Poland, Slovakia and Hungary announced restrictions on imports on Friday after the European Commission decided not to extend a ban on sales into Ukraine’s five EU neighbours, which also include Romania and Bulgaria.

Ukraine retaliated by filing complaints Monday with the World Trade Organization (WTO) against Poland, Slovakia and Hungary, while other EU members condemned the unilateral moves.

Spain’s agriculture minister on Monday said the bans seemed illegal while his French counterpart said they called European solidarity into question.

Poland, with a parliamentary election looming in October, distanced itself even further and withdrew from a co-ordination platform — a group including the five neighbours, Ukraine and the European Commission — that has been looking at solutions to boost Ukraine grain transit to global markets.

“We have to look forward, since Ukraine said it wants to sue Poland… every comment we would have made on this platform could be used against us,” Poland Agriculture Minister Robert Telus told reporters in Brussels.

For much of the last year, some 60 per cent of Ukrainian grain has transited through the five EU countries using so-called Solidarity Lanes as an alternative to the Black Sea due to Russian threats.

Like most countries in central and eastern Europe, Poland and Slovakia have been some of Kyiv’s strongest allies in its fight against Russia’s invasion that began in February 2022. Hungary’s stance has been more ambivalent, as the only member of the EU and NATO alliance to maintain close relations with Moscow, still the main source of its oil and natural gas.

But grain exports have been an area of friction throughout the region.

Exports disrupted

Ukraine’s war with Russia has disrupted its ability to export agricultural products through its Black Sea ports, leading to a surge in shipments via road, rail and barge through its five EU neighbours.

Farmers in those countries protested these shipments were distorting local markets, leading the EU to approve trade restrictions — while still allowing transit — until Sept. 15.

Spain’s agriculture minister Luis Planas Puchades said it was up to the European Commission to judge whether the unilateral bans have broken any laws, but said the measures seemed illegal.

France’s agriculture minister, Marc Fesneau, was also critical of the measures.

“For solidarity there needs to be unity… We must keep hold of the two elements, otherwise the European project is at risk. The single market is a fundamental element,” he said.

Romanian Prime Minister Marcel Ciolacu said on Monday his country would look to extend a trade ban on Ukrainian grain for 30 days if import requests rise.

Ciolacu said Romania had not seen requests to import grain from Ukraine since Friday and did not want a repeat of the situation earlier this year that impacted Romanian farmers.

“The Ukrainian prime minister promised to send the export licensing proposal today, which we will discuss,” Ciolacu said.

“If there will be export requests to Romania I will ask the agriculture and economy ministers to draft an order extending the ban for a period of 30 days until things are clarified.”

The Bulgarian parliament voted to lift its ban on Ukrainian grains last week.

— Reporting for Reuters by Julia Payne in Brussels and Yuliia Dysa in Kyiv; additional reporting by Luiza Illie in Bucharest, Tom Balmforth and Pavel Polityuk in Kyiv, Sybille de La Hamaide in Paris, and Marek Strzelecki; writing by Nigel Hunt.

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Ukraine has become entirely dependent on alternative European Union routes, called Solidarity Lanes, for its grain exports after Russia abandoned in July a year-long deal that had allowed Ukrainian grains to be shipped safely via its Black Sea ports.

As a result, farmers in neighbouring states — Poland, Hungary, Romania, Bulgaria and Slovakia — have faced increased competition and bottlenecks in their own markets.

The European Commission announced “temporary preventive measures” in May that would ban sales into these five states while allowing transit to non-EU markets, mainly Africa.

“The preventive measures were effective, efficient and stabilizing the markets in the five member states and also helped increase exports via Solidarity Lanes,” Agriculture commissioner Janusz Wojciechowski told the European Parliament.

“This is the main argument for prolongation of the preventive measures which is my strong position.”

He added that the Commission was closely monitoring the situation. The Commission also allocated 156 million euro (C$227 million) in compensation to the affected EU farmers and amassed nearly 1.9 billion euro (C$2.77 billion) to improve the alternative routes.

