Mandatory minimum grain handle extended

A new order-in-council will extend the federal government’s mandatory minimum weekly grain handle for Canada’s big two railways through March, just as the previous order expires.

Federal Transport Minister Lisa Raitt and Agriculture Minister Gerry Ritz on Saturday announced the mandatory minimums, which expired Saturday, are extended until March 28, 2015.

The new order, however, adjusts the minimum five times between now and then. Where the previous rule required Canadian National (CN) and Canadian Pacific (CP) Railway to each move 536,250 tonnes of grain per week, each railway will have to move 345,000 tonnes per week between Sunday and Dec. 20.

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From Dec. 21 until Jan. 3, 2015, the minimum drops to 200,000 tonnes per railway per week; rises to 325,000 tonnes per week for the period from Jan. 4 to Feb. 21; rises to 345,000 tonnes again from Feb. 22 to March 21; and 465,000 tonnes for the week of March 22 to 28.

Failure to meet the minimums could result in penalties for non-compliance of up to “$100,000 per violation,” the government said. The railways are still also required to report on demand and volume.

The total grain supply for the 2014-15 crop year is estimated at about 71.8 million tonnes, the government said, including a crop of about 56.4 million tonnes and carryover from 2013-14 at about 15.4 million tonnes.

The government said Saturday it also expects both CN and CP to submit formal winter contingency plans, including service plans for producer car loaders and shortline railways, for the remaining crop year.

Both railways, the government said, are also expected to provide information on car order fulfillment by corridor, including the placement of rail cars at producer car loading sites and along shortline railways, to the federally appointed Grain Monitor, so as to “expand transparency in the logistics system.”

“Work together”

“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,” Ritz said in a release Saturday.

Mandatory minimums were first imposed last spring through a March 7 order-in-council, then extended to the end of the 2013-14 crop year with minimum volume requirements of 500,000 tonnes per week per railway.

A second order-in-council on Aug. 1 raised the minimum to 536,250 tonnes per week per railway until Nov. 29.

Ritz, in an interview with Reuters correspondent Rod Nickel in late October, said the order-in-council “did what it was intended to do,” citing government data showing grain has flowed more smoothly since the 2014 harvest began compared to last fall.

The government, Ritz told Reuters, would need to see “a complete failure by the railways to move grain” to extend the minimums.

Later in October, however, Ritz’s office emphasized in an email that “no decision has been made with respect to volume requirements,” and Ritz and Raitt would “receive advice from the (Canadian Transportation Agency) and will make a decision in due course.”

CN, in a statement Saturday, retorted that the federal government “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 said its grain handling performance “shows a supply chain fully in sync” with movement of Prairie grain 25 per cent greater than its past average performance.

“With the stocks now drawn down in line with normal levels, the mission of bringing the grain supply situation back to balance was achieved within a period of a little more than a year despite the 100-year crop harvested last fall.” — AGCanada.com Network

 

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