Canada Markets

A Fine Mess!

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
@CliffJamieson

Is the fine for failure to meet the mandated minimum weekly volume of grain by Canada's two railways $100,000 a day, or is it $100,000/week? Or is it perhaps something even lower?

As if by sleight of hand, the fine for non-compliance has been changed, with the latest press coverage indicating "The penalty is up to $100,000 per week and that is up to the minister's discretion," according to a Transport Canada press secretary.

Just a few references to the $100,000/day penalty can be found on:

-- Government of Canada press release from March 7 -- Harper government acts to get grain moving in Western Canada

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-- March 7 announcement by Lisa Raitt, Federal Transport Minister (video)

-- Government of Canada press release from March 26 -- Harper Government Introduces Legislation to Address Rail Capacity Challenges

-- March 27 press conference with Gerry Ritz, Federal Agriculture Minister (video)

Details surrounding this announced financial penalty have also been release by media outlets worldwide. One prairie farm publication wrote about the pending fine for CN's failure to comply as recently as Sept. 17, while linking the Fair Rail for Grain Farmers Act to the up-to $100,000 per day fine.

While the details surrounding the actual fine against CN Rail have yet to be released, the government's hard-fought victory over the monopoly powers of the railways may be showing cracks in the armor.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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John De Pape
9/28/2014 | 10:50 AM CDT
The original penalty of $100,00 per day made no sense at all when the performance being penalized was measured by the week. When a railroad failed to meet their weekly requirement, what was to be the fine? Seven days or $700,000? Were they to work on a business week basis - 5 days or $500,000? Were they supposed to divide the week up into - let's say, 5 - and aim at shipping 1,000 cars per day (assuming the original 5,000 per week per railroad). If so, we'd be hearing the discussion that, well Mon and Tues CN met their targets, but missed on Wed, Thurs and Fri - so the penalty is $300,000 for that week. Ridiculous. It needs to be said that the Order in Council was not well thought out, poorly conceived and created more grief than it solved. For example, with "total cars shipped" being the only performance measure on the railroads, the railroads obviously chose the routes with the quickest turn around times, leaving important market (like the US) starved for cars. The shippers could scream all they want but the OIC put the railroads in charge of which markets would be served. And we can't blame the railroads for that - they were acting as commercially as the order in council allowed. Changing the penalty as the order moved from an OIC to Bill C-30 was clearly a quiet admission that they got it wrong in the first place. It's unfortunate they didn't see the other weaknesses in the bill.
JAMIE KOUBA
9/24/2014 | 10:33 PM CDT
That fine will just get passed down to us farmers, some ideas are not as practical as they seem