The five countries have been pushing for an extension of the ban past its Friday expiry and Poland has repeatedly said it will unilaterally continue with the ban if the Commission does not extend it.

Over 60 per cent of the Ukrainian grain transiting the EU moves through Romania where its farmers’ associations have said they plan protests should the ban was lifted.

Romania’s agriculture minister, Florin Barbu, suggested the European Commission to set up a subsidy system for transiting Ukrainian agricultural products outside the bloc.

“The restrictive measures have had a positive effect both for the Romanian grain market and for the transit of Ukrainian grain, which is rising,” Barbu said in a statement on Tuesday after meeting his Hungarian counterpart in capital Bucharest.

— Reporting for Reuters by Julia Payne in Brussels and Luiza Ilie in Bucharest.

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Bulgaria, Hungary, Poland, Romania and Slovakia cited concerns that grain from Ukraine meant to be exported to other countries had ended up in their local markets, which was pushing down prices for local farmers.

European Commission Vice-President Valdis Dombrovskis tweeted that the EU executive had reached “an agreement in principle” with the five “to address concerns of both farmers in neighbouring EU countries and Ukraine.”

He said the deal included “safeguard measures” for four products: wheat, maize, rapeseed and sunflower seed. He did not provide any further details.

The deal also includes a support package worth 100 million euros (C$149.25 million) for local farmers, Dombrovskis said.

Ukrainian President Volodymyr Zelenskiy said he had spoken on Friday to Charles Michel, president of the European Council, to raise concerns over what he called a destructive ban on exports of agricultural products.

“This gives the Kremlin dangerous hope, the hope that in our common European home someone’s wrong decisions can prevail over common interests,” he said in a video address.

The five countries became transit routes for Ukrainian grain that could not be exported through the country’s Black Sea ports because of Russia’s invasion.

Bottlenecks then trapped millions of tonnes of grains in countries bordering Ukraine, forcing local farmers to compete with an influx of cheap Ukrainian imports that they said distorted prices and demand.

European Commission President Ursula von der Leyen said the deal “preserves both Ukraine’s exports capacity so it continues feeding the world, and our farmers’ livelihoods.”

— Reporting for Reuters by Andrew Gray, Sudip Kar-Gupta and David Ljunggren.

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Canadian National Railway said Tuesday that heavy rainfalls in the region have led to mudslides and washouts on its network.

Crews are inspecting affected areas and “carrying out repairs which are critical to the passage of railway traffic through southern B.C.,” the company said in a statement.

That repair work is “progressing safely,” CN said — but “northbound and eastbound traffic from Vancouver, as well as inbound to Vancouver from east/north of Kamloops, continue to be impacted.”

Canadian Pacific Railway, in a separate statement, said it’s “experiencing a track outage” on its mainline between Yale and Agassiz, B.C., north of Hope, affecting rail service in the region.

In effect, “all rail service coming to and from the Port of Vancouver is halted because of flooding in the British Columbia Interior,” the Reuters news service quoted port spokesperson Matti Polychronis as saying Tuesday.

The provincial government on Monday said Highway 1 through the Fraser Valley would be closed in both directions effective 7 p.m. that evening.

A flood warning on the Sumas River led to the decision to close the highway between Highway 11 and No. 3 Road, the province said.

Highway 7, the main alternative to Highway 1 through B.C.’s Lower Mainland region, “also remains closed due to flooding and debris,” the province said Monday.

Highways 1 and 7 remained closed as of Tuesday morning, part of a long list of provincial highways closed due to flooding, washouts and mudslides.

The provincial transportation and infrastructure ministry said Tuesday the Malahat section of Highway 1 between West Shore Parkway and Tunnel Hill will be closed in both directions from 6 p.m. to 6 a.m. each night until Monday next week.

“The full overnight closure is required to repair the highway at Tunnel Hill from damage caused by the recent weather conditions,” the province said.

During the daytime, that stretch of the highway will be open only to single-lane alternating traffic for 30-minute intervals; drivers should consider limiting travel for essential purposes only, the province added.

