Grain handlers seek stricter rail rules to avoid logjam

Tue Jun 10, 2014 5:09pm EDT
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By Rod Nickel

WINNIPEG Manitoba (Reuters) - Grain handlers are lobbying the Canadian government for even stricter rules requiring railroads to allocate thousands of railcars to them each week in hopes of stopping an unprecedented crop logjam from getting worse.

Tougher rules could ensure that U.S. and other buyers have ample access to Canadian grains. They would also give grain handlers priority over other shippers, including oil companies, which have moved a rapidly growing, though still relatively small, volume of crude by rail.

A record-large harvest and frigid weather had snarled the transportation system last fall and winter, leaving millions of tonnes of grain stuck in farm bins.

Minimum shipments to the United States, part of the grain handlers' wish list, could keep cereal companies from suffering a repeat of last winter's oat shortages, as Cheerios maker General Mills Inc did.

Canadian Agriculture Minister Gerry Ritz said the government intended to have new regulations in place by mid-July, possibly with tougher volume requirements.

"If it's necessary, it will be done," Ritz told Reuters. " ... I'm not going to be prescriptive yet."

Under pressure from angry farmers, Canada's Conservative government in March ordered the nation's two railways, Canadian National Railway Co and Canadian Pacific Railway Ltd, to boost grain shipments to minimum weekly levels.

The minimums expire in August, when the next harvest begins, but a recently passed bill allows Ottawa to set new targets for the 2014/15 crop year. Adding more regulations creates tricky politics for the Conservatives, although they have also gotten tougher on banks and phone companies.   Continued...

A wheat crop ready for harvest are seen on the Canadian prairies near Taber, Alberta, September 7, 2011. REUTERS/Todd Korol