The VRCPI for the Canadian National Railway is set at 1.9734, an increase of 1.72 per cent over last crop year. For Canadian Pacific Kansas City Railway, the VRCPI is set to 1.9349, an increase of 3.11 per cent from the previous crop year, the CTA said in a news release on Wednesday.

The VRCPI is an inflation factor determined based historical price information for railway inputs like labour, fuel, material and “other capital items,” the CTA said. Future changes in railway price components are also factored in.

The indices are used to determine the railways’ maximum revenue entitlements for movement of Western Canadian grain in the 2025-2026 crop year.

If the railways exceed their maximum revenue entitlement, they must pay the excess, plus a penalty, to the Western Grains Research Foundation.

In 2024, CPKC exceeded its revenue cap by a bit more than $1.8 million. CN did not exceed its maximum revenue entitlement.

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At 12:01 AM EDT on August 22, after negotiations that began last year failed to bring about a resolution to the dispute, CN and CPKC announced at that they would lockout their employees who are members of the Teamsters Canada Rail Conference (TCRC). The move affects roughly 9,000 employees at the two companies.

Federal mediators have been working with the companies and the union, but those involved in the discussion said little progress was made. The union says CN Rail and CPKC want to dilute safety provisions, a charge the companies deny. The railroads have accused the union of unrealistic demands, and have said binding arbitration is the only way forward.

Meanwhile, farmers expect to take a hit from the lockout.

“The impact on Canadians of a full-country railway work stoppage, both CN and CP at the same time for all industries, is mammoth; it can’t be overstated,” said Wade Sobkowich, executive director of the Western Grain Elevators Association (WGEA), one of the agricultural groups that has signed on to the Stop the Strike letter writing campaign initiated by Pulse Canada.

From a grain shipping perspective, Sobkowich said there are several factors that will affect farmers directly.

To get the best price, grain shipping companies try to move as much grain as possible before the Australian harvest comes off in January and February, when global prices tend to drop. If that window is shortened, it will mean farmers will get paid less for their grain.

A lengthy strike could also mean cash-flow headaches for producers.

“Farmers don’t get paid until they deliver,” said Sobkowich. “So that’s a significant impact.”

Sobokwich said there are other less quantifiable effects a strike would have, like reputational damage.

“When you talk to your buyer in Indonesia and you say you’re not going to be able to deliver, that buyer is a mill, and they want to keep their mill humming along, so they’re going to try and source product from another country,” said Sobkowich.

The question of reputational damage was recently addressed at the Canadian Beef Industry Conference in Saskatoon on August 20. At the foreign trade committee meeting, Nathan Phinney, Canadian Cattle Association president, brought up the question.

In response, the chief trade negotiator for Agriculture and Agrifood Canada (AAFC) said that at times when the supply chain is compromised, like the flooding in 2022 that caused delays, he definitely gets questions about whether shipments will be affected, but he hasn’t received any calls about this pending strike.

However, during a press conference set up by the Stop the Strike campaign, Dean Roberts, vice chair, Canola Council of Canada, brought up a letter signed by 35 US industry groups sent to the Prime Minister’s office on August 20 as a sign that Canada’s trading partners are in fact taking notice.

“They’re concerned about the integrated supply chains between our two countries and how exposed agriculture is to this disruption,” said Roberts.

Since the Stop the Strike campaign was launched, agricultural groups from across Canada have added their weight to the campaign. Independently, senators, municipal groups, and industry groups have joined in the chorus, urging the government to intervene and ensure a speedy end to the dispute.

Sobkowich said he’s hopeful that the efforts of these groups will have the desired impact, but added that there are a lot of issues and agendas at play.

“We saw the federal government impose binding arbitration regarding the WestJet strike, and so we’re hopeful that they will do the same thing in this situation,” he said.

However, Sobkowich noted that there is a difference between the two events in terms of optics. During the WestJet strike, Canadians were stranded at airports. The effect was immediate. But with this labour dispute, the effects will begin to show up later.

