Canada to subsidize northern grain shipments

Fri Apr 13, 2012 3:39pm EDT
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WINNIPEG, Manitoba (Reuters) - The Canadian government said on Friday it will offer grain handlers a subsidy for shipping grain through the country's only Arctic port, which stands to lose volume once the western grains market opens for competition.

The Canadian Wheat Board is by far the biggest shipper through Manitoba's Port of Churchill, but the CWB will lose its marketing monopoly over wheat and barley with the next harvest under a new federal law.

Ottawa had announced earlier that it would offer shipping incentives totaling C$25 million ($25 million) over the next five years for Churchill, and on Friday gave further details.

In 2012, grain exporters -- who include Viterra Inc, Cargill Inc, Richardson International Limited, the CWB and others -- may collect C$9 per metric ton (1.1023 tons) for shipping through Churchill. The grants are available on a first-come basis to a maximum payout of $5 million per year for all shippers combined.

The CWB exported a higher-than-average 507,000 tons of wheat and durum through Churchill in 2011, sending grain to Europe, Africa and Latin America.

The CWB has long said it saves money shipping certain crops through the Arctic, but major grain handlers are expected to maximize the use of terminals they own on the Great Lakes and the Pacific Coast once the CWB loses control of wheat and barley on August 1.

The grant-eligible crops are barley, beans, buckwheat, canola, chick peas, corn, flaxseed, lentils, mixed grain, mustard, oats, peas, rapeseed, rye, safflower seed, solin, sunflower seed, triticale and wheat (including durum).

Soybeans and fababeans are not eligible.

($1=$1.00 Canadian)

(Reporting by Rod Nickel in Winnipeg; editing by Jim Marshall)