Canada extends railway grain volume rules through harvest

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The Canadian government will extend through the autumn harvest period its requirements that the two big railways in the world's third-biggest wheat exporter move more than 1 million tonnes of grain per week.

 

The regulations announced on Friday require Canadian National Railway Co and Canadian Pacific Railway Ltd to each move 536,250 tonnes of grain per week starting on Sunday and lasting through Nov. 29. Failing to move that volume can incur penalties of C$100,000 ($92,000) per violation.

In March, the Conservative government forced the railways to each move 500,000 tonnes of grain weekly to unclog a massive backlog that followed record 2013 Canadian wheat and canola crops and a brutal winter. Those requirements were due to expire on Sunday.

"Harvest looks like it might be late again. If that's the case, then there is still a lot of grain to move through August and September," Agriculture Minister Gerry Ritz said in an interview.

Ottawa's decision keeps the pressure on the railway companies, but may not satisfy grain handlers such as Viterra , Richardson International and Cargill Ltd, who wanted minimum volume movements to the United States and other rail corridors.

The railway backlog, which left billions of dollars worth of crops on farms in winter, has eased considerably as CN and CP picked up the pace and summer weather allowed for more fluid movement. But leftover grains and oilseeds from 2013 reached an estimated 20.9 million tonnes as of Thursday, more than double the previous year's stockpile, according to the Canadian agriculture department.

The next wheat crop, despite flooding problems, has potential for the second-largest yields on record, according to a crop tour this week.

The government also said it would require CN and CP to provide more data on grain movement and will continue to allow interswitching in more parts of Alberta, Saskatchewan and Manitoba that have been served by a single railway. Interswitching, which applies to all commodities on the Prairies, involves the transfer of cars from one railway's line to the line of another railway.

Ottawa's measures also clarify issues that its Canadian Transportation Agency can arbitrate in commercial negotiations between shippers and railways, and give farmers more clout in their contracts with grain companies. Farmers complained last year that grain handlers did not accept delivery of their crops as required by sales contracts.


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