Flood risks and infrastructure damage have so far led to partial evacuations in B.C. communities including Abbotsford and Chilliwack and a full evacuation for the community of Merritt. — Glacier FarmMedia Network

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“Both (CN and Canadian Pacific Railway) are having troubles because there are so many fires in the area,” Mark Hemmes, president of Quorum Corp. and Canada’s grain monitor, said in an interview Thursday.

“There was a new fire around Lytton (Wednesday). Fires had started around Cache Creek and Ashcroft. It’s just a mess down there. I think (CN) ran a train Tuesday night and then they had to stop and didn’t run a train until yesterday morning.

“With forest fires all over the place you don’t want to run trains at night and all of a sudden a wildfire hits and it catches a train in the middle of nowhere. That crew is in danger.”

Even after nearby fires are controlled, train movement will be delayed because whenever weather conditions raise the fire threat, under a new order limiting train speeds in extreme fire risk areas, issued by federal Transport Minister Omar Alghabra effective Saturday.

Why it matters: All train traffic, including grain, destined for the Port of Vancouver, travels through southern B.C. Measures to slow trains, to reduce the risk of starting wildfires, will slow grain movement.

The July 1 wildfire that destroyed 90 per cent of Lytton killing two residents, also damaged CN’s bridge by the town.

There were unconfirmed reports the fire might have been caused by sparks from a train. An investigation continues.

Because of a track-sharing agreement the bridge’s closing also affected CP track.

To improve efficiency all trains heading west from Kamloops to Mission, B.C, switch to the CN line. Trains going east from Mission use CP’s line back to Kamloops.

While CN’s bridge was out, some CN trains moved east on CP’s line, creating a backlog for both railways, Hemmes said.

CP resumed operations July 5, CP spokesman Andy Cummins wrote in an email.

“On July 9, train traffic in the corridor ceased for 48 hours in compliance with a (previous) Transport Canada order,” he wrote. “CP resumed operations again on July 11 and is reducing the traffic backlog.”

Meanwhile, CN is following safety protocols to prevent fires, CN spokesman Mathieu Gaudreault wrote via email.

“Moreover, we are increasing patrols that precede and follow trains,” he wrote. “These patrols are equipped with fire suppression equipment and keep a constant lookout for any signs of fire risk.”

The Western Grain Elevator Association (WGEA), which represents Canada’s major grain companies, is watching the results closely.

“If there is such a thing as a silver lining in this case it is we are in a slower (grain) shipping period relatively speaking,” WGEA executive director Wade Sobkowich said in an interview. “It would be much more impactful if this was to happen in October, for example.

“That being said for the grain still needing to move, the impact of the Lytton fires is that exporters are not able to load and execute in a timely fashion. The perception might be there’s not a lot of grain left… so it’s not having as big an impact, but… it is impacting that grain that wants to move and is destined for vessels to execute on a sale to a customer.”

As for how Alghabra’s order affects grain movement, Sobkowich said it depends on the weather.

“It depends on how many days we have over 30 C (when trains, under the order, must reduce speeds),” he said. “And it depends on other traffic. It depends on so many variables. That order puts operational restrictions on those lines when the (fire) hazard rating is listed as extreme. So when will that be between now and the end of October?”

Western Canadian grain shipments to Vancouver had been running at record pace much of the crop year, but were slowing in recent weeks as is usually the case just ahead of harvest.

But the Lytton bridge closure slowed grain movement even more, Hemmes said.

“The stocks are really starting to deplete,” he said in an interview Monday, the day before the Lytton bridge re-opened. “When we look at some of the daily reports on unloads in Vancouver you get zeros across the board.

“There’s not a lot of grain that’s making it across and into the lower mainland and that’s going to become a little bit problematic with vessels continuing to arrive… but you really can’t hold the railways responsible for that. They are as much a victim of the circumstances as anyone else.

“It’s not a catastrophe because we are in a period of time (of lower movement). If this would’ve happened in the fall it would of just reverberated through the whole rest of the crop year.”

In the short term, coal and potash shippers will probably be hurt more than grain, Hemmes said.

