The statement was released Monday afternoon after a chaotic day which saw Finance Minister Chrystia Freeland resigning from her post hours before presenting the document.

The 2024 budget predicted Canada to have $40 billion deficit for 2024. That number has increased by $21.8 billion, according to the fall economic statement.

There are only a few mentions of farming and agriculture in the 270-page document, including a proposal of $4.3 million to the Canadian Food Inspection Agency over three years. An investment in biofuel production will also provide a boost to the agriculture sector, the statement reads.

Agriculture is also given a mention in the section Leveraging AI to Boost Public Service Productivity, as Agriculture and Agri-Food Canada (AAFC) is using a chatbot to inform farmers on available services.

The federal government is predicting a deficit of $48.3 billion, or 1.6 per cent of GDP, in 2024-25.

The economic scenario analysis portion of the statement examines several uncertainties in Canada’s future, including the impacts of the incoming U.S. administration.

The statement’s “downside scenario,” the less optimistic of two alternative economic scenarios presented in the document, sees growth stall and the labour market continue to weaken. This scenario would lead lower consumption and demand, the statement said.

In this scenario, the federal budgetary balance would deteriorate by an average of approximately $6 billion per year, and add 1.3 percentage points to the federal-debt-to-GDP ratio in 2029-30 compared to the same year of the economic statement.

In the statement’s “upside scenario,” Canada sees supply improvements and a reversal of GDP per capital decline. This could translate into higher commodity costs, benefiting Canadian producers. The budgetary balance would improve by an average of approximately $9.2 billion per year, and the federal debt-to-GDP ratio would end up 1.6 percentage points lower than the 2024 Fall Economic Statement’s forecast for 2029-30.

However, “Given the importance of trade to the Canadian economy, the uncertainty surrounding North American and global trade policies suggests that the balance of risks to growth are tilted to the downside,” the statement said.

—Updated Dec. 19. Corrects story to say that the economic statement includes ‘few’ mentions of agriculture, not ‘no.’ Adds details throughout.

The post Fall economic statement fairly quiet on agriculture appeared first on Farmtario.

Planned changes to the capital gains inclusion rate also drew specific concern and attention from the House of Commons’ agriculture committee.

In a May 27 letter to finance minister Chrystia Freeland, agriculture minister Lawrence MacAulay and national revenue minister Marie-Claude Bibeau, 10 signatories said they are concerned about the capital gains inclusion rate, the Alternative Minimum Tax (AMT) and the Canadian Entrepreneurs’ Incentive (CEI), which were all announced in April.

The letter said farmers appreciated the proposal to increase the lifetime capital gains exemption (LCGE) to $1.25 million to reflect the appreciation of farmland values and capital demands.

“However, we are concerned with the potential impacts associated with Budget 2024’s proposed increase to the capital gains inclusion rate from one-half to two-thirds for corporations and from one-half to two-thirds on the portion of capital gains realized in the year that exceed $250,000 for individuals on or after June 25, 2024,” said the letter.

The organizations said Bill C-208, which took effect in 2021, recognized the significant costs that section 84.1 of the Income Tax Act placed on intergenerational transfers of farms and small businesses.

“Our concern is that by increasing the capital gains inclusion rate to two-thirds, we are neutralizing the increase to the LCGE threshold, undermining the policy intent of Bill C-208 and jeopardizing the success of genuine intergenerational farm transfers to young farmers across Canada,” they said.

MacAulay appeared at the standing agriculture committee May 30 to discuss the department’s main estimates. Asked about the letter, and whether agricultural stakeholders had been consulted about changes to the inclusion rate, he replied he doesn’t write the budget.

“Did I know what was going in the budget before it went into the budget? No.” he said.

Saskatchewan Conservative MP Warren Steinley appeared incredulous at that, later posting on X that the minister must sit at the kids’ table rather than at cabinet.

However, outgoing deputy minister Stefanie Beck confirmed later that the department sends in its proposals, and discussions happen only around those suggestions.

“I’m saying it would not have been the kind of proposal that we would have made,” she told the committee.

The letter recommends that all Bill C-208-eligible intergenerational farm transfers continue to be under the one-half inclusion rate and that any capital gains eligible for the LCGE be excluded from the calculation of the alternative minimum tax, even if the exemption is not claimed.

