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Fears of potential grain backlog loom

Fears of potential grain backlog loom

Alberta’s premier pushes for federal investment in rail transport to move more oil

By Kate Ayers
Staff Writer
Farms.com

A recent proposal by Rachel Notley, Alberta’s premier, could affect farmers’ abilities to get their grain to market.

The feds should invest in rail cars and locomotives to improve crude shipments, she said on Monday. She wants to reduce the spreading price differential Alberta receives for its oil, a Calgary Herald article said yesterday.

While this investment is not intended to affect grain transportation, Western Canadian producers worry the ag industry could be collateral damage. The 2017-18 grain backlog remains fresh in their minds. Producers lost billions of dollars in sales over the last five years because of rail shortages and crops stranded at elevators, the article said.

“Inadvertently, it will (hurt us),” Lynn Jacobson, president of the Alberta Federation of Agriculture, said in the article.

“If you’re going to ship more of one commodity, then you’re going to have to ship less of another. The railways are operating close to capacity now – when they have to start prioritizing, in a lot of cases, that hurts grain shipments.”

The federally imposed revenue cap on grain shipments leads to rail companies to prioritize the commodities they ship, ag groups say.

“The railways want to haul stuff that pays a bigger margin,” Ward Toma, the general manager of the Alberta Canola Producers Commission, said in the article.

“Grain is a regulated product for them, so there’s not much incentive for them to move it. There’s more incentive for them to move an unregulated product like oil.”

More crude cars on the tracks could “clog up the system,” Toma said.

In May, the feds amended and passed the Transportation Modernization Act to help ensure farmers can get their crops to market. Canadian Pacific Railway Ltd. and Canadian National Railway Co. also promised to meet the needs of producers, the article said.

“There are some penalties for the railways if they don’t perform,” Jacobson said to Farms.com today.

“But how the grain companies are going to treat producers is another question. … Will they share that penalty money with (farmers)? If they can’t load, that means we can’t ship.”

The rail lines have a lot of shipping demands. In addition to oil and grain, for example, companies ship potash and coal by rail.

In July, crude-by-rail exports increased by 73 per cent from the previous year and hit a record high of 206,000 barrels per day (bpd). The oil industry expects this number will jump to 300,000 bpd by the end of 2019, the article said.

If Alberta crude companies start shipping more product to the west coast by rail, farmers should be concerned of significant congestion on the tracks, Mark Hemmes of Quorum Corp. said in the article. He is the federal government-appointed monitor for the Prairie grain handling and transportation system.

“It’s a little too early to know the final results right now,” Jacobson said to Farms.com.

“In Alberta, there will be a lot of feed grain after the bad September (weather), which will go into the feed market. How much will be absorbed in the feed market and how much will be exported as seed” remains to be seen, he added.

 

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