“Certainly the container business will be hurt,” he added. “You keep getting container ships showing up and unloading on the docks (in Vancouver), but pretty soon the docks get full so you can’t unload anything more.”

These events underscore how reliant Canada’s grain farmers are on just two rail lines running through B.C.

“It’s a narrow track across the prairie and if any piece of it is disrupted it affects the whole thing,” Sobkowich said. “It really defines the saying ‘we are only as strong as our weakest link.'”

While it’s critical for grain companies to get grain to Vancouver to meet current sales, the peak time for grain movement usually starts in late September.

“But regardless of the size of the crop we are going to see here (in fall) grain companies are going to want to buy and sell as much as possible in the earlier part of the (crop) year,” Sobkowich said.

“The size of the harvest, I wouldn’t link that to the fires or disruption in the pipeline because once that harvest comes off grain companies will want to move as much as possible as early as possible.”

— Allan Dawson reports for the Manitoba Co-operator from Miami, Man.

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Canadian National Railway (CN) announced Monday it had moved 2.95 million tonnes of grain last month, beating the previous March record of 2.74 million transported last year. It was also the 13th straight month CN broke its own monthly grain movement record.

During its first quarter, despite deliveries being affected by adverse weather, 8.2 million tonnes were moved by CN, topping its previous Q1 record of seven million in 2017. The total was also more than 25 per cent higher than the three-year average of 6.5 million.

CN has moved 22.7 million tonnes of grain during the 2020-21 crop year so far, 3.6 million more than the previous year-to-date record from the 2018-19 crop year.

“Since the beginning of 2021, Canadian grain farmers, along with all of our supply chain partners, have worked closely with CN’s railroaders to deliver record grain performance despite the pandemic and the very difficult operating conditions we faced in February,” CN senior vice-president James Cairns said in a release.

Canadian Pacific Railway (CP), meanwhile, reported it had moved 2.53 million tonnes of grain from February 28 to March 27, according to its own weekly results.

In March 2020, CP moved 2.21 million tonnes of grain. The railway also said grain movement is 14.5 per cent ahead of last year’s crop year-to-date. During its first quarter, 6.62 million tonnes were transported, 12.6 per cent more than in its 2020 Q1.

— Compiled by Adam Peleshaty for MarketsFarm.

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It’s counterintuitive, but the explanation is simple: grain companies have ordered 13 per cent more cars this crop year, and the railways, while setting records, aren’t keeping up with the increased demand, according to Ag Transport Coalition (ATC) figures.

The ATC is a coalition of grain companies and farm groups that contracts QGI Consulting to monitor the railways’ grain shipping performance.

From April until the end of the 2019-20 crop year July 31 grain shipping demand was up 21 per cent from the previous year, QGI Consulting’s Milt Poirier said in the shipping week 12 Grain by Train weekly podcast from Pulse Canada.

Why it matters: While grain shipping records are welcome, grain companies emphasize they need to become common as western Canadian farmers keep upping crop production and grain companies are finding markets to take it.

“Normally you would see a slowdown (in grain car orders) in the summer months pre-harvest but that didn’t happen this year, and so far this year (starting Aug. 1) shipper demand is up 13 per cent overall as compared to the same time last year,” Poirier said.

“Over the course of the last six weeks neither railway frankly has performed particularly well, with CN supplying only 77 per cent on average, and CP only 83 per cent of shipper demand on average on a weekly basis. So the trend in performance is downward unfortunately but that’s the trend we have been seeing over the last month and a half.”

Grain shippers say railways are performing well when they deliver 90 per cent of car orders in the week ordered.

Still, both CN and CP set new grain movement records not only for October, but for any month. CN moved 3.27 million tonnes of grain last month, surpassing its previous record of 2.88 million set in October 2019 by 13.5 per cent.

“This unprecedented performance follows seven record months of Canadian grain movement (for CN) in March, April, May, June, July, August, and September,” CN said in a news release.

CP moved three million tonnes in October, breaking its previous movement record set in April by 6.9 per cent.

