Rail strike would hurt Canada farmers, exporters

* Autumn a peak time for grain movement

* Grain exporters could face penalties for delays

* Minimal impact seen on fertilizer movement

By Rod Nickel

WINNIPEG, Manitoba, Nov 27 (Reuters) - A strike at Canada's biggest railway would interrupt a busy period for transporting grain across one of the world's top exporting countries, and could ring up costs to farmers and grain exporters.

Negotiators from Canadian National Railway (CNR.TO: 行情) (CNI.N: 行情), the country biggest railway, and the union representing 1,700 locomotive engineers, met on Friday in hopes of averting a strike scheduled to begin on Saturday.

The railway has not said what its plans are if the strike proceeds, but a transportation expert said it would certainly interrupt rail service.

"(The rail system) is like a conveyor belt and it takes some time to start up again" after an interruption of service, said Barry Prentice, director of the University of Manitoba's Transport Institute. "It will back things up."

He said a service interruption lasting only days may not cause much damage, but a longer one would be a major concern for grain movement.

The grain harvest usually wraps up in October, but this year much of it didn't get done until this month because of earlier wet weather.

And Canada, one of the world's leading exporters of spring wheat and the top shipper of canola and durum, relies more heavily on rail to move grain than other farming countries because of its vast distances to port.

Any delay in delivery to export markets can generate penalties and diminish an exporter's reputation.

A rail interruption wouldn't greatly affect movement of fertilizer, since farmers typically apply it earlier in autumn or in spring, Prentice said. Shipments of nutrients like nitrogen to the United States don't typically begin until January, said an industry source.

The potential losses for farmers come because Canadian farmers store most of their crop until they sell it and they are not usually paid until the grain moves off their land.

The Canadian Wheat Board moves grain to domestic and export markets throughout the year. But late in the calendar year is often a peak time.