Significant and widespread impacts are expected on the agriculture industry if an unprecedented work stoppage occurs at both of Canada’s two major railways later this week.
Several industry groups have issued media releases warning on the repercussions, including the Canadian Meat Council and the Canadian Pork Council, who said in a joint statement Monday a dual railway work stoppage – which could occur Aug. 22 - would be even worse than last summer’s 35-day Port of Vancouver strike which disrupted $10.7 billion in trade.
“Canada’s red meat processors need stable, reliable supply chains to run their businesses,” said Chris White, CEO, Canadian Meat Council. “Another interruption in service will result in millions of dollars in losses, irreversible reputational damage, environmental disposal challenges, and enormous waste.”
According to the joint release, some processing plants anticipate losing up to $3 million dollars per week. The initial impact will be a delay in customer deliveries, but that will be followed by plant shutdown within 7-10 days of strike action, it added.
Once trains start rolling again, it will take 2-5 weeks for processing plants to ramp back up to normal capacity.
René Roy, Chair, Canadian Pork Council, said that not only will a railway work stoppage impact the movement of perishable goods like pork, but it will also hit the shipment of essential supplies, including animal feed.
Meanwhile, more than 100 chambers of commerce, boards of trade, and business associations, including the Western Grain Elevator Association (WGEA), have also raised their concerns about a railway work stoppage in a letter to the federal government.
“A work stoppage will be near absolute for bulk grain movements – traffic volumes would go from 6,500 railcars per week to zero,” said Wade Sobkowich, Executive Director WGEA. “There is no ‘plan B’ because there aren’t competitive alternatives, and people around the world would suffer. Clearly, this supply chain breakdown must be averted at all costs.”
For farmers, the Agricultural Producers Association of Saskatchewan said a rail disruption could result in delayed payments, as well as impact storage of on-farm inventory, jeopardizing producers’ cash flow and financial obligations.
“The ability of Saskatchewan farmers to market their grain is also vital to the Canadian economy and to maintaining our nation's reputation as a dependable trading partner,” APAS said.
Research shows that the daily flow of grains and oilseeds through Canada’s rail system is valued at over $43 million per day in August, rising to more than $50 million per day in September, the Canadian Canola Growers Association (CCGA) said in a release Tuesday.
“These numbers show how significant the negative economic impact to farms will be,” says Rick White, President & CEO at CCGA. “A strike on one railway is a crisis. A strike on both railways is unfathomable and is sure to damage Canadian farmers’ livelihoods.”
The Chamber of Marine Commerce said that near the midway point of the 2024 shipping season on the Great Lakes and St. Lawrence Seaway, grain traffic has increased from the same period last year (March-July). Specifically, Canadian grain traffic was up 301,000 tonnes (or almost 8%) for a total of approximately 4.1 million tonnes moved to date.
“While this underlines the importance of, and demand for, Canadian grain throughout the world, there are real concerns that the movement of this and many other vitally important commodities will halt if a work stoppage involving Canada’s Class I Railways proceeds,” the Chamber of Marine Commerce said.
It is estimated that 27% of the waterborne tonnage moving via Quebec and Ontario ports move to and from inland locations within Canada by railway.
Fertilizer Canada said that industry is poised to see significant impacts as well, estimating potential lost sales revenues at between $55 million and $63 million per day, not including logistical and operational costs.
An estimated 75% of all fertilizer produced and used in Canada is moved by rail, with minimal transportation alternatives, Fertilizer Canada said in a release Tuesday.
“Canadian, American, and international farmers rely on Canadian fertilizer to maximize crop yields. Notably, 90% of Canadian-produced fertilizer destined for the U.S. market is delivered by rail, underscoring the importance of a reliable rail network for North American agriculture,” Fertilizer Canada said.
