Exclusive: Smoother grain flow points to Ottawa lifting rail regulations

Tue Oct 28, 2014 5:29pm EDT
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By Rod Nickel

WINNIPEG Manitoba (Reuters) - Barring a sudden pile-up of grain across Western Canada in the next five weeks, Ottawa will lift requirements that railways move minimum volumes of crops, Agriculture Minister Gerry Ritz said in an interview.

While Ritz says he is not ruling out any options before the rules expire Nov. 29, government data shows that grain has flowed more smoothly since the current harvest began compared to a year ago.

The government would need to see "a complete failure by the railways to move grain" to extend the minimums, Ritz told Reuters, citing potential signs such as grain piling up in elevators and boats waiting to load at ports. Problems still exist, but not like in early 2014, Ritz said.

A record-large harvest and harsh winter overwhelmed Canadian National Railway Co and Canadian Pacific Railway Ltd last winter, plugging grain elevators in the world's No. 3 wheat exporter and forcing farmers to store millions of tonnes of crop instead of selling for cash.

Ottawa responded with regulations forcing railways to move about 1 million tonnes per week combined.

"There are some stories out there still that make the hair on the back of my neck stand up," Ritz said. "But having said that, the order in council did what it was intended to do."

If Ottawa lifts its regulations, it would please fertilizer makers and mills that have complained they are at a disadvantage. But the Conservative government would risk upsetting farmers heading into an election next year.

Canada exported 3.9 million tonnes of wheat and 1.9 million of canola through ports from Aug. 1 through Oct. 19, up 16 and 41 percent, despite a smaller harvest this year, according to Canadian Grain Commission data.   Continued...

A Canadian Pacific Railway locomotive sits at the Obico Intermodal Terminal in Toronto, May 23, 2012. REUTERS/Mike Cassese