Rail strike may further slow movement of huge West Canada crop

Wed Oct 16, 2013 1:19pm EDT
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By Rod Nickel

WINNIPEG, Manitoba Oct 16 (Reuters) - A possible strike at Canada's biggest railway is compounding a vexing problem in the second-biggest wheat exporting country - how to move the western crop belt's abundant harvest to port with a strained transportation system.

A dispute between Canadian National Railway Co and its railroad workers raises the possibility of a strike or lockout as early as Oct. 29. Talks are scheduled to resume on Oct. 21, with both the union and railway hopeful of avoiding a work stoppage.

"Whenever there's a labor disruption, it has a huge impact on us," said Wade Sobkowich, executive director of the Western Grain Elevator Association, which represents grain handlers such as Richardson International Limited, Viterra and Cargill Ltd. "All grain shippers are concerned that we won't have sufficient rail capacity to move this large crop when we need to move it."

Agriculture and Agri-Food Canada estimates total crop production in Western Canada at a record-high 67.3 million tonnes and transport infrastructure is already struggling. Canada exports about two-thirds of its wheat and more than half of its canola.

Some farmers, waiting for congested country elevators to clear space, have piled grain on the ground, potentially risking contamination, while others are filling plastic silo bags that snake hundreds of feet across fields.

Some bursting-at-the-seams grain handlers, meanwhile, have resorted to storing crops in temporary "bunkers" that resemble hockey rinks with boards along the sides, pipes to dry the grain and tarps protecting it from rain and snow.

Railways are filling about half of the grain car orders within the same week, a situation that isn't unprecedented during the harvest, but not ideal for moving crops quickly, Sobkowich said, adding that elevators are about 95 percent full.

A bottleneck in Western Canada's crop pipeline has already expanded the discount in the cash price grain handlers pay farmers versus the wheat futures price, according to crop marketer CWB. It may also prevent some export sales as handlers look to avoid penalties for late delivery, Sobkowich said.   Continued...