Government extends minimum grain volume requirements until next March

OTTAWA – The federal government is extending minimum grain volume requirements that are aimed at helping maintain the reliable supply of grain to international markets.

The requirements were first introduced in March to increase the movement of grain that had been left sitting in bins across the Prairies because of a railway transportation bottleneck.

Canadian National (TSX:CNR) and Canadian Pacific (TSX:CP) had blamed the backlog on the size of the harvest and extremely cold weather.

They said they had to use shorter trains during freezing temperatures to ensure brakes could be used properly and that meant less capacity.

The government now says the minimum volume requirements will be extended until March 28, 2015.

It says railways are expected to provide reliable and predictable service and notes that non-compliance could result in penalties of up to $100,000 per violation.

CN says instead of re-imposing the minimum requirements, the government should have focused on encouraging greater supply chain collaboration.

It says it has met and continues to meet its pledge to move as much grain as possible, as efficiently as possible.