The organizations proposed several ways the government could address agriculture’s unique circumstances and avoid unintended consequences of planned personal income tax changes.

These include postponing implementation until January 2025, rather than June 25, 2024, to allow for more consultation and analysis.

They applauded the decision to introduce the CEI, which would reduce the tax rate on capital gains for qualifying disposals but recommended it be available to successive generations and not just first-generation businesses. The organizations noted that farm families commonly transfer shares from a parent to child through donation, which would make the child ineligible for the CEI.

“The tax implications of a proposed increase to the capital gains inclusion rate and the introduction of the CEI are significant and complex, requiring careful consideration,” the letter said.

“As implicated stakeholders we need time to do a more fulsome assessment of these tax changes to ensure there are no unintended consequences.”

The letter notes the AMT requires high tax payments and although they are recoverable against taxes payable in future years, a seller must have sufficient income to pay taxes. Otherwise, the tax becomes permanent.

Retiring farmers often don’t have enough income to recover the funds.

“In these circumstances, AMT essentially undermines the utility of the LCGE, making impacted farm transfers more costly and negatively affecting the financial health of both the retiring party and next generation,” the letter said.

The organizations also said farms use diverse operating structures, such as holding companies, and recommended the CEI not discriminate against those who use different structures.

The 10 signatories are the Canadian Federation of Agriculture, the Canadian Canola Growers Association, the Canadian Cattle Association, Fruit and vegetable Growers of Canada, the National Cattle Feeders’ Association, the Canadian Ornamental Horticulture Alliance, Canadian Hatching Egg Producers, the Canadian Seed Growers’ Association, Grain Growers of Canada and the Canadian Sugar Beet Producers Association.

The post Farm groups criticize capital gains inclusion rate change appeared first on Farmtario.

While some have praised aspects of the plan, others have condemned the lack of attention paid to agriculture and farmers.

The Canadian Cattle Association (CCA) stated that they were “cautiously optimistic” to see recognition of the effectiveness of the livestock deferral tax in an April 16 news release.

“Beef producers are encouraged to see the Livestock Tax Deferral in Budget 2024 and we are hopeful that meaningful change will come quickly as we head into another extremely dry season in Western Canada,” CCA President Nathan Phinney was quoted as saying in the release.

He continued by saying that he felt the announcement was “an indication that the government will make a change and work with ranchers to find a solution that addresses extreme weather challenges for producers across the country.”

CCA also praised the budget’s efforts toward supporting the Copyright act.

Dairy Farmers of Canada (DFC) said in an April 16 release that they welcome the “capital gains exemption on the sale of small business shares and farming and fishing property to $1.25 million,” as most dairy farmers own land.

They also acknowledged the government’s announcement of a national school lunch program: “Dairy products are a source of fifteen essential nutrients and are a top contributor of protein and calcium in the diets of Canadian children.”

The DFC went on to note the government’s commitment to help protect farmers from the effects of climate change, but said they were “disappointed that the government has not taken this opportunity to specifically commit to revising Canada’s business risk management programs for agriculture.”

Other organizations’ reactions were more negative.

The Canadian Federation of Agriculture (CFA) said in their own April 17 release that they were “disappointed to see a lack of investment in Canadian agriculture in the 2024 budget.”

CFA President Keith Currie acknowledged the government’s “competing priorities” in the release, but also said that “the government can ill-afford to ignore food production and Canadian farmers.”

The CFA made note of what it called “positive investments,” such as the launch of interoperability consultations and carbon rebates for small businesses, but lamented that “there was no mention of pivotal issues for the sector such as investments in environmental programming, chronic labour issues in food production or improvements to transportation and trade infrastructure.”

“If Canadian agriculture is to seize its full economic and climate potential,” Currie was quoted as saying, “we cannot keep missing opportunities while our international competitors continue to invest in their agriculture industries.”

The Wheat Growers Association was particularly critical of the budget, calling it “woefully bloated” and saying it “falls short in addressing Canadian farmers’ real concerns.”

Their April 16 news release criticized the government for not understanding the impacts of the carbon tax on wheat growers.

