Profitability and farming

When it comes to farming, at least in terms of Prairie grain and oilseed producers the issues which impact profitability are many.

Some such as the way to market grain -- the age old Canadian Wheat Board debate -- are part of the coffee shop culture of farming communities for decades.

Ditto the weather.

Few grain farmers do anything before looking out the window each morning to gauge the weather, and what its impact might be on their crops.

While well removed from their ability to impact it, farmers are also keenly aware the value of the Canadian dollar in comparison to the currency of other countries impacts their bottom lines.

All of the above things play a role in determining grain prices.

But when it comes to affecting how Prairie farmers operate, and how much they realize in returns, there is another major factor which often seems set on the back burner, and that is grain transportation.

When the old 'Crow Rate' a transportation subsidy was eliminated by the federal government it seemed to take the issue out of the limelight.

Yet Prairie farmers remain tethered to the railroads as the only viable way to get export grain to market.

In Canada, outside a few privately held short-lines, that means relying on CP and CN rail companies.

By the existence of two companies there remains at least a mirage of competition, but few communities can boast of service by steel belonging to both.

Most lines are singular ribbons of steel with a community left to deal with whichever rail line still serves them. That means the grain handlers on the line and the farmers along it too.

The loss of the Crow, the rationalization of grain handling companies to a network of high throughput facilities which often sit in isolation of close competition, and the closure of branch lines by the aforementioned rail companies have meant significant changes in grain transportation.

The change has meant grain hauled ever farther from farm gate to elevator in ever larger trucks, and that has raised havoc with roads. That has meant grain once rolled on railroad steel is now hauled farther on grid roads and highways, with local municipalities and provincial coffers covering the cost of upkeep.

Still the railways are critical in getting grain to export ports leaving farmers with no viable alternative since local alternative markets for most grains simply do not exist.

So it is with more than some interest farmers should be following Bill C-52.

In what is an increasingly rare situation MPs unanimously approved the government's Fair Rail Freight Service Act.

The Act gives shippers the right to a level-of-service agreement with railways.

Once fully-enacted the new Act could offer producers a new level of protection in terms of having some assurance of not only service, but the level of service.

Bill C-52 requires carriers to entertain a request from a shipper to negotiate a level-of-service agreement, and more importantly would create penalties if either side does not live up to the commitments.

Farmers have long thought the rail lines often fell short of doing their best for farmers in favour of serving other customers, and negotiated contracts could finally make the rail companies more directly accountable for services.

Given the reliance farmers have on rail services Bill C-52 could be one of the most significant steps toward better rail service in decades.