“They will see increased prices, a lack of product availability, and that sort of thing, but it’s somewhat masked because of the way goods are transacted throughout the supply chain,” he said.

But last week, in a letter to the Teamsters Canada Rail Conference (TCRC), the union representing employees of the railways, Minister MacKinnon said that he would not intervene.

“I trust that with continued effort, an agreement can be achieved promptly,” wrote MacKinnon in the letter that was posted to the Teamsters’ website. “The government firmly believes in the collective bargaining process and trusts that mutually beneficial agreements are within reach at the bargaining table.”

—Updated Aug. 22. Updates current lockout scenario.

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“The agriculture sector has already endured numerous labour disruptions in recent years… It is imperative that we explore long-term solutions to reduce the risk of future labour disruptions and ensure the stability of our supply chains,” wrote Robinson and Black in a letter dated Aug. 20.

Robinson and Black addressed Transport Minister Pablo Rodriguez, Labour Minister Steven MacKinnon, Energy and Natural Resources Minister Jonathan Wilkinson, and Agriculture Minister Lawrence MacAulay, and urged them to invoke section 107 of the federal labour code to “bring about a resolution.”

Black is a senator for Ontario and is chair of the Standing Committee on Agriculture. Robinson is a senator for Prince Edward Island and has held leadership positions in the agriculture sector, including the presidency of the Canadian Federation of Agriculture.

MacKinnon has urged Canadian National (CN), Canadian Pacific Kansas City (CPKC), and the Teamsters union to work hard to reach a deal but has thus far declined to force their hands.

Federal mediators are working with the companies and the union, but those involved in the discussion say little progress has been made. The union says CN Rail and CPKC want to dilute safety provisions, a charge the companies deny.

Asked what the federal government would do to alleviate effects of a strike on farmers, MacAulay said in an emailed statement this morning that he was closely monitoring the situation and was in regular contact with his government colleagues.

“Our government has always supported free, collective bargaining and the right to strike, but we need to get a deal done for Canada’s agriculture sector and our farmers,” he said.

“I join the Minister of Labour in calling on all parties to remain at the table and negotiate a deal. This is vitally important for Canada’s farmers, workers, businesses, and all Canadians who depend on them.”

Aside from stepping in to stop a strike or lockout, the federal government may not have much leeway to alleviate farmers’ pain in the event of a work stoppage, said Barry Prentice, a professor and director of the University of Manitoba Transport Institute.

“One only has to consider the numbers of farmers and the size of the grain harvest to eliminate doing anything meaningful financially for the farm sector in the wake of the strike,” he said.

“Also, governments must be very careful not to make any assistance be interpreted as a production subsidy. Canada depends on access to foreign grain markets and we do not want to be accused of unfair trade practices.”

Unless labour agreements are reached, both railways could grind to a halt tomorrow. Trains are already winding down in anticipation of a strike or lockout.

—With files from Reuters

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In a release Aug. 20, Fertilizer Canada called for federal intervention on the potential work stoppage on Canada’s two major railways. The industry group would like to see binding arbitration that would stop both strike action on the part of the union and lockout action on the part from the railways from going forward.

“We can no longer patiently wait for a resolution,” Fertilizer Canada CEO Karen Proud said. “The federal government must protect Canada’s economy and food security by ordering binding arbitration.”

The labour dispute between the Teamsters Canada Rail Conference union and both Canadian Pacific Kansas City and the Canadian National Railway threatens to explode this week. Both railways have issued lockout notices starting Aug. 22. On Aug. 18, the teamsters union issued its strike notice to CPKC, also starting Aug. 22.

“Each and all of the TCRC’s demands remain outstanding at this point in time,” the union said in an online statement published Aug. 18.

Fertilizer Canada estimates that a work stoppage would cost their sector $55-63 million in lost sales a day, “not including logistical and operational costs.”

