Penalties for Canadian railways that do not ship enough grain

An article in the Wall Street Journal (March 7,2014) titled “Canada sets Minimum Grain Shipment Targets for Railways”, describes penalties of up to $90,000 if shipments by railways fall below 5,500 railcars a week. This target is significantly greater than the current shipments of 2,500 railcars a week, that farmers claim leaves their grains stuck at the farm. Shipments of crude are said to displace the grain shipments. But railways claim that the constraints will be counterproductive. Should constraints be the way to force capacity to be directed to grain traffic or should prices be permitted to adjust flows ? Given the reported bumper grain crop, how should transportation be planned without impacting other flows? Should US plants awaiting these grains be required to bear the higher transport costs?

About aviyer2010

Professor
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One Response to Penalties for Canadian railways that do not ship enough grain

  1. This is really bizarre. Are there not enough trains in Canada to ship the grain? I would think price could take care of this…

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