“Once again, the federal government has missed the opportunity to support agriculture and those that work in the industry,” Chair Daryl Fransoo was quoted as saying.

“The real issues impacting us are the cumulative effect of the carbon tax on everything that we do, the growing need to have coordinated grain research, increased funding for the PMRA, and industry efficiency through an improved Canada Grains Act.”

They mentioned the failure to pass bill C-234, which they said would provide “immediate relief to grain farmers from the negative impact of the carbon tax on grain drying.”

The Grain Growers of Canada (GGC) made similar complaints. Their April 16 press release expressed disappointment in the lack of any update to the Canada Grains Act.

“The Canada Grains Act is the enabling legislation that supports grain farmers and needs to be modernized to reflect the realities of 2024,” GGC Executive Director Kyle Larkin said in the statement.

“Unfortunately, this budget has shortcomings in key policy priorities for farmers, such as infrastructure, innovation, tax incentives, and delays in other policy areas.”

The post Federal budget draws mixed reaction from Canadian ag groups appeared first on Farmtario.

Finance Minister Chrystia Freeland made little mention of agriculture in her speech following the tabling of the budget on Tuesday, though she touched on issues like carbon pricing and green technology.

However, chapter three of the budget, titled “lowering everyday costs” features three sections on reducing costs for farmers.

The first, “Lower Costs and Fairer Treatment for Farmers” announces that the government will be launching consultations on interoperability in June.

“This is part of broader work the government is undertaking to support the right to repair and interoperability,” the section reads.

The section “Interest Relief for Farmers” proposes $64 million in funding to Agriculture and Agri-Food Canada “to support a $250,000 interest-free limit on Advance Payments Program loans for the 2024 program year.”

Finally, “Protecting Farmers from the Costs of Climate Change” reads that “the federal government is committed to working with industry partners, such as the Canadian Cattle Association, to explore avenues to ensure farmers get support quicker and more efficiently in times of need.”

In a release, the Canadian Federation of Agriculture (CFA) said “in light of sustained high-interest rates, a price on carbon for essential farming activities, for which farmers have no viable alternatives, and an increased risk of extreme weather events that are testing the limits and effectiveness of Canada’s suite of risk management programs, yesterday’s Federal Budget falls short for Canadian farmers.”

“While we understand there are competing priorities for government funds, with erratic weather and high prices tremendously increasing the risk profile of Canadian agriculture, the government can ill-afford to ignore food production and Canadian farmers,” Keith Currie, CFA president, said in the release.

The CFA said there was no mention of “pivotal issues for the sector” such as investments in environmental programming, chronic labour issues in food production or improvements to transportation and trade infrastructure.

“If Canadian agriculture is to seize its full economic and climate potential, we cannot keep missing opportunities while our international competitors continue to invest in their agriculture industries,” Currie said.

In her speech, Freeland highlighted the Canadian carbon rebate, which she said in French will be “delivering hundreds of dollars to Canadians every three months.”

“Eight out of 10 Canadians get back more than they pay in the provinces where the federal price on pollution applies,” she continued.

“We are delivering on our promise to return carbon pricing proceeds to small and medium-sized businesses.”

She said that the Canada Carbon Rebate for small businesses will “soon return over $2.5 billion directly.”

The budget’s primary focus is housing, though it also involves the launch of a new national school food program and the first phase of a national pharmacare plan.

On housing, Freeland said the government would be focusing on “making life cost less” with a plan to build nearly four million news homes by 2031.

“It begins with building more homes at a pace and scale not seen since after the Second World War,” Freeland said.

While the CFA was pleased to see the Government of Canada respond to CFA’s recommendation to increase to the Lifetime Capital Gains Exemption, which it considers a critical tool in supporting intergenerational farm transfers.

“However, the increase to the inclusion rate holds the potential to make these same transfers more challenging given the amount of capital required to remain competitive in modern agriculture. CFA will be assessing the full implications of these changes for intergenerational farm transfers in the coming days.”

The budget also includes an outlined electric vehicle supply chain investment tax credit, which will “introduce a new 10 per cent … tax credit on the cost of buildings used in key segments of the electric vehicle supply chain.”

Freeland said this is “to attract companies investing across the electric vehicle supply chain.”