“It also betters the previous October record of 2.66 million tonnes set in 2019, by 14.2 per cent,” CP said in a news release.

CN and CP set grain movement records in the third quarter (July, August, September) of 2020 moving 7.76 million and 7.72 million tonnes, respectively.

If the railways continue at the current pace they might match or even exceed last year’s record grain movement of 60.7 million tonnes, which broke the previous record of 54.3 million tonnes in 2018-19.

“We should be setting a record every year,” Jeff English, Pulse Canada’s vice-president of marketing and communications, said in an interview Nov. 4. “In fact we have to be setting a record every year because we know farmers are producing more. We know the demand is out there. We know we have ambitious export targets so records being set is an absolute must and is a great news story and it should be an expectation.”

But make no mistake, grain companies aren’t complaining.

“We are getting good service from both CN and CP right now and that’s great for us, that’s great for the farmers, that’s great for the railways and it’s great for Canada,” Wade Sobkowich, executive director of the Western Grain Elevator Association (WGEA), representing the West’s major grain companies, said in an interview Nov. 3.

“We’re pleased to get the capacity and the service that we need right now and we look forward to that continuing into the winter period.”

History has shown winter can throw the railways off schedule because of snow slides and cold temperatures that reduce train sizes.

While the railways can’t change the weather, shippers argue they can prepare better for it.

And sometimes, like last year, blockades arise that the railways have no control over.
Shippers also worry that once the economy begins to rebound traffic from other commodities will sidetrack grain.

Shipping records are welcome, but Sobkowich said the demand to move grain in Canada has never been higher.

“The shippers are testing what the railways can do… ” he said. “If they (grain companies) don’t and their competitor does the competitor is going to get a larger share of the pie. The system is designed to motivate shippers to ask for the top end of what they think they can get.

“We need to move a record amount in order to match the growing crop size in Western Canada… since 2013-14. The railways are adjusting their capacity offering… that’s good and what they should do. They are moving record volumes because farmers are growing record volumes.”

Meanwhile, both railways say they continue to invest to boost capacity.

CP has 3,300 new hoppers out of a commitment for 5,900 laid out in 2018, it said in a news release. The new highly efficient cars carry 15 per cent more grain volume and 10 per cent more weight compared to the older cars they are replacing.

CN said it’s receiving its first shipment of the 1,500 new high-capacity grain cars, with 100 cars received and another 500 expected between now and the end of the year.

Meanwhile, grain companies have invested “literally billions of dollars adding new country elevators and more loop tracks that are more efficient,” Mark Hemmes, president of Quorum Corporation and Canada’s grain monitor, said in an interview Nov. 3.

“The demand for rail service, because of those investments is going to naturally increase. And the railways are responding to it, but not at the rate that demand has increased.”

G3 recently opened a new export terminal in Vancouver and another one, Fraser Grain, is opening soon, he added.

Asked about a possible three-peat in record annual grain shipping, Hemmes said: “I think what we should hope for is that we move as much grain through this year as we did last year without having a panic attack in the middle of winter because something went wrong.

“My concern about talking about another record year is that we’re only three months into the crop year. I’m not a superstitious person but I don’t want to jinx it.”

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Increased demand from many countries stockpiling grain amidst the global COVID-19 pandemic was cited as one of a number of factors behind the solid movement of wheat and canola, according to an update from the port.

Global grain supply was also impacted by drought in Australia and export restrictions in Russia. Meanwhile, Canada had significant carryover stock from the 2019 crop.

The pandemic has also increased available capacity in the supply chain for grain, with reduced movement of oil and gas freeing up railway capacity, according to the report.

Both Canadian National (CN) and Canadian Pacific (CP) railways have reported grain movement records in recent weeks. Strong grain shipments are anticipated to continue through the summer.

A total of 2.338 million tonnes of grain have moved through the Port of Thunder Bay during the shipping season so far, accounting for 90 per cent of the business at the port. That compares with 1.782 million tonnes at the same time a year ago.