“In the last seven years, Canadian supply chain labour disruptions have cost the fertilizer industry nearly a billion dollars,” Proud said. “These stoppages are doing immense damage to our reputation as a reliable trading partner. Our customers, who rely on Canadian fertilizer products, are being forced to turn to our competitors in Russia, Belarus, and China. We can’t afford for our railways to shut down, and we can’t afford a passive approach to our supply chains any longer. We need long-term solutions.”

The impact has already been felt, the industry group said. Last week, railways announced that shipment of certain more volatile materials, which included some ammonia products, were being curtailed in anticipation of a potential stoppage. Fertilizer Canada estimates that about 75 per cent of fertilizer in Canada is transported via rail.

Numerous provincial and national farm organizations have called on their members and other members of the public to sign a letter to Canadian Labour and Seniors Minister Steven MacKinnon. The #StopTheStrike campaign also urges the government to invoke binding arbitration under section 107 of the Canadian Labour Code.

“This will provide needed certainty to Canadian farmers and shippers, and their customers around the world,” the letter reads, in part.

The three provincial organizations representing rural municipal governments in the Prairie provinces have launched similar concerns and calls for action.

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The Stopthestrike.ca campaign was launched shortly after the Canadian Industrial Relations Board decision on August 9 that confirmed rail transport is deemed non-essential. The website includes a clock that counts down the days, hours and minutes before the trigger is pulled on the railways promise to lock employees out if the strike is not settled by August 22.

“The only way the event will be stopped is if the parties can come to an agreement at the negotiating table, and at the moment, there’s no sign that they’re able to bargain effectively,” said Greg Northey, Vice President Corporate affairs with Pulse Canada. “By saying there they’re going to lock out their employees, the railways are clearly signalling that things aren’t working at the bargaining table, and we’re just not confident that that they’ll be able to come to any kind of resolution.”

Since the campaign began, Northey has been busy galvanizing support for the effort and producer groups and grain shipping organizations from across the country have put their weight behind the campaign.

Northey said there’s a section in the Labour Code that gives the Minister the power to end the strike.

“It’s in Section 107 and that section details that if it’s unclear that parties are able to effectively bargain, that he can intervene,” he said. “So he has to use those powers before we hit the 22nd.”

Northey said there are a number of possible solutions that could come out of invoking Section 107, but the main one is binding arbitration, which the railways have already asked for; most recently, by CN in the wake of the CIRB decision on August 9.

However, CBC reported on August 15 that in a letter they obtained, Labour Minister Steven Mackinnon rejected CN’s request saying it’s the responsibility of the railways and the union to come to an agreement and that the government wouldn’t intervene and thinks an agreement can still be reached.

—Updated Aug. 16. Corrects name of CIRB.

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“Our [Canada’s] reputation for supplying the world with quality agricultural products, while hard earned, is greatly threatened by unnecessary disruptions in the supply chain,” the coalition said on stopthestrike.ca

Producer and agriculture groups across Canada launched a ‘Stop the Strike’ writing campaign asking the federal ministers of agriculture and labour to use all their means to stop rail workers from walking off the job.

The website has a countdown of “time left to avoid a catastrophe”, running out on Aug. 22, which is the end of the 13-day cooling period of negotiations between the railways and unions representing workers.

CPKC said in an Aug. 9 news release that it would lock out workers if no agreement had been reached by then.

Agricultural groups renewed calls for immediate government action to prevent a work stoppage.

“Canadian farmers need more than platitudes,” said Daryl Fransoo, Wheat Growers Sask. director, in a news release on Monday.

“We need prompt action by the federal government, rail and union officials. When factors beyond our control impact our industry, customers and food security, that is when government needs to take immediate action.”

Fransoo said the labour minister must initiate the settlement agreement and force parties to the table as soon as possible.

Agricultural Producers Association of Saskatchewan (APAS) called on the government “to explore all options to prevent simultaneous work stoppages at both railways, to avoid financial damage to Saskatchewan’s agricultural producers, and to safeguard our trading relationships with international customers.”