The post Federal budget promises lower costs, interest relief for farmers appeared first on Farmtario.

Finance Minister Chrystia Freeland made little mention of agriculture in her speech following the tabling of the budget this afternoon, though she touched on issues like carbon pricing and green technology.

However, chapter three of the budget, titled “lowering everyday costs” features three sections on reducing costs for farmers.

The first, “Lower Costs and Fairer Treatment for Farmers” announces that the government will be launching consultations on interoperability in June.

“This is part of broader work the government is undertaking to support the right to repair and interoperability,” the section reads.

The section “Interest Relief for Farmers” proposes $64 million in funding to Agriculture and Agri-Food Canada “to support a $250,000 interest-free limit on Advance Payments Program loans for the 2024 program year.”

Finally, “Protecting Farmers from the Costs of Climate Change” reads that “the federal government is committed to working with industry partners, such as the Canadian Cattle Association, to explore avenues to ensure farmers get support quicker and more efficiently in times of need.”

In her speech, Freeland highlighted the Canadian carbon rebate, which she said in French will be “delivering hundreds of dollars to Canadians every three months.”

“Eight out of 10 Canadians get back more than they pay in the provinces where the federal price on pollution applies,” she continued.

“We are delivering on our promise to return carbon pricing proceeds to small and medium-sized businesses.”

She said that the Canada Carbon Rebate for small businesses will “soon return over $2.5 billion directly.”

The budget’s primary focus is housing, though it also involves the launch of a new national school food program and the first phase of a national pharmacare plan.

On housing, Freeland said the government would be focusing on “making life cost less.” with a plan to build nearly four million news homes by 2031.

“It begins with building more homes at a pace and scale not seen since after the Second World War,” Freeland said.

The budget also includes an outlined electric vehicle supply chain investment tax credit, which will “introduce a new 10 per cent … tax credit on the cost of buildings used in key segments of the electric vehicle supply chain.”

Freeland said this is “to attract companies investing across the electric vehicle supply chain.”

The post Federal budget promises lower costs, interest relief for farmers appeared first on Farmtario.

An announcement this week from the federal government called for an adjustment to the Competition Act that would prevent manufacturers from refusing to provide the means of device and product repair in an “anti-competitive manner.”

That declaration came in the government’s 2023 Fall Economic Statement, released Tuesday.

Why it matters: The right-to-repair debate has been a long-fought battle on between producers and manufacturers.

Grain Growers of Canada was among those applauding the decision.

“Enabling growers to access essential tools and software for maintaining their equipment — such as tractors and combines — will foster a more equitable landscape between manufacturers and consumers,” GGC executive director Kyle Larkin said in a release.

This right to repair will enable producers to save time during critical points of the growing season, the farm group argued.

READ MORE: Right to repair still an issue

Those on the manufacturing side have been more lukewarm on right to repair.

In a webinar held by the Canada West Foundation last year, Eric Wareham of the North American Equipment Dealers Association defended manufacturers’ ability to hold certain repair tools and methods in-house. He argued that farmers already have the ability to repair 98 per cent of a piece of ag equipment.

“The two per cent we do not allow access to is our critical safety and emissions criteria functions,” said Wareham.

The association supports “the right to repair but not to modify,” he added.

Manufactures have concerns that, if given proprietary repair tools, some owners will damage their equipment by altering it.

Gaps

Although Larkin classified the announcement as a step in the right direction, he added that there needs to be more clarity as to what would and would not be included under the amendment.

“The devil is going to be in the details,” he said. “Of course, we want agriculture, equipment, tractors, combine, etc. to be included. It’s not precisely clear in the economic statement that it will be included.

The right-to-repair lobby would also like to see amendments to the Copyright Act, said Larkin.

“One of the challenges that farmers have experienced is that a lot of the time manufacturers will stand behind their intellectual property and that’s what they’ll use to not offer farmers the access to tools and diagnostics information to actually repair their equipment themselves,” he said.

“They also hold back a lot of that software from independent shops.”

Other nuggets

Beyond the right-to-repair announcement, mentions of agriculture were light in the Fall Economic Statement Nov. 21.

A search of the 141-page document for the term “agriculture” revealed only a handful of results.

