Canada's grain supply chain returning to normal

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Transport Canada

Mar 28, 2015, 12:06 ET

Movement of grain by rail has improved over the past year

OTTAWA, March 28, 2015 /CNW/ - Transport Minister Lisa Raitt and Agriculture Minister Gerry Ritz today announced that the Government of Canada will not renew its requirement for Canadian National Railway (CN) Company and Canadian Pacific Railway Company (CP) to transport minimum volumes of grain by rail after the current Order in Council expires on March 28, 2015.

A year ago, the government took the unprecedented step of mandating volume requirements for moving grain by rail to protect Canada's farmers and maintain its reputation as a reliable grain shipper. As a result, Canada's overall grain exports have improved and the projected carry-out going into this new crop year is within the average range historically.

Mandatory volume requirements continue to be an option if the grain supply chain compromises farmers' livelihoods, the economy or Canada's international reputation as a reliable shipper. The Government of Canada is encouraging CP and CN to continue to address shipper specific issues so shippers across Canada can grow and build their businesses.

The government is also announcing that more grain monitoring statistics are now publically available. Today, a summary of the grain volume shipped by rail from August 2014 to January 2015 is available on the Grain Monitor's website and new weekly and monthly reports will also be posted at www.grainmonitor.ca.

With government support, the Ag Transport Coalition is now reporting by corridor on weekly rail car supply to help individual shippers make business decisions. The government, with input from the Crop Logistics Working Group and the Ag Transport Coalition, will review the Grain Monitor Program before the new crop year to determine how more effective data can be collected to find efficiencies in the supply chain.

The government is pleased that measures in the Fair Rail for Grain Farmers Act are being utilized within the supply chain:

  • Transparency in the supply chain is improving thanks to increased sharing of data on grain movement.
  • Service Level Agreements continue to be signed, providing shippers with rail car supply certainty and creating confidence in the supply chain, and reducing customer complaints and contract penalties. 
  • Expanded interswitching provisions are allowing previously captive shippers to make use of different rail lines in order to meet the needs of their businesses.
  • Farmers continue to have the right to negotiate delivery contract penalties with their buyers; increasing accountability.

The government remains committed to promoting economic growth by opening up and maintaining markets around the world, and looks forward to receiving, before the end of the year, the Canada Transportation Act review recommendations that will help inform long-term supply chain improvements.

Quick Facts

  • Western Canadian shipments from ports are 31% higher than last year, and 25% higher than the 5 year average.
  • Under the mandated volume requirements CP and CN moved more than 50 million tonnes of grain exceeding the volume requirement by 5.5 million tonnes.
  • The projected carry-out will be 10 million tonnes in Western Canada, which is within the average range historically. 
  • On March 7, 2014, the Government introduced an Order in Council (OIC) for a period of 90 days, to set out minimum volumes of grain to be moved by CN and CP each week, and requiring the railways to report on those weekly shipments. 
  • The Fair Rail for Grain Farmers Act, enacted in May 2014, extended the minimum volume requirements of 500,000 metric tonnes per week to the end of the 2013-14 crop year.
  • On August 1, a second OIC was introduced requiring CN and CP to each move 536,250 metric tonnes of grain per week until November 29, 2014. Regulatory changes were also introduced to facilitate better monitoring of the overall performance of the rail-based grain supply chain, to clarify the operational terms in service level agreements and to increase competition among railways by extending the limit for rail interswitching from 30 to 160 kilometres in the Prairie provinces.
  • The volume requirements were extended on November 29, 2014, until March 28, 2015.

Quotes

"I am pleased that the government's action requiring minimum volumes had its intended effect and that the movement of grain by rail is once again running at a rate that contributes to strong economic growth. We look forward to continuing to work with both shippers and producers to ensure that the efficiency of the supply chain continues to improve, contributing to the country's long term economic growth."
Lisa Raitt
Transport Minister

"Our government took decisive action to protect Canada's farmers, our economy and our international reputation as a reliable exporter. The order in council has done its job and can be reinstated if required. Our Government will continue to monitor performance and encourages the full supply chain to be more collaborative in the long run."
Gerry Ritz
Agriculture Minister

Related Products

  • Summary of grain volume shipped by rail from August 2014 to January 2015: www.grainmonitor.ca

Associated Links

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SOURCE Transport Canada

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