Grain Growers Caught in The Crossfire

Tuesday, September 24, 2024

Rail strike uncertainty came at the 'worst time' for our industry. So how & why did we get here?

By Matt Jones

At press time, Canadian National Railway (CNR) and Canadian Pacific Kansas City (CPKC) were saying they would lock out employees unless they can reach deals to avoid a potential rail strike.

This followed Teamsters Canada Rail Conference (TCRC) members recently voting to authorize strikes, and a more-recent ruling by the Canada Industrial Relations Board (CIRB) that “a work stoppage would not cause an immediate threat to public health and safety.”

The CIRB ruled on Aug. 9 that commodities transported on railways are not considered essential services because “reasonable alternatives” exist in the form of long-haul trucking. That ruling created the likelihood of a strike or lockout by Aug. 22.

(The TCRC’s collective agreement expired at the end of 2023 but was extended while the parties negotiated. The overwhelming majority of the TCRC members who voted favoured going on strike with the aim of securing better wages, improved conditions and flexibility on fatigue management.)

A rail strike could significantly impact the grain sector in the Prairie provinces. But even if a deal is reached before this magazine reaches your farm, larger questions remain, and will linger.

How did this situation develop? Have reputations or relationships been damaged even before any strike happened? How might this down-to-the-wire drama be avoided in the future?

Caught in the crossfire are Prairie grain producers, who rely on the railways for 80 to 90 per cent of their grain exports.

Shannon Sereda, director of government relations, policy and markets for Alberta Grains, notes that the railways are the only logistic option that makes sense.

“It’s not feasible from a cost standpoint to truck grain, so there’s quite literally very few options besides rail to get their grains to the elevators,” says Sereda. “If the elevators can’t accept the grain if rail cars aren’t arriving, then they’re just unable to deliver even to the local elevator.”

Jonothan Hodson, vice-chair of the Manitoba Crop Alliance and part of the latest generation of his family to run Rosebank Farms, says this potential strike is particularly concerning since it encompasses both railways at the same time.

“Strikes have happened in the past, but it’s very rare that both of them are affected at the same time, so that’s extra concerning,” says Hodson.

“In many cases, farmers are only being served by a single rail line anyway,” adds Sereda. “But this would mean that it’s a full system shutdown with both CPKC and CNR being in negotiation with TCRC. This one is particularly concerning.”

Particularly bad timing

Jake Leguee, board chair for the Saskatchewan Wheat Development Commission and managing partner of Leguee Farms, adds that the timing is particularly poor since this is a bountiful year after a few less productive seasons.

“All the last three years have been quite dry across most of the Prairies,” says Leguee. “This one, we’re still dry, but probably closer to normal. So we have more grain to move, and there’s also more other types of products moving. Now, right when the harvest is going to kick into gear, we have a lot of contracts that get delivered off the combines during harvest, an enormous volume that needs to go. And now we’re going to have a strike, so this is kind of a worst-case scenario. It’s incredibly unfortunate timing.”

With the CIRB ruling that TCRC members were authorized to strike as of Aug. 22, the potential strike was pushed into an even more damaging time.

“As you can imagine, as we creep into August we’re starting to get to prime grain delivery time at the end of harvest,” says Sereda. “And there are some expectations that it may be an early harvest this year.”

If a strike does run through harvest and shipping times, Hodson is concerned about farmers like himself having enough storage space to hold on to their grains until the strike is resolved.

“How are you going to store that? Is there a potential for grain spoilage if you don’t have enough bins?”

A further issue is not just the strike itself, but also the ‘catch-up’ period that follows the strike. After a strike is resolved, many commodities would be trying to get caught up at the same time, likely creating logjams in the system.

“And if this is during harvest, it can really compound the problem,” says Hodson. “For example, the Jasper fire. It only shut down the railway for two days, but once it started, they were only running at half-speed. How long will that last? (Natural disasters) are going to happen. But it’s these other events that get frustrating.”

While exports are the most obvious area of discussion, imports would also be affected.

Hodson notes that, while not as high a percentage as the grain exports, a significant amount of fertilizer and propane are imported via rail.

What can producers do?

Hodson laments that there are few things that growers can do to insulate themselves from the impacts of a potential rail strike, other than simply having enough storage to hold on to your grain and hoping that it doesn’t spoil before the strike is over.

With both railways potentially affected by the strike, there isn’t an alternative rail option, even for the small number of producers who would find it feasible to switch to the other. And even if farmers could somehow will a trucking company into existence on short notice, it would be economically impossible.

“That’s why we have railways,” explains Hodson.

“An overlying thing that concerns me as a farmer is we strive to produce a very high-quality product. It bothers me that our international reputation takes a hit every time there’s a strike and somebody can’t get the product they’ve bought from Canada.

“There’s always alternatives; there’s always a lot of places they can buy from, and get it in a more timely manner if these strikes are going to prolong.”

Leguee says that farmers have long memories, with talk of rail strikes dredging up painful memories of the railway labour disputes of 2013 and 2014. Unfortunately, the sellers and distributors who handle Canadian grains have similarly long memories.

“We are not considered a reliable shipper anymore by most of our customers, and that’s extremely concerning,” says Leguee. “We’re a country that is close to the top 10 economies in the world and we can’t even get our products to market reliably. That’s really concerning for those of us in the export industry.

“Not only does this hurt our reputation today – it’ll hurt our reputation for a long period of time.”

While there is little that can be done on the farms themselves, Sereda encourages producers to get in touch with their local politicians about the issue.

And every day that the railway is disrupted means several more days of backlog.

“One day of backlog has reverberating effects on the entire supply chain, and it can’t be understated how much disruption, even a small break in service, causes,” says Sereda.

“So we encourage our farmers to ask their local MPs and MLAs to advocate on their behalf for early intervention.”

Sereda also points to mechanisms that the federal government can utilize under the Canadian Labour Code to intervene.

“They obviously want to respect the collective bargaining process, and we understand that, but it has to be timely intervention in order to save the system from the same types of disruption that have hurt our reputation in past years.”

“What we’re doing right now isn’t working,” adds Leguee emphatically.

“We’re seeing these strikes come up basically every year, sometimes twice a year.

“These strikes are a huge problem, but it doesn’t seem like our government takes them that seriously. Our country is as successful as it is because of exports – whether that’s food or energy or other products. All the wealth that we have built in this country comes from that. It doesn’t seem like the government is taking that as seriously as they should be.

“It’s one of the most serious economic issues that faces this country.” BF