Ottawa has renewed a federal order that dictates how much grain must be moved each week by Canada’s largest railway companies.
Federal agriculture minister Gerry Ritz and transport minister Lisa Raitt announced late Nov. 29 that weekly grain volume requirements will remain in place until March 28, 2015.
However, the volume requirements have been reduced significantly from the levels that were previously in place.
Beginning Nov. 30, Canadian National Railway and Canadian Pacific Railway will be required to haul 200,000 to 465,000 tonnes of grain per week or face fines as high as $100,000 per week for non-compliance.
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The exact amount that the railways must haul each week will vary depending on the time of year.
According to Ottawa’s plan, both CN and CP must haul:
• 345,000 tonnes per week between Nov. 30 and Dec. 20.
• 200,000 tonnes per week between Dec. 21 and Jan. 3, 2015.
• 325,000 tonnes per week between Jan. 4, 2015 and Feb. 21.
• 345,000 tonnes per week between Feb. 22 and March 21.
• 465,000 tonnes per week between March 22 and March 28.
In addition, the railways will be required to “submit formal winter contingency plans,” which include service plans for producer car loaders and short-line railways for the remainder of the 2014-15 crop year, which ends July 31, 2015.
In an effort to improve transparency in the logistics system, the railways will also be expected to provide information on the number of cars that are spotted on each railway corridor.
That information will include rail car placements at producer car loading sites and short-line railway companies that operate in Western Canada.
The information will be supplied to the Western Canadian Grain Monitoring Program, which Quorum Corp. manages for the federal government.
Ottawa also renewed calls for all parties in the grain supply chain to work together to develop solutions to ensure the timely movement of grain.
Ritz and Raitt made the announcement just hours before a previous federal order requiring the railways to haul 500,000 tonnes of grain per week was due to expire.
“Our government has again acted to ensure the supply chain operates effectively in delivering Canadian grain to market,” said Raitt in a Nov. 29 news release.
“Railways, shippers and producers must work together and meet these new requirements.
“Our government continues to act to ensure that grain and all commodities get to market in a timely manner.… We continue to call on all parties in the grain supply-chain to work together to ensure the efficient movement of grain to markets through the winter.”
CN’s response to Ottawa’s new regulations was consistent with previous statements issued by the company.
CN has argued since the weekly volume requirements were first introduced in March 2014 that Ottawa should remove the volume targets and allow normal commercial relations to dictate the amount of grain that is moved.
“End-to-end balance has been restored to the grain supply chain. and CN continues its record-setting grain movements in the 2014-15 crop year,” the company said.
“As such, the government of Canada … should have focused on encouraging greater supply chain collaboration and announced it was lifting — not re-imposing — minimum weekly grain volume requirements on railways.
“CN believes that normal commercial relationships and a stable regulatory environment are essential for an effective, well-functioning rail transportation marketplace, including that for grain.”
With a few exceptions, farm groups across Western Canada have favoured the retention of the federal volumes requirements.
In a Nov. 30 email, Grain Growers of Canada applauded Ottawa’s announcement, claiming the decision to extend the volume requirements will help ensure that the rail shipping deficiencies experienced last winter do not recur.
“(The ministers) are once again demonstrating leadership in providing key support for Canada’s agriculture and agri-food sector”, said GGC president Gary Stanford.
“Canadian farmers grow some of the highest quality grain in the world. It is in everyone’s best interest to see it get to market. The reliable movement of Canadian product is of vital importance to the livelihoods of our members across the country.”
Stanford said GGC members were particularly pleased to see that CN and CP will be required to submit formal winter contingency plans.
He said the plans will be “integral in responding rapidly to changing winter conditions and will provide confidence to grain shippers.”
The Alberta Wheat Commission also issued a statement supporting the measures, although chair Kent Erickson said an extension of the minimum volume requirements should not be viewed as a long-term solution to the ongoing challenges facing grain shippers in Western Canada.
He said the commission will continue to press for reforms to Canada’s grain transportation system through the Canada Transportation Act review.
“We will continue to voice our opinion on what we believe is the most critical mechanism to ensure that railways are held accountable for their performance through the inclusion of reciprocal penalties in service level agreements,” he added.
Contact brian.cross@producer.com