Some organizations, such as Keystone Agricultural Producers (KAP), said they’d made their concerns clear months ago to all involved parties, including former Labour Minister Seamus O’Regan but minimal action was taken.

Earlier this month, the Canada Industrial Relations Board (CIRB) ruled that rail service was not essential, and no activities needed to be maintained during a strike or lockout.

Approximately 94 per cent of Canadian grain is shipped via rail.

“A rail disruption could see farmers face delayed payments, as well as impact storage of on-farm inventory, jeopardizing producers’ cash flow and financial obligations,” said APAS in an Aug. 9 news release.

“A strike at this time of the year is inconvenient, frustrating, and damages Canada’s reputation as a supplier of reliable, high-quality agricultural product,” said Brenna Mahoney, KAP general manager.

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Workers represented by the Teamsters union last week voted overwhelmingly to strike as early as May 22.

Late on Thursday, federal Labour Minister Seamus O’Regan said he had asked the Canada Industrial Relations Board to look at whether the strike might have safety implications. Until the board has issued a decision, the strike cannot start.

In an emailed statement, the Teamsters union said it was reviewing O’Regan’s move and would “obviously comply with any order” from the board.

O’Regan acted after stakeholders expressed concern about the effect of a stoppage on healthcare infrastructure, in particular shipments of propane, which is used as a back-up generator fuel for rural hospitals, said the official, who requested anonymity given the sensitivity of the situation.

There is no set timeline for the board to issue a decision.

Farm groups have said a strike would cause mass disruption to the agricultural sector and the Canadian economy.

“As farmers, our operations are closely tied to rail transport, both inbound to access crop inputs and outbound to deliver grain to export position,” said Grain Growers of Canada chair Andre Harpe.

“A rail strike now is the last thing we need. We’re at a critical point in the seeding season, and any delay in shipping can directly affect our bottom line and cause substantial economic losses across the agricultural sector.”

The organization said about 94 per cent of Canadian grain moves by rail. Job action would mean elevators could not accept grain, leading to delayed payments and financial hardship.

—Reporting for Reuters by David Ljunggren; with files from Karen Briere

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More than 95 per cent of workers at Canadian National and Canadian Pacific Kansas City railways have voted in favour of a strike that could happen as early as May 22.

The farm group said this could cause mass disruption to the agricultural sector and the Canadian economy.

“As farmers, our operations are closely tied to rail transport, both inbound to access crop inputs and outbound to deliver grain to export position,” said chair Andre Harpe.

“A rail strike now is the last thing we need. We’re at a critical point in the seeding season, and any delay in shipping can directly affect our bottom line and cause substantial economic losses across the agricultural sector.”

The organization said about 94 per cent of Canadian grain moves by rail. Job action would mean elevators could not accept grain, leading to delayed payments and financial hardship.

At port, demurrage and weakened trade relations could result.

In June 2023 Canada exported more than 2.6 million tonnes of grain. GGC said that illustrates the potential loss of $35 million for each day of a June strike.

“We urge the unions and railway companies to consider the broader impact of their negotiations,” Harpe said.

—Karen Briere writes for the Western Producer from Saskatchewan

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Railways are critical to Canada’s economy, due to its vast geography and exports of grain, potash and coal.

Contracts covering locomotive engineers, conductors and yard workers at CN and CPKC expired on Dec. 31, 2023, and Teamsters Canada Rail Conference is re-negotiating a third agreement covering CPKC rail traffic controllers.

The three worker groups, numbering 9,300 workers, each voted over 95 per cent to authorize a strike.

The sides have made no progress in six months of negotiations, said Teamsters Canada president Paul Boucher, adding that the companies were trying to remove rest provisions that are critical to safety.

CN said in a statement that the union has opposed moving toward a more modern agreement based on an hourly rate and scheduling changes and has focused instead on 200 local and regional demands.