Non-agriculture features of interest to farmers include plans to ease the exemption reporting requirements for the federal Underused Housing Tax (UHT), for certain classes of property and property owners.

One of the few other sections of interest for farmers referred to the use of waste biomass to generate electricity and heat.

Industries such as canola have eyed the biofuel market as a potential avenue for growth. Speaking at an early November event at the Richardson Centre for Food Technology and Research in Winnipeg, Curtis Rempel, Canola Council of Canada vice-president of crop production and innovation, noted the hype biofuels have created for the commodity.

A significant chunk of the council’s research dollars is going to processing technology to tailor canola for the new market, as well as yield to meet the anticipated demand, he told attendees.

“Biofuels seem to be taking the front-and-centre space for the oilseed sector, at least in Western Canada,” he said.

The recent economic statement says that “During the course of production, industries like forestry and agriculture generate organic by-products, such as leftover wood chips and crop residues, which have the potential to be used to generate affordable energy while also reducing emissions.”

Tax credits expanded

The statement proposed expanded eligibility for the 30 per cent Clean Technology investment tax credit, which could play into the future of the biofuel market.

“This expansion… would be available to businesses investing in eligible property that is acquired and becomes available for use on or after the date of the 2023 Fall Economic Statement,” the document read.

Another tax credit expansion would see wider eligibility for the 15 per cent Clean Electricity investment tax credit, to include systems that produce electricity or a mix of electricity and heat from waste biomass. That tax break would be available as of the date of Budget 2024 for projects that did not begin construction before March 28, 2023.

— Jeff Melchior reports for Alberta Farmer Express from Edmonton.

The post Ottawa lines up with farmers on right-to-repair appeared first on Farmtario.

Bill C-47, the government’s budget implementation bill — which was first read April 20 in the House of Commons and got third reading in the Senate and royal assent on June 22 — includes amendments to section 127 of the Canada Transportation Act, extending rail interswitching radius within the Prairies to 160 km, up from 30 currently.

Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul — that is, if the point of origin or destination of a “continuous movement of traffic” within the Prairie provinces is also within the given radius of an interchange between two companies’ rail lines.

In other words, as the Western Grain Elevator Association — which declared its support for the provision in a release Tuesday — said, it “gives shippers in all sectors who are physically located on a single rail line, the ability to automatically seek competing service and rates from an alternate carrier.”

The 18-month pilot expansion “is expected to bring about an increased level of competition among railway service providers, and represents an incremental gain for supply chains and the Canadian economy more broadly,” the WGEA said.

The budget bill calls for the interswitching pilot to come into effect on the 90th day after the bill received royal assent — that is, Sept. 20.

The previous Conservative government had set up a temporary extension of the interswitching radius to 160 km in 2014, but that extension was sunsetted in 2016.

The Railway Association of Canada, which represents almost 60 railways including Canadian National Railway and CPKC, in March ripped the current Liberal government’s plan as a resurrection of a “failed policy” that was “misguided and harmful to Canada’s supply chains.”

A number of farmer groups disagreed, launching a campaign this spring called “Flip The Switch,” calling for the budget provision to be boosted even further to a five-year pilot and a 500-km interswitching distance.

The Flip The Switch campaign partners, in a separate statement Thursday, said they “look forward to working with the government over the next 18 months to develop a path that leads to the extension of the distance and the permanent integration of this policy into Canada’s transportation framework.”

For its part, the WGEA said Tuesday that when the 18-month pilot is done, it plans to ask the federal government to make the expansion permanent, “regardless of how often physical interchanges occur.”

The association said it would also ask for an increase to the radius, so as “to give all shippers at least one other competitive shipping option.”

The interswitching provision “recognizes that competitive tension is one of the basic tenets of a well-functioning marketplace,” WGEA executive director Wade Sobkowich said.

“Shippers prefer to use the rail carrier that services their facility first and foremost, however, the provision offers an alternative when service or freight rates are less than adequate.” –– Glacier FarmMedia Network

The post Rail interswitching expansion pilot clears Parliament appeared first on Farmtario.

Agriculture Minister Marie-Claude Bibeau confirmed Wednesday that the interest-free limit under the Advance Payments Program (APP) for the 2023 program year is now $350,000, effective Monday (May 8).

