Promoting Canadian Oats

Canada’s grain, oilseed and special crop farmers critically rely on rail transportation. Every order for a grain hopper car counts. In a complex supply chain, spanning an average of 1,520 kilometres, the ability of the railways to get agricultural products to an export position is crucial to every player in the value chain – especially to the farmer.

Rail is the most economical and efficient way to ship bulk grain. Unfortunately, Canada’s rail system is not consistent nor reliable and has not proven to be adept at handling the grain industry’s growth. For example, 2013’s record-breaking harvest should have resulted in a positive outcome for the grain industry, but subsequent poor rail performance threatened our reputation as a reliable supplier of quality products, and compromised the livelihoods of farmers and the growth of the Canadian economy.

In addition to the MOGA AGM, there will be an additional session dedicated to oats at the CropConnect Conference.

Location: Victoria Inn Hotel and Convention Centre, Winnipeg, MB
Date: Thursday, February 11, 2016
(As part of the CropConnect Conference)

The Maximum Revenue Entitlement (MRE), often referred to as the “revenue cap”, has been in effect since August 1, 2000. It is a dynamic and elastic regulation that ensures the two major railways derive a profit and are compensated for their investments related to transporting Western Canadian grains to export positions. The complicated nature of the MRE causes a great deal of misunderstanding about how it works and perpetuates a number of misconceptions about rail service in Canada. Below we set the record straight on the MRE.

Myth 1: The MRE sets a fixed shipping rate for grain shipped to a port
This is not the case. In fact, railways can apply differential rates to regulated grain movement as long as the overall ‘average’ revenue per tonne, as established under the MRE, is not exceeded. It is proportional, in that the more grain moved, the more revenue earned. In the 2013-14 crop year, the two major railways moved almost 38.5 million tonnes of regulated grain, with an average haul of 1,520 kilometres earning them $33.69 per tonne for a combined revenue of almost $1.3 billion.

but Rail Service Must Respond to Market Demand

Our reputation as a global supplier of food and feed products is at stake.
The market for Canadian grains, oilseeds and special crops is global. The domestic market is not large enough to consume the majority of Canada’s agricultural production; we must export. Our consistent high quality, assured safety, and trusted Western Canadian Grain and Oilseeds Exportsreputation sets the benchmark that our competitors strive for. Transporting our product from farm to customer requires a complex supply chain with multiple actors to operate in a timely, efficient and cost effective way. Unfortunately, Canada’s trading partners and competitors have taken notice of our transportation challenges. When grains and oilseeds are not delivered in full quantities on time, it means lost sales domestically and internationally. To safeguard Canada’s reputation into the future, we must ensure our global customers that our domestic supply chain can deliver on time, every time.

Movement to our neighbours needs priority

The challenges faced by Canadian oats serves as an example of agriculture’s difficulties shipping to our closest customers.

Making our morning oatmeal is a North American ritual. Canadian oats supply companies in Canada, the U.S. and Mexico with great product. Indeed many Canadian crops are integrated into the milling, malting and processing businesses right across the continent. Surprisingly then, for a country so heavily dependent on trade with the U.S., our grain transportation system continues to struggle to make our only neighbour a priority, despite the demand from both America and Mexico.

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