BUSINESS

Railway fines for failing to transport grain don't reflect damage: lobby groups

01/09/2015 03:19 EST | Updated 03/11/2015 05:59 EDT
REGINA - Farm lobby groups in Saskatchewan and Manitoba say fines levied against Canada's two largest railways don't reflect the damage caused when the companies failed to transport the minimum required grain volumes last year.

Transport Minister Lisa Raitt said Thursday that Canadian National Railway and Canadian Pacific Railway were fined a combined total of $150,000.

Norm Hall, president of the Agricultural Producers Association of Saskatchewan, said farmers are frustrated with the fallout from months of railway backlogs following last year's bumper grain crop.

"There's also some relief that the federal government did step forward, but there's still frustration," Hall said.

"The one thing that bothers us most about this is that fine, that money, goes to government," he said. "It in no way goes to those that were hurt ... be it the producers or the grain companies."

He added that the fines are a drop in the bucket for the railways.

"For these large corporations, it's not a bunch of money," he said.

CN (TSX:CNR) will pay $100,000 for violations under the Fair Rail for Grain Farmers Act related to shipments for the weeks of July 28 and Sept. 7.

Canadian Pacific (TSX:CP), which was assessed a $50,000 penalty for the week of Sept. 7, is disputing the fine on the basis that the shortfall was a result of matters beyond its control.

Jeremy Berry, a spokesman for the company, said in an email that the missed targets resulted from broader supply chain issues, "specifically the Labour Day holiday shutdown at the Port of Vancouver the week before."

"CP has stressed and will continue to stress that the Canadian grain supply chain must operate on a 24/7 basis to support balanced pipelines, reduce congestion and drive velocity."

Berry added that the company moved record amounts of grain in 2014 that were 21 per cent above the three-year average and up 16 per cent over the previous record crop year of 2008-09.

Doug Chorney, head of Keystone Agricultural Producers in Manitoba, said there needs to be a way to compensate shipping companies and farmers who are adversely affected by rail delays.

"A fine of such small amount really doesn't reflect the kind of damage poor service is impacting on shippers and farmers," he said.

"We've always had challenges with reliable and adequate service from railways because of different planning issues, not always because of capacity.

"We do have fundamental challenges in terms of making sure we have a system that's well-co-ordinated ... we can't be left to wait months and months for rail service."

Montreal-based CN said it would be paying a lower $50,000 a week administrative monetary penalty.

"CN is heartened that the Transport Canada enforcement officer's investigation appropriately took into account factors beyond CN's control and also reflected the important role that others play in the grain supply chain," spokesman Mark Hallman said on Thursday.

In March, Minister Raitt said fines against rail companies could total up to $100,000 a day for delays. But Transport Canada said in September it would fine the railways up to $100,000 weekly at the minister's discretion.

The department said it is still reviewing fall data on grain volumes to ensure the railways adhered to the volume requirements.

Hall said there needs to be a system review to prevent grain backlogs.

"If the grain companies and producers could depend on the timely deliveries of cars, then there would be no issue."