The Keystone effect? Farmers blaming grain backlog on oil-by-rail surge – by Claudia Cattaneo (National Post – February 12, 2014)

The National Post is Canada’s second largest national paper.

Has the Keystone XL domino effect spread to Canadian farmers? Many are blaming a backlog in Western Canadian grain movements on the surge in oil transportation by rail, in turn the result of insufficient pipeline capacity, caused by environmental opposition to oil sands growth.

The situation is so serious Saskatchewan Premier Brad Wall appointed a delegation of provincial cabinet ministers Wednesday to meet with grain and rail companies and solve the “urgent matter.”

“This grain movement backlog is a very serious situation for the entire province and it is a high priority for our government,” Mr. Wall said in a statement. “The delays in moving grain have led to lower prices for our producers at the farm gate and are harming our reputation as a reliable supplier of agriculture products throughout the world. We want every possible avenue explored to ensure our producers have the ability to market and deliver their grain in a timely manner.”

He even suggested to reporters that the federal government slap fines on railway companies for poor performance, and that transportation of grain, which is seasonal, be made a priority over other commodities.

“There is a disproportionate hit on agriculture,” from tight rail capacity, Mr. Wall said. “You can make the case that certain times of the year, post harvest until now, there is a real acute need for some attention to agriculture.”

Grain producers in Western Canada have been fuming for months about their inability to move a bumper crop.

Meanwhile, they have been watching with angst as the oil industry becomes a new competitor for rail space, and as they, too, project bigger crops.

What they are seeing is just the beginning. TransCanada Corp., the proponent of the stalled Keystone XL from Alberta to Texas, forecasts rail transportation of oil out of Western Canada will increase from 400,000 to 500,000 barrels a day in 2014 and to one million barrels a day by 2015 because it is virtually unrestricted.

For their part, CN and CP are blaming an unusually harsh winter, which has forced them to reduce the length of trains and slowed down their network.

“CP’s position is that it’s a situation where there has been a record crop, combined with periods of extreme weather,” said Ed Greenberg, spokesman for CP. “CP has responded … by moving more Canadian grain than in previous years, and our railway continues to work directly with our customers to address their shipping requirements as quickly and efficiently as possible.”

Railways are also downplaying their role in moving growing quantities of Western Canadian oil.

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