie farmers to blame any marketing challenge they face on either the railways or the Canadian Wheat Board, depending on their politics. Both were effective monopolies at most Prairie locations. And with the latter just a memory, the former is taking most of the blame - "most" rather than "all," as some are blaming the absence of the single desk on their challenges.

There is, therefore, nothing new about the politics. And one can have sympathy for farmers, but the finger pointing this winter has hardly been constructive.

The details of the recent federal government dictate are simple. A federal order-in-council ordering the two railways to move a million tonnes of Prairie crops a week with penalties of $100,000 per day for non compliance. Note the nice round numbers which everyone can remember easily.

The supporting legislation, section 47.(1) of the 1966 Canada Transportation Act, which reputedly enables the order-in-council - cabinet decision, is far from unambiguous in this instance. Justification for taking "steps" is that "… an extraordinary disruption to the effective continued operation of the national transportation system exists or is imminent."

But the reality is the system, by the objective criteria of bulk exports, has performed relatively well since the abundance of supplies emerged as a challenge after harvest. Bulk exports of grain and oilseeds have been matching those of last year and have been running ahead of the 1990-91 record year. And, assuming farmers choose to continue delivering grain to challenge the capacity of the system during the spring and summer, a record will be set for bulk grain exports surpassing by a wide margin the rather old record.

The only "extraordinary disruption" appears to be a very large Prairie harvest. No other such was mentioned in the joint press release of the federal Transport and Agriculture departments.

Whether the order-in-council would stand up to a legal challenge is mute. The railways have four weeks to ramp up their shipments with spring weather certainly more of a factor assisting with this than the order-in-council. Four weeks hence road bans will be in place, field work will have started, with a resulting lull in farmer deliveries. The limit of available grain for shipments will surely restrict movement with the very indicative sight of hopper cars waiting for grain in the country. This will be the cue for the federal government to proclaim the success of the order-in-council.

But what will happen when farmers have finished seeding and spring field work, and turn their attention to marketing grain again in June? Conveniently the legislation limits the effect of the order-council for no more than 90 days. So even if the challenges of the winter return in the summer, the federal government will have an out.

What a political triumph and at next to no cost to the tax payer! You don't see such brilliance every day.

David Walker
March 12, 2014


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