The regulatory amendments allowing this increase are not retroactive, the government noted. The new limit will be applied to existing APP advances as of Monday, when the amendments came into force, and producers still must pay any interest that accrued on an existing advance before that date.

Bibeau said Wednesday the decision comes as farmers “continue to face significant financial challenges including high input costs and rising interest rates.”

The APP gives eligible farmers access to up to $1 million, calculated based on up to 50 per cent of the “anticipated market value” of production, whether it’s in storage or still to be produced — with “preferential” interest rates on the portion above the interest-free limit.

The operating credit from a cash advance thus can help improve a farm’s cash flow or offer the flexibility to sell commodities into more favourable market conditions, the government said.

Following the budget announcement in March, at least one farm consultant suggested other farmers might consider investing interest-free APP cash to benefit from the current interest rate environment.

APP advances, on most eligible commodities, must be repaid in full over the following 18 months. On cattle and bison production, that repayment period is 24 months.

The single-year interest-free limit increase to $350,000 is on top of last June’s temporary increase to $250,000 for the 2022 and 2023 program years — up from the usual limit of $100,000.

That earlier increase is estimated to save farmers an average of $8,600 over the two years, the government said Wednesday. This week’s increase, meanwhile, is expected to translate to total savings of up to $12.4 million, or an additional $3,600 in interest costs per applicant on average.

The government estimated the total federal investment for these increases for 2022 and 2023 could run up to about $94.9 million.

APP cash advances are delivered in Canada through 30 industry-led associations. One such program administrator, the Canadian Canola Growers Association, said last month it was waiting for the updated interest-free limit to be made available and “will notify customers as soon as we are able to issue advances under these new parameters.”

The CCGA also noted last month that some of the APP advance rates for 2023 have risen or fallen while others remain flat. For example, it said, the 2023 advance rate per tonne for wheat is up 20 per cent, and for canola up nine per cent, over 2022.

The feds, in Wednesday’s release, said they also plan to consult further with the provinces and territories “to explore ways to extend help to smaller agricultural producers who demonstrate urgent financial need.” — Glacier FarmMedia Network

The post Feds lock in higher interest-free portion on cash advances appeared first on Farmtario.

The measure, part of this spring’s federal budget, essentially gives grain shippers a choice in which railway they deal with (as long as the competitor’s line is no more than 160 kilometres away). It means a railway would have to pick up the rail cars loaded by a shipper and ‘hand off’ the cars to the other railway.

“Extended interswitching is a vital tool for Canadian shippers that is proven to increase competition while lowering costs to shippers and consumers,” Alberta Wheat tweeted in support of the Flip The Switch campaign.

The wheat commission, along with Alberta Barley and Alberta Pulse Growers, has joined a dozen other commodity groups and industry organizations in the lobbying campaign. They want the budget pledge of an 18-month trial extended to five years, and the maximum distance for interswitching upped to 500 km, so it applies to the Peace region and the Carrot River growing region of northeastern Saskatchewan.

“Extended interswitching is one of the only policy tools that has historically created competitive options for shipper business,” Wade Sobkowich, head of the Western Grain Elevator Association, said in a release.

“It offers an alternative service provider for single-served shippers which balances negotiations in a way that encourages better service or pricing for the benefit of entire supply chains.”

The railways disagree.

“Extended regulated interswitching is inherently inefficient because it introduces more operational complexity to the movement of railcars as it unavoidably requires additional hand-offs for railcars between carriers, which in turn causes increased cycle time,” CPKC, the railway formerly known as Canadian Pacific Railway, said in a response to the interswitching proposal.

“Overall, this slows down the entire rail supply chain and reduces capacity because it introduces inefficiencies that could otherwise be avoided.”

It typically takes an additional 24 to 48 hours for interswitching, the railway said, adding a move to 160-km interswitching in 2014 (that lasted four years) caused “significant harm to Canada’s supply chains.”

The alliance of grain groups calls this a “myth” on its website, arguing it actually improves efficiency.

“Extended interswitching will reduce congestion by moving traffic from a full capacity railway to a railway with excess capacity,” the website states.

