Farmers are going to face an unsettled fall in terms of marketing their grain.
Regardless of the side of the age-old debate of whether the Canadian Wheat Board single desk selling system, or complete marketing is best for Prairie wheat, durum and export barley, you have to be looking at the arrival of August with some trepidation.
The good prices which started a couple of years ago appear to be holding and that may well buffer the problems which may still pop up in what is a rushed transition facilitated by federal government arrogance.
The courts have proven to be fickle at times, so we’ll leave them as the joker in the deck.
What we do know if the legislation holds is the CWB is going to be out there competing for farmer grain, but the tightness of the transition is putting pressure on the Board to ink deals with the various elevator companies to handle their grain.
It is interesting the big multinational Cargill was one of the first to ink with the CWB.
It is likely every elevator company will come on board, after all it is business to handle grain, but that doesn’t mean a contract will come easily.
The process of getting those deals done is muddied a bit by the fact Viterra, one of the biggest grain handlers on the Prairies is being targeted for a takeover by Glencore. That takeover bid is likely a bigger priority in Viterra offices than a deal to handle CWB grain this fall.
The deadline being Aug. 1, certainly puts pressure on things to fall into place rather quickly in terms of what will be million dollar deals over time.
Muddying the waters of a grain system which is walking into a new world in terms of marketing wheat, durum and export barley is the rail system.
There is a growing fear out there regardless of whether it’s the CWB or a number of independent sellers at work that the rail system is losing interest in handling grain.
Certainly the ever expanding potash sector will compete with grain, and with a product of generally higher value with a regular marketing schedule. As a rail line company in a country with only a mirage of competition, is not really in a position where they need to fight for business. The country is pretty divvied up between CP and CN.
Beyond that, potash is a commodity which rolls out of the mines every day, pretty much 365 and has to get to port position by rail. With mines expanding significantly in the last few years that means more potash rail companies need to move.
And, there are new mines on the horizon, adding to that trend.
When it comes to investing in rolling stock in the past the rail companies have shown little interest in investing in new grain cars, and it is likely future rolling stock will be geared to potash, not wheat. The situation is one multiple shippers may find a challenge to deal with, whereas a single-seller had a bit more clout based on value.
So as farmers wait for spring to settle so they can plant the 2012 crop, marketing that crop also has to be something that they are putting more thought into than in the last half century.
Calvin Daniels is Assistant Editor of Yorkton This Week.