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Feds threaten new rules to fix grain bottleneck

Action is needed, Ritz says after huddle with industry officials

The federal government is threatening to introduce new railway regulations to speed up the flow of grain from Western Canadian farms to ports.

Federal Agriculture Minister Gerry Ritz said Monday following a meeting with railway and grain company officials in Winnipeg that lengthy delays this winter in getting western grain to port are not acceptable.

He said the problem isn't the grain companies because they told him their grain-handling systems are at their best when they have 13,000 rail cars per week at their disposal, which is almost three times what the railways are currently providing.

And the problem isn't limited to not enough rail cars, he said. The railways also don't have enough locomotives and train crews.

"As you know, regulation is not something our government takes lightly or favours... But as I said before, our government is considering all options with respect to the challenge of ensuring our farmers have access to the rail service and supply chain that they need, and that our global customers demand."

Ritz didn't spell out what regulations are being considered.

And he wouldn't speculate on how long it might take to enact the new rules.

The minister told reporters the government also is considering ways to ensure grain companies live up to their contractual obligations to farmers. That could include introducing new service standards that would force the railways to pay farmers interest for storing grain they were under contract to take, but didn't accept within a reasonable period of time.

Doug Chorney, president of Manitoba's largest farm group -- Keystone Agricultural Producers -- said grain farmers will be thrilled to hear the federal government is finally talking about possibly taking action against the railways.

"This is the first time the minister has really levelled threats. I think this is exactly what we needed to hear from the government to spur some type of action.

"And I think the railways will take this very seriously. I don't think they want to have that conversation."

But Chorney wasn't happy to hear the government may penalize grain companies for failing to take delivery of farmers' grain. He's worried if they're forced to pay interest to farmers for storing the grain, they'll stop entering into futures contracts.

"That's crazy, and I would be absolutely and completely against that," he added.

The Saskatchewan government also said Monday it wants the federal government to oversee talks between grain and rail companies about getting grain to port, even as railways give assurances they will ramp up service.

A record crop is sitting in bins across the Prairies, and grain-handling companies have told Saskatchewan Economy Minister Bill Boyd it may be well into 2015 before the backlog is cleared.

Boyd led a delegation that met with Canadian National and Canadian Pacific rail officials to talk about ways to get a backlog of grain moving.

He said the railway companies told him they're adding "thousands more grain cars per week" and will keep that up until at least next December.

But Boyd said there still need to be agreements, with penalties, for both grain companies and railways to ensure service levels.

CN has said it uses shorter trains during cold weather to ensure brakes can be used properly, which affects shipment capacity.

Company spokesman Mark Hallman said in an email to The Canadian Press the company's goal is to return to more normal winter performance of 4,000-plus cars per week "as soon as extreme cold temperatures abate."

CN has another 500 hopper cars coming on stream and it is lining up crews and locomotives for as many as 5,500 cars per week at country elevators once the Ontario port at Thunder Bay reopens, probably in early April, he said.

"CN is doing its level best to move this 100-year grain crop to export position and world markets," he added.


-- with files by The Canadian Press

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Is there still grain being shipped through Churchill in summer?

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