UPDATE 2-Canada to force minimum rail grain shipments as backlog builds

Wed Mar 26, 2014 6:23pm EDT
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* Government would set future grain volume minimums

* Grain companies to pay farmers for breaching contracts

* Legislation too narrow in scope -opposition (Adds details on timing, comments from opposition, farmer, CN Rail)

By Randall Palmer and Rod Nickel

OTTAWA/WINNIPEG, Manitoba, March 26 (Reuters) - The Canadian government introduced legislation on Wednesday that will allow it to set minimum levels of grain that railways must ship each year to avoid the huge crop backlogs that have hurt farmers' cash flow this winter.

The Conservative government earlier this month ordered the country's two dominant railroads, Canadian National Railway Co and Canadian Pacific Railway Ltd, to double their weekly grain volumes to 1 million tonnes combined over a four-week period to clear the massive crop logjam.

The new legislation enforces that requirement - 500,000 tonnes of grain weekly for each railway - through the balance of the 2013/14 crop year, which ends in August.

The bill also would allow the government to set similar grain movement targets in subsequent years, depending on the size of the harvest, with penalties of up to C$100,000 ($90,000) per day for noncompliance.

"Our government means business when it comes to getting our grain and other commodities moving throughout the marketplace," Agriculture Minister Gerry Ritz told reporters.   Continued...