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As Canada’s biggest rail strike in a decade entered its seventh day, industry kept pressuring the government to intervene. The Teamsters Canada Rail Conference, the union representing the 3,200 striking CN employees, said it was no closer to an agreement than when its members first hit picket lines.

The Unifor labour union said 70 employees would be laid off effective Thursday at a Nova Scotia facility contracted by CN to handle vehicles shipped in and out of Canada.

Meanwhile, frustrated farmers facing propane shortages dumped wet corn in front of the prime minister’s local Quebec office and pleaded for the government to intervene.

Striking conductors and yard workers are demanding improved working conditions, including worker rest breaks. The federal government has sidestepped industry calls to force employees back to work, insisting collective bargaining is a quicker solution.

“Every option (is) always on the table, but for the time being we hope that both parties will get to an agreement and that will be the fastest way,” federal Agriculture Minister Marie-Claude Bibeau told reporters in Regina.

Canada relies on CN and Canadian Pacific Railway to move products such as crops, oil, potash, coal and other manufactured goods to ports and the United States. Industry figures show about half of Canada’s exports move by rail, and economists have estimated a prolonged strike could eat into economic growth.

A CN spokesman said company officials continue to negotiate and called for binding arbitration, a demand the union has rejected thus far.

Vessels pile up

The strike left at least 35 vessels waiting at Canada’s West Coast to load grain shipments, Mark Hemmes, president of Quorum Corp., which monitors the movement of Prairie grain for the Canadian government, told Reuters. Hemmes said many of the grain handling facilities at major ports on the West Coast are serviced only by CN.

Shipments from those ports supply international markets, including Asia.

An association of Canadian exporters has declared event of delay, allowing members to avoid contract penalties due to circumstances outside their control.

Nutrien said it was preparing to shut down its largest potash mine, at Rocanville, Sask., for two weeks effective Dec. 2.

The north shore of Port of Vancouver’s Burrard Inlet is home to a major potash and coal export terminal as well as grain terminals operated by Cargill and Richardson International that are normally serviced only by CN.

A “trickle of cars” from CP was reaching the grain terminals, but they are “for all intents and purposes shut down,” said Wade Sobkowich, executive director of the Western Grain Elevator Association.

Cargill spokeswoman Connie Tamoto said the company had taken “mitigation measures” to ensure customer needs are met.

Richardson International did not respond to requests for comment.

Around 300 farmers, angry at a shortage of propane they need to dry grain, gathered with a dozen tractors near Prime Minister Justin Trudeau’s parliamentary office in Montreal on Monday to demand government action to end the strike. Some farmers held bags of grain and signs that read “To dry grain, you need propane.”

CN is a key link in transporting propane to parts of Eastern Canada where it is also used to heat homes and hospitals.

— Reporting for Reuters by Kelsey Johnson in Ottawa, Allison Lampert in Montreal and Arunima Kumar in Bangalore; additional reporting by Rod Nickel in Winnipeg, David Ljunggren in Ottawa and Christinne Muschi in Montreal.

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Montreal-based CN on Tuesday reported net income of $958 million on total revenues of $3.221 billion for the quarter ending Sept. 30, down from $972 million on $3.014 billion in the year-earlier period.

CN CEO Luc Jobin credited the increase in revenue to “increased demand across key business segments such as frac sand, intermodal, coal and Canadian grain.”

Revenue also saw support from freight rate increases and higher fuel surcharge rates, though operating expenses rose 10 per cent to $1.762 billion, mainly on “higher costs from increased volumes and higher fuel prices,” the company said.

CN, in its Q3 report, didn’t break out any figures for Canadian versus U.S. grain traffic in its grain and fertilizers business segment, which saw about 145,000 total carloads in Q3, down from 150,000 in the year-earlier period.

The railway, in its grain and fertilizers segment, booked revenue of $492 million for the quarter, down from $497 million, for rail freight revenue per carload of $3,393, up from $3,313.

Jobin said CN is “increasing investments in our infrastructure and equipment by $100 million, for a total capital program of $2.7 billion in 2017,” and has been “hiring across our network, particularly in Western Canada.” — AGCanada.com Network

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