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Canada extends but lightens railway grain shipment requirements

Nov. 29, 2014 - The Canadian government has extended the requirement that the country's two big railways ship a minimum amount of grain per week, but reduced the requisite amount in light of this year's smaller harvest.

Ottawa had imposed minimum volumes in March after a record-large 2013 harvest and frigid winter bogged down crop movement by Canadian National Railway Co and Canadian Pacific Railway Ltd.

For the most recent period, the busy harvest stretch from Aug. 1 to Nov. 29, each railway has had to move a minimum of 536,250 tonnes of grain each week.

This will now be reduced to 345,000 tonnes each per week from Nov. 30-Dec. 20; 200,000 from Dec. 21-Jan. 3, 2015; 325,000 from Jan. 4-Feb. 21; 345,000 from Feb. 22-March 21; and 465,000 from March 22-28.

"Our government continues to act to ensure that grain and all commodities get to market in a timely manner," Agriculture Minister Gerry Ritz said in announcing the new rules, which take effect on Sunday.

CN said balance has been restored to the grain supply chain.

"The government of Canada today should have focused on encouraging greater supply chain collaboration and announced it was lifting - not reimposing - minimum weekly grain volume requirements on railways," CN said in a statement.

This year's harvest was large but smaller than last year. A statement from Ritz and Transport Minister Lisa Raitt said total grain supply for the current crop year was estimated to be 71.8 million tonnes, comprising a 56.4 million-tonne crop and a carry-over from last crop year of about 15.4 million.

The government said that to support the efficiency of the grain supply chain, both railways must submit to it formal winter contingency plans.

To expand transparency of the logistics system, railways must also provide information on car order fulfillment by corridor, it added.

Western farmers and grain handlers in the Prairie provinces from which the ruling Conservatives draw support had argued for extending the regulations.

But mills and processors based in eastern Canada and the United States that rely on western grains had said they were at a disadvantage as railways maximize volume through the West Coast to meet the government's targets at the expense of their markets.



November 29, 2014  By Reuters


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