Ottawa slaps Prairie grain volume quotas on railways

The federal government has imposed an immediate schedule of increasing mandatory minimum volumes of Prairie grain on Canada’s big two railways, subject to fines.

Transport Minister Lisa Raitt on Friday announced an order-in-council, effective immediately, which sets out minimum volumes of grain that Canadian National (CN) and Canadian Pacific Railway (CP) are each required to move — and requires the companies to report to her on their weekly shipments.

The Alberta Wheat Commission, in a separate release Friday, put the initial minimum volume CN and CP will each be required to move at 5,500 grain cars per week.

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Those minimum volumes, the government said, are to increase each week over a period of four weeks, to a “combined target” of one million tonnes per week. That would more than double the volume currently being moved, the government added.

Raitt’s order creates “direct legal obligations” on railways, the government said, and “non-compliance” would result in penalties of up to $100,000 per day.

“For the past several months, the bumper crop of grain produced in Canada has not been moving fast enough to Canadian ports,” Raitt said in a release. “We are taking this action to more than double grain shipments in order to preserve the integrity of Canada’s transportation system and our reputation as a global supplier.”

Agriculture Minister Gerry Ritz, in the same announcement, said the government will introduce legislation when Parliament returns to “establish measures to ensure Canada maintains a world-class logistics system that gets agricultural products to market more efficiently.”

Details on those measures weren’t available in Friday’s release.

Greg Porozni, an Alberta grower and chairman of value-chain group Cereals Canada, hailed Raitt’s order as “unprecedented” and “a demonstration of the importance to the Canadian economy of the grains, oilseed and special crops industries.”

“Restricted grain movement over the last six months has placed a significant economic strain on western Canadian farmers,” Porozni said in a separate release. “The announcement today will help get income flowing to producers again. This is not just good for farmers, it is good for Canada.”

Western Canada’s 2013 crop came in at 76 million tonnes, 50 per cent higher than average, the government said, acknowledging the volume “is putting significant pressure on Western Canada’s grain handling and transportation system.”

However, the government said, as it “continues to work with farmers to invest in research and innovation, higher yields will continue to be the new reality across Canada.”

In the short term, the AWC noted, “numerous” ships are now waiting to load grain in Vancouver and Prince Rupert and demurrage charges, ultimately paid by farmers, have now topped $25 million.

Furthermore, the AWC, said, “news out of Japan indicates that they plan to buy more grain from the United States instead of Canada due to poor delivery and no clear resolution to the bottlenecks.”

Spokesmen for CN and CP were not immediately available for comment Friday afternoon. — AGCanada.com Network

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