Dairy Farmers of Manitoba has reached a settlement with Trans-Canada Pipelines following the explosion of a natural gas pipeline near Otterburne in late January.
The fiery pipeline rupture left 4,000 homes and nearly 200 barns without heat. It also shuttered two dairy processors in the area — Parmalat in Grunthal and Bothwell Cheese in New Bothwell — leading to a backlog of milk that couldn’t be processed.
“From Dairy Farmers of Manitoba’s perspective, we’re quite pleased by the way in which TransCanada dealt with this situation… it certainly took responsibility,” said Dairy Farmers chairman, David Wiens, adding that the compensation process moved ahead quickly and simply.
“It wasn’t an onerous task to receive compensation, as it is, we track all these costs anyways and know the exact amount of milk that is being produced in the province,” he said. “I would think that (Trans-Canada) also preferred dealing with a central organization rather than with a whole list of individual producers.”
While the amount of compensation received won’t be disclosed, Wiens noted that approximately 300,000 litres of milk had to be discarded as a result of the disruption in natural gas service and the resulting closure of the two processing plants.
During an interview shortly after the explosion, Wiens said the discarded milk had a value of approximately $240,000.
In addition to discarding some milk, approximately 600,000 litres were also shipped out of province. If not for a blizzard that left some milk trucks stranded on the sides of roads, more milk would have been shipped beyond Manitoba, Wiens said.
He added that shipping milk outside of Manitoba also increased expenditures.
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But as soon as the disruption occurred, the chairman said his organization began to liaise with TransCanada and take stock of additional costs that were being incurred.
“From the start it was very receptive to our concerns and the losses we were experiencing at the time, so right from the beginning it asked us to keep track of all of our costs in terms of milk loss and added transport costs,” he explained.
Costs and benefits shared
And the news isn’t just positive for the 70 or so dairy farmers that were directly impacted by the gas explosion and ensuing outage.
Because dairy is a supply-managed commodity, milk producers across the province would have been affected by the spilt milk and increased transportation costs.
“We would have pooled those losses, and so there would have actually been reduced sales for the month, however, there still would have been the cost of having produced that milk,” said Wiens. “So we would have pooled those losses collectively.”
That won’t be necessary now that a deal on compensation has been reached.
“There was no loss to the pool, nor were there any losses to any producers,” Wiens said. “It worked out well for both sides.”
TransCanada Pipelines was contacted for an interview, but did not respond to the request.