Feds impose grain targets

A federal order that imposes minimum weekly quotas on the amount of western grain that the major railways must haul comes as welcome relief to the prairie grain industry.

Canada’s major railway companies will be required to carry a combined total of one million tonnes of western Canadian grain each week, the equivalent of about 5,500 rail cars a week for each railway.

Railways have a grace period of four weeks to ramp up their operations to meet the new limits. After that, failure to meet the quota could result in fines as high as $100,000 per day.

Grain shippers welcomed the order but industry observers already doubt that the quotas will be achieved on a consistent basis.

“I think it’s going to be a challenge,” said Mark Hemmes, president of Quorum Corp., which runs the Grain Monitoring Program.

“The issue is not about whether you can do a week or two like this. The issue is whether you can do this week, after week … on a sustained basis.”

Details of the federal order are sketchy.

Transport Canada official Josianne Martel said in an email that the railways must report to the transport minister weekly.

Martel’s email contained no details about how the railways would report their weekly movements, how weekly reports would be scrutinized and what would constitute a tonne of grain carried.

As of March 10, Quorum had received no details about how grain movements would be reported or monitored.

“I would imagine they’ve got a plan, but it doesn’t involve us,” Hemmes said.

He said the challenges involved in moving prairie grain to market will not disappear when spring weather arrives.

New challenges will include rural road bans, spring flooding, avalanches and rock slides.

“I don’t know that the railways will be able to sustain 5,500 (cars per week) through that entire period.”

Canadian National Railway and Canadian Pacific Railway have never delivered one million tonnes in a single week to port locations that handle western Canadian grain, according to Canadian Grain commission statistics collected over the past two and a half years.

The highest combined weekly tonnage delivered to Canada’s four port locations has never exceeded 800,000 tonnes since Aug. 1, 2011.

The closest the railways came was in Week 9 of the 2013-14 crop year, when 785,000 tonnes were unloaded at Thunder Bay, Churchill, Vancouver and Prince Rupert.

The federal order includes grain delivered to Eastern Canada, the United States and domestic markets.

CP said it is disappointed with the order in council.

“CP believes the actions of the federal government raise more questions than … answers and only (focus) on the railways and not the entire supply chain,” said spokesperson Ed Greenberg.

CN president Claude Mongeau said his company will do its part.

“Our assessment shows that an upper limit of around 5,500 cars per week may be achievable, but only if all members of the supply chain work together closely.”

CN said it expects to move an additional 10 million tonnes of export grain this year because of last year’s record harvest.

“No supply chain in the world can reasonably be expected to handle a 10 million tonne increase in traffic on such short notice,” Mongeau said.

CN said more regulations for grain transportation would be ill-advised.

“(They) would lead to adversarial relationships within the supply chain, at a time when collaboration is essential,” he said.

Robert Ballantyne, chair of the Coalition of Rail Shippers, said Ottawa’s decision to impose a million-tonne-per-week quota will require the railways to live up to promises they made to grain shippers last fall.

“If the railways say they can do that, then it was reasonable for the government to put that into the targets,” Ballantyne said.

“But I think … this will be certainly be of concern to a number of other industry groups that are big users of rail.”

Added Hemmes: “Short of stealing assets and resources away from other commodities and creating problems for other commodity groups … I think we’re in a bind.”

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  1. A wee bit of “Orderly Marketing” would be in order. The “Old School”, (a phrase generally associated with something deemed to be good that “naturally” sailed into the past tense) CWB always got these large crops off to market at a very premium price on time with little or no demurage being charged. If you have a large crop, the ships should be the ones struggling to keep up. No, no, we have 50 of them sitting at port hoping for grain to show up. WHY!! When the world and ships are waiting the bids on the prairies should be going up, not down. The line companies should have had CN and CP’s sorry tails in court like the CWB did in 1998 and get the service up to scratch last October at the latest and have the railways pay the demure charges. This kind of dysfunction for an export nation will be starving many to death in the world as we speak. This is beyond shameful. It is a calculated callousness towards mankind in the name of financial greed and gain.

  2. Barcs45 on

    Your memory is faulty.

    Year after year we had stories of demurage at port even with the CWB there.

    Year after year with average crops we were forced to carry over durum in our bins because the wheatboard chose not to sell it.

    Year after year the CWB marketed their pool 25% per quarter. In other words limit price risk. Hit all the peaks, but all the valleys too. Whatever premium was earned… was limited.

    There is no level of service agreement to move grain (much as the government would like to enforce one) There is however a cap on revenue for grain. Which means grain gets shipped cheaply…. but only when they aren’t making more money on something else.

    You can call that greed if you want. I would call it business. Greed might someone demanding that others do something for you without you compensating them for it. Demanding others pay for your grain marketing, rails move your wheat cheaply instead of moving something where they make a profit, etc.

    The difference between this year a few years ago?

    1. The CWB bureaucracy hid where the ineffiencys were. Now we can see them, and with a huge crop they are stark. Now atleast we can work on improving them.

    2. The CWB would have already told us we were going to carry over 1/3 to 1/2 your crop into the next year. Everyone would be in the same boat. But this year you had the option. You were told there was a huge crop, you were told that the prices were near high’s. Why didn’t you sell months ago? You might have a little left, but it is amazing the amount of guys I talk to that haven’t sold anything yet and are surprised to find out there is no place for it.

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