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Banks urged to be flexible with farmers facing cash crunch due to grain backlog

REGINA - Saskatchewan's agriculture minister wants financial institutions to cut farmers some slack because of a grain transportation backlog.

Lyle Stewart says he has written to all banks in the province urging them to be flexible with farmers facing a cash crunch because their grain isn't getting to market.

"I think the banks will recognize that there's lots of value in the grain in those producers' bins and they'll be flexible, but I felt it appropriate to suggest that to them, that producers are a pretty good risk and we'd ask for some flexibility," Stewart said Wednesday.

Saskatchewan producers harvested a record crop of 38.4 million tonnes last year, but much of the crop is sitting in bins because of railway transportation delays.

Farmer don't get paid until the grain gets to market.

"I know that cash flow is very tight for some of them, that's for sure," said Stewart. "When it comes right down to it, they have a lot of money tied up in their grain inventory, hundreds of thousands, in some cases millions of dollars, and so they're a long ways from bankrupt.

"But certainly cash flow is a serious issue, particularly as we get closer to seeding and that time of the year when producers need to spend a lot of money."

The Alberta Federation of Agriculture, the British Columbia Agricultural Council, the Agricultural Producers Association of Saskatchewan and Manitoba's Keystone Agricultural Producers have warned the backlog is so bad that some farmers won't have enough cash to pay for seeding this year.

Saskatchewan Premier Brad Wall said Monday that it may be time for the federal government to mandate service agreements or mandate the number of rail cars to get grain moving.

Liberal MP Ralph Goodale said federal Transport Minister Lisa Raitt should use emergency powers under the Canada Transportation Act to get grain moving. Goodale said the law allows the minister to step in when there's "an extraordinary disruption" in the effective continued operation of the national transportation system.

"That's what we've got here. We've got major chaos in western grain handling and transportation," the Regina MP said.

Railways blame the backlog on the size of the harvest and cold weather. They say they must use shorter trains during freezing temperatures to ensure brakes can be used properly — and that means less capacity.

Goodale said part of the problem is getting the capacity in locomotive power and rolling stock, the cars used to move the grain.

"The railways have not gone out and acquired that locomotive power. Some of the railways have in the United States. The Canadian railways have not. CP, in fact, has reduced its locomotive power this winter," he said.

"So one of the orders would be, I would think, make sure you've got the capacity, both in rolling stock, but especially in locomotive power, to be able to move this crop."

The Canadian Press


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