Federal Govern­ment takes ac­tion on grain trans­porta­tion back­log

The Southwest Booster - - NEWS -

The Federal Govern­ment has es­tab­lished min­i­mum vol­umes of grain Canada’s two rail com­pa­nies have to move in or­der to ad­dress the is­sue of an un­prece­dented back­log of grain.

Prairie farm­ers har­vested a record 76 mil­lion tonne crop in 2013, nearly doubling an­nual pro­duc­tion lev­els. How­ever, trans­porta­tion is­sues dur­ing the win­ter months have pre­vented much of the crop from reach­ing West Coast ter­mi­nals, with the Federal Govern­ment step­ping in on March 7 to ad­dress the is­sue.

An Or­der of Coun­cil was an­nounced last Fri­day, call­ing on Cana­dian Na­tional and Cana­dian Pa­cific rail­ways to move min­i­mum vol­umes of grain, plus re­port weekly ship­ment to­tals to the federal Min­is­ter of Trans­port.

The Federal Govern­ment is re­quir­ing the rail­ways to in­crease the vol­umes of grain car­ried each week, over a four week pe­riod, to reach a com­bined tar­get of one mil­lion met­ric tonnes per week. This tar­get will more than dou­ble the vol­ume of grain cur­rently be­ing moved.

The Or­der also cre­ated non-com­pli­ance penal­ties of up to $100,000 per day.

Saskatchew­an’s Provin­cial Govern­ment was pleased to see this was the first ini­tia­tive by the Federal Govern­ment to ad­dress the trans­porta­tion back­log.

“We had asked for im­me­di­ate ac­tion in­clud­ing emer­gency leg­is­la­tion to be in­tro­duced and we are pleased the federal govern­ment has made this com­mit­ment,” Pre­mier Brad Wall said. “Clear­ing this grain trans­porta­tion back­log has been the num­ber one pri­or­ity for our govern­ment and these federal mea­sures will help our pro­duc­ers to fi­nally get their prod­uct to ports.”

Saskatchew­an Agri­cul­ture Min­is­ter Lyle Ste­wart was also op­ti­mistic about the federal govern­ment’s an­nounce­ment they will also in­tro­duce emer­gency leg­is­la­tion in the near fu­ture.

“To­day’s federal Or­der in Coun­cil with in­terim mea­sures is a good first step and we look for­ward to work­ing closely with the federal govern­ment to en­sure the emer­gency leg­is­la­tion in­cludes manda­tory ser­vice level agree­ments, re­cip­ro­cal penal­ties for grain ship­pers and rail­ways, and spe­cific com­mit­ments for ton­nage of grain de­liv­ered,” Ste­wart said.

The provin­cial govern­ment pointed out they will be mon­i­tor­ing pro­ducer de­liv­er­ies to grain ship­pers and ba­sis lev­els with the ex­pec­ta­tion that grain com­pa­nies will have staff on hand 24 hours per day and seven days per week at both in­land ter­mi­nals and at port when­ever nec­es­sary.

“Pro­duc­ers have ul­ti­mately been left bear­ing the cost for this cri­sis and we fully ex­pect ev­ery player in the sup­ply chain to do their part to get this grain moved,” Ste­wart said. “This in­cludes both grain com­pa­nies and rail­ways and we ex­pect penal­ties to be levied against ei­ther party if they are not hon­our­ing their com­mit­ments.”

The Saskatchew­an As­so­ci­a­tion of Ru­ral Mu­nic­i­pal­i­ties voiced their sup­port for the Or­der which takes ef­fect im­me­di­ately.

“The an­nounce­ment to­day was some­thing we were anx­iously await­ing; Saskatchew­an grain pro­duc­ers have been ask­ing for ac­tions to ad­dress the sit­u­a­tion and these mea­sures are an at­tempt to ad­dress both short and long term con­cerns,” said SARM Pres­i­dent David Marit. “We look for­ward to work­ing with the Federal Govern­ment on this new leg­is­la­tion as it is drafted.”

Ce­re­als Canada said the Or­der in Coun­cil was an im­por­tant step in ad­dress­ing Canada’s clogged grain trans­porta­tion sys­tem.

The Al­berta Wheat Com­mis­sion sup­ported the ini­tia­tive, but high­lighted that the de­lay in rail ser­vice has al­ready had a sig­nif­i­cant eco­nomic im­pact on western Cana­dian grow­ers with nu­mer­ous ships wait­ing to load in Van­cou­ver and Prince Ru­pert and de­mur­rage charges now ex­ceed­ing $25 mil­lion. In ad­di­tion, news out of Ja­pan in­di­cates that they plan to buy more grain from the United States in­stead of Canada due to poor de­liv­ery and no clear res­o­lu­tion to the bot­tle­necks. Es­ti­mat­ing there has been a $2 bil­lion to $4 bil­lion cost im­pact on grow­ers, they noted Canada’s rep­u­ta­tion as a qual­ity and re­li­able sup­plier has been hang­ing on the line.

“To­day’s an­nounce­ment demon­strates that the govern­ment is com­mit­ted to en­sur­ing Canada re­mains a pri­mary and re­li­able sup­plier of agri­cul­ture prod­ucts, and rec­og­nizes the long-term, neg­a­tive im­pact that poor rail ser­vice can have on Canada’s in­ter­na­tional rep­u­ta­tion,” says Kent Erick­son, Chair of AWC. “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.”

How­ever, the Saskatchew­an NDP Cau­cus says the re­ac­tion by both lev­els of govern­ment has been too slow and too weak to help pro­duc­ers with grain still in the bins.

They ar­gue the penal­ties for not mov­ing the grain, and the to­tal amount of com- mod­ity they are re­quired to move, are not suf­fi­cient to make a dif­fer­ence. They stated the 11,000 car per week to­tal car re­quire­ment is about the same num­ber of grain cars which were moved in the fall.

“The federal govern­ment is treat­ing the two big rail com­pa­nies with kid gloves – and the Sask. Party gov­ern- ment is pat­ting them on the back for it,” said Cathy Sproule, NDP agri­cul­ture critic. “To­day’s an­nounce­ment does noth­ing to com­pen­sate pro­duc­ers that have al­ready lost bil­lions, and the 5,500 cars re­quired from each com­pany only re­flects what the rail com­pa­nies have al­ready promised for spring. This just isn’t good enough to re­solve the cri­sis, and it hasn’t been well re­ceived by the pro­duc­ers I’m hear­ing from to­day.”

Sproule added that a $100,000 fine is a small price to pay for the mas­sive cor­po­ra­tions, but grain sit­ting un­shipped is hav­ing a ma­jor fi­nan­cial im­pact on pro­duc­ers, many of whom have bills and loans pil­ing up and no cash flow to buy their in­puts for the com­ing seed­ing sea­son. The NDP says about 14,000 cars are re­quired im­me­di­ately to move grain – the min­i­mum likely nec­es­sary to get the grain out of the bins. Adding open-run­ning rights so other rail com­pa­nies can step in to help could be an im­por­tant part of the so­lu­tion.

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