CPKC said the parties remain far apart and now begin a mandatory 21-day period of federal mediation. The company’s proposals for rest do not compromise safety and comply with Canadian regulations, CPKC said.

The potential strike is unique in that it would involve both major railways, grinding bulk grain shipping to a near halt, said Wade Sobkowich, executive director of Western Grain Elevator Association, which represents grain handlers including Cargill and Richardson International.

“There is no plan B because, as we’ve said for decades, there aren’t competitive alternatives,” Sobkowich said.

Grain sales typically slow weeks ahead of a railway stoppage as shippers and exporters try to minimize costs for vessel wait times and contract penalties, Sobkowich said.

Transport Minister Pablo Rodriguez said the government is concerned about a potential strike’s impact on the supply chain and urged the sides to negotiate in good faith.

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Members of the Teamsters Canada Rail Conference (TCRC) are in the middle of a strike vote. The vote comes after three collective agreements, covering CN and CPKC engineers and conductors as well as rail traffic controllers at CPCK, expired December 31.

The TCRC electronic strike vote began April 8th and will wrap up May 1st, meaning the earliest a strike or lockout can legally occur is May 22nd.

While there’s still some track ahead of the labour unrest locomotive, the grain sector is concerned it could be collateral damage in the dispute.

Wade Sobkowich, executive director of the Western Grain Elevator Association, says the risk is “huge” and that the stoppage will be “absolute or near absolute” for bulk grain movements.

He added that even the usual seasonal and cyclical dimension of grain sales and movement aren’t in the sector’s favour this crop year. There’s been more demand for rail cars than have been supplied, leading to what he describes as a “flatlining” effect on sales through the year.

“A larger portion of the crop than normal has been pushed outside the peak period and there is still a lot of grain to move,” he said.

He also noted the labour woes cover both major railways which is a double-whammy for the grain sector.

“In this case, both rail networks will stop at the same time,” he said.

Mark Hemmes, president of Quorum, the national grain shipping monitor, says any potential labour disruption on the major railways is a concern for the grain sector, regardless the time of year. The first effect is the uncertainty that’s generated, regardless whether the strike actually occurs or is averted, when shippers are forced to make decisions that “disrupt the balance of movement.”

“They do things like pre-sell or cancel sales or find alternate routings, an so on,” Hemmes said.

Then there’s the hit to Canada’s reputation as a reliable supplier to global grain markets.

“Overseas buyers cringe, as you can be certain they are watching this too and thinking ‘Yet another strike in Canada?’,” Hemmes said.

Sobkowich agrees, saying this underlines why its so important that supply chains continue to function, even during times of collective bargaining.

“Lack of stability creates uncertainty, which adds costs to any supply chain, which adds to inflationary pressures, which increases the costs of goods for Canadians and abroad,” he said.

Sobkowich added WGEA respects collective bargaining legislation, when the effects are limited to the decision making parties—in this case the railways and the workers. But since the rail sector isn’t a competitive environment in Canada, and few alternatives exist for shippers, creating interests outside the decision-making parties.

“Since railways in the grain sector are monopoly service providers, the same threat of loss of business is not present,” Sobkowich said. “The true sufferers in a railway strike or lockout are grain shippers and exporters who cannot move the grain, their customers who are waiting for product to arrive in the country of import, grain producers who are not able to get paid because they cannot deliver, and Canadians in general.”

Hemmes noted that there’s still lots of time for the railways and workers to come to agreement, and that could allow the sector to dodge the worst of the effects of any disruption.

“I cannot see a strike happening before June sometime, if at all, so we will see a good portion of the crop moved by then,” he said. ” Although we usually have that last burst of movement in late June as producers clear their bins after they’ve done spraying and have a better comfort level about what they think is going to come off the fields.”

The union’s website notes that the last meetings with CPKC took place March 27 and 28, with the next scheduled date for negotiations set for April 23 and 24.

The last negotiations with Canadian National were scheduled to take place April 10, 11, 12, 29 and 30 and then during the week of May 13 and 20.

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