One million tonne mandate Grain groups applaud new order in council to get grain moving again
A federal government plan requiring each of Canada’s major railways to carry a minimum of 500,000 tonnes of western regulated grain per week is being applauded by farmers and grain industry organizations.
Federal transportation minister Lisa Raitt announced in Winnipeg March 7 that an order in council will set out minimum volumes of grain that Canadian National Railway and Canadian Pacific Railway are each required to move.
Together, the railways will be required to move one million tonnes of grain per week, an amount equal to roughly 11,000 carloads.
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Raitt said the railways have four weeks to ramp up deliveries to the minimum levels imposed by Ottawa.
Failure to meet the targets could result in fines as high as $100,000 per day.
The order will remain in effect for 90 days.
The Alberta Wheat Commission issued a news release shortly after Ottawa’s announcement, applauding Raitt and federal agriculture minister Gerry Ritz for taking an “unprecedented” action to get grain moving and provide relief to the Western Canadian agriculture sector.
“The rail backlog has resulted in significant costs to the agriculture industry, and AWC applauds the actions of the government for the immediate and long-term solutions that are being implemented,” said AWC chair Kent Erickson.
Greg Porozni, chair of Cereals Canada’s board of directors, offered similar praise.
“Restricted grain movement over the last six months has placed a significant economic strain on Western Canadian farmers. The announcement today will help get income flowing to producers again. This is not just good for farmers, it is good for Canada.”
The 5,500 car weekly minimums for each railway are in line with numbers contained in railway company service plans that were shared with grain companies last fall.
Actual deliveries of grain so far in the 2013-14 crop year are slightly higher than the five-year average, but well below the levels of service that were promised by the railways last year.
The announcement comes as farmers and grain companies are taking extraordinary measures to move their grain to markets.
Last week Richardson International took the unusual step of trucking canola to Thunder Bay, Ont., from Richardson Pioneer elevator locations in southern Manitoba.
Richardson spokesperson Tracey Shelton said the company started transferring grain last week and will continue until available capacity at Thunder Bay has been filled.
“We’re moving grain from our facilities out to Thunder Bay so we can … open up space in the country … and fill space that’s available in Thunder Bay …,” Shelton said March 5.
“It’s a desperate situation. We’re certainly anxious and really keen on getting grain moving so we’re looking at all the opportunities that we might have to do that … and this is one on those options.”
Shelton said the first shipments were canola but she did not rule out other crop types that could be moved that direction as well.
Last month, under mounting pressure from farmers and grain companies, Ottawa also took steps to beef up railway performance data collected by the federal Grain Monitoring Program.
Officials with Quorum Corp., the company contracted by Ottawa to collect data on grain movement and railway performance, said expanding the data will improve shippers’ understanding of the railways and the grain handling system.
Increasingly, rail companies are dedicating more resources on the eastern Prairies to moving commodities other than grain.
According to Quorum president Mark Hemmes, that has complicated grain company efforts to match grain shipments with ocean vessels waiting at port.
“The fact that … the railways are choosing where grain is going to get sourced from frustrates the plans that grain companies put together when they make a sale,” Hemmes said.
“The grain companies know it’s happening. They’ve told us. They’ve told the government … but there isn’t anything you can do if that’s the way that the market and the regulatory environment is set up.”
Hemmes, who spoke from Vancouver, said the number of ships waiting at port had dropped slightly as of March 5.
