Saskatchewan cabinet minister to meet with rail companies over grain backlog

REGINA - Saskatchewan Economy Minister Bill Boyd says he's "not very optimistic" that a grain backlog which has left a bumper crop in bins across the Prairies will be cleared soon.

Boyd says grain-handling companies have said that it may be well into 2015 before the backlog is cleared.

He says the problem could be compounded when this year's crop comes off the fields.

"What the grain companies indicated to us, and what I think everybody understands, is that there will be a carryover of probably in the magnitude of 25 per cent of this crop. You add 25 per cent onto even a normal crop and we're right back in the situation where we were last fall," Boyd said Wednesday.

"So clearly there's going to have to be a significant ramping up of rail movement here in Western Canada to catch up from where we are right now."

Boyd is leading a delegation of Saskatchewan cabinet ministers to a meeting with CN Rail (TSX:CNR) officials Thursday in Montreal and plans to meet with CP Rail (TSX:CP) on Friday to talk about ways to get the grain moving.

The delegation has already met with several grain-handling companies in Regina and Winnipeg.

Boyd said grain handlers don't want to push federal legislation that includes a provision for possible penalties on a railway.

"Their response ... is that they didn't want to test the legislation. We're not exactly sure why. We're concerned about some of the response that there was with respect to that."

The legislation allows a government arbitrator to decide if a signed service agreement between a shipping company and a railway has been violated, but most grain handlers don't have such contracts.

That means rail companies determine the level of service they're going to provide to grain companies and there are no provisions for penalties, Boyd said.

CN spokesman Mark Hallman said earlier this month that the railway has been performing at a record pace with grain car shipments about 12 per cent higher than the five-year average. Hallman said CN uses shorter trains during cold weather to ensure brakes can be used properly, which affects shipment capacity.

Federal Agriculture Minister Gerry Ritz announced Feb. 3 that Ottawa plans to keep closer tabs on rail companies by requiring them to report monthly on their performance instead of every three months.