And bringing a measure of competition to the country’s rail duopoly has been shown to cut freight bills, it contends.

“Data is clear that the increased competition from extended interswitching reduces costs for shippers who are using the rail network.”

The farm groups’ website also has an e-letter that producers can send to their MP. In addition to backing a five-year pilot and a 500-km interswitching distance, the letter urges the federal government to “invest in rural rail infrastructure that can accommodate larger trains to expand the use of interchanges.”

— Glenn Cheater is editor of Alberta Farmer Express.

The post Go bigger on interswitching pilot, grain groups urge Ottawa appeared first on Farmtario.

Finance Minister Chrystia Freeland’s budget, released Tuesday, laid out a list of investments to “further strengthen Canada’s transportation systems and supply chain infrastructure.”

A non-financial line item in that envelope calls for the government to introduce amendments to the Canada Transportation Act for a “temporary extension, on a pilot basis” of the interswitching limit in the Prairie provinces, to “strengthen rail competition.”

Interswitching rules commit one rail carrier to pick up cars from a shipper, then deliver them to another railway for the line haul. Federal rules generally allow grain elevators and other shippers to use interswitching for up to a 30-km radius.

Expanding that maximum radius, the feds said Tuesday, “would support competition among rail carriers by enabling rail companies to access tracks owned by another rail provider within the limit, under rates regulated by the Canadian Transportation Agency.”

The previous Conservative government set up a temporary extension of the interswitching radius, to 160 km, in 2014, to the acclaim of several crop commodity groups — but that extension was sunsetted in 2016.

The Railway Association of Canada said Wednesday the 2014 extension was allowed to lapse “based on results from a previous pilot and recommendations contained in an independent study” — a reference to a 2015 review of the Canada Transportation Act.

The RAC, which represents almost 60 railways in Canada including Canadian National and Canadian Pacific railways (CN, CP), ripped the current Liberal government’s proposal as a resurrection of a “failed policy” that was “misguided and harmful to Canada’s supply chains.”

“This policy will cause Canadians to pay more for virtually everything that moves by rail,” RAC CEO Marc Brazeau said Wednesday in a release, warning the policy “will incentivize congestion in our supply chains while disincentivizing private investment.”

“This pilot has been done before,” the RAC said, listing the impacts of “switching cargo multiple times” as slowing the movement of goods by one to two days, adding to greenhouse gas emissions and adding costs.

“The measures announced today will not improve the efficiency, capacity or reliability of Canada’s supply chains. They will do the exact opposite, as we saw under extended regulated interswitching that was in place from 2014 to 2016,” Brazeau said.

However, supporters of the 2014 extension estimated in 2016 that about 150 grain elevators on the Prairies were able to make use of interswitching with the 160-km radius, up from just 14 elevators previously.

One such supporter, Pulse Canada, in 2016 said freight rates were reduced on some routings, and that grain shippers were afforded more leverage in getting rail car capacity where needed, both as a result of the extended interswitching radius.

Gordon Bacon, Pulse Canada’s then-CEO, speaking in favour of extended interswitching in 2016, said that “in cases where railways have lost business due to competition, they are actively campaigning to get it back by offering rate reductions and improved levels of service.”

‘Down payment’

The RAC on Wednesday also panned another non-financial proposal from Tuesday’s budget — namely, for legislation that would ban the use of temporary replacement workers in federally regulated workplaces affected by work stoppages.

The RAC said a ban on replacement workers would mean rail service “will be disrupted more frequently,” strikes “will be more common and will last longer” and federal back-to-work legislation “will be required more often.”

Tuesday’s budget also earmarks $27.2 million over five years starting in 2023-24 for Transport Canada to establish a “Transportation Supply Chain Office.”

That office, the budget said, would “work with industry and other orders of government to respond to disruptions and better co-ordinate action to increase the capacity, efficiency, and reliability of Canada’s transportation supply chain infrastructure.”

The budget noted the measures announced Tuesday “are a down payment on Canada’s National Supply Chain Strategy,” which the government said “will be released in the coming months and will be informed by the recommendations of the National Supply Chain Task Force report.” — Glacier FarmMedia Network

The post Railways push back on feds’ proposed interswitching revival appeared first on Farmtario.