Sask. farm groups look for compensation from railways

Farmers ask government to make rail companies pay demurrage fees

Saskatchewan farm groups are calling on the federal government to impose stiff financial penalties on the railways amid a major grain backlog, the cost of which is expected to climb into the billions of dollars.

In a letter to Transport Minister Marc Garneau and Agriculture Minister Lawrence MacAulay, the coalition outlined its “serious concern” about fees paid to keep ships waiting in port — known as demurrage — which are passed down to farmers.

“The sole reason for these charges is the lack of adequate rail service provided by railways to move our products to our customers,” the groups said in the letter, a copy of which was provided to the Saskatoon Star Phoenix.

“We would therefore request that your government consider mandating the railways to pay the demurrage charges resulting from their lack of service and poor planning,” the groups said in the letter.

Agriculture Producers Association of Saskatchewan President Todd Lewis said while the total is not yet known, demurrage costs hit $40 million during the 2013-14 grain backlog, which is estimated to have cost Western Canada $6.5 billion.

“We’re looking forward to speaking with the ministers about this. Hopefully they take it seriously. Farmers certainly are taking this bill seriously. It’s big money,” Lewis said Thursday in an interview.

Shipping companies charge demurrage to cover the cost of keeping vessels waiting in port. Lewis said they can reach $15,000 per day, and are built into the prices charged by shippers, meaning farmers ultimately shoulder the burden.

While grain shipping performance was “much improved” last week, according to the Ag Transport Coalition, the letter sent by APAS and other groups recommended the penalties be retroactive to Jan. 1 for every week below 85 per cent performance.

Canadian National Railway Co.’s statement did not address the request for financial penalties. Instead, the two-line statement said the company has taken steps to clear backlogs and is focused on improving grain movement.

Canadian Pacific Ltd. representatives declined to comment.

Concern about another costly grain backlog has been growing for most of the winter. Earlier this month, CN dismissed its chief executive officer, issued a rare apology and promised to provide better service, “no excuses.”

The federal and provincial governments are leaning on the Canadian Senate to pass Bill C-49, which includes a host of provisions aimed at improving rail service and making both CN and CP more accountable to farmers.

In an email, Transport Canada spokeswoman Delphine Denis acknowledged that farmers are frustrated by “significant rail service and capacity challenges this year” but did not specifically address the request for financial penalties.

“Getting ahead of emerging issues before they reach a crisis point and managing such pressures is imperative,” Denis said, referring to C-49, the committee report on which has been adopted by the Canadian Senate.