Tuesday September 02, 2014

Grain delivery seems maxed out


We have heard a lot about the record crop harvested across the Canadian Prairies last fall.

But concerns that the Canadian rail system would not be up to getting the record crop to port for export appear to be playing out.

Analyst Mike Jubinville with Pro Farmer Canada broached the concern in November when he spoke at the Farrell Agencies Farmer Appreciation Night as part of the Grain Millers Harvest Showdown

At the time Jubinville was suggesting the harvest had resulted in “the biggest crop in Canadian history. It’s a phenomenal level of production.” His view has since been proven by the numbers.

The Canadian Wheat Board has estimated Canadian farmers grew 73 million tonnes of the six major crops plus peas and lentils in 2013-14, up from 53 million tonnes a year earlier, and indication of how large production was.

Marlene Boersch, Partner Mercantile Consulting Venture, told those attending Canola Day as part of the Harvest Showdown that the Canola Council had been predicting canola production in Canada would hit 15 million tonnes by 2015, but the 2014 crop was estimated at 16-16.4 MT “up 15-16 per cent from last year,” adding Stats Canada has pegged the average canola yield at 39.4 bushels per acre.

“The growth in production has been impressive,” she said. “It’s two-and-a-half times bigger in terms of production than 10-years ago.”

All those bushels will take effort to market.

“It does present some challenges for us,” she said, adding “this year is not just about prices.”

An issue away from prices will be getting the record crop to market.

“The rail system will be challenged to move the largest crop in Canadian history,” said Jubinville.

Jubinville likened the rail system to a small “garden hose”, adding there “is only so much grain we can move, even at peak capacity …

“Any hiccup in the transportation system is going to be problematic.”

The constraints of the transportation system may make it difficult to “convert deliverable opportunities.

“Last year we could deliver at will in most cases … This year is going to be a tight one.”

Jubinville said based on transportation capacity, and terminal capacity, “there’s going to be carryover” of the 2013 crop into the next crop year.

There have not exactly been what would be termed hiccups in the system, which is hauling grain at levels basically on par with the 2012-13 crop year.

But with much higher production in 2013, the previous year’s rail performance is simply not good enough.

We would expect the rail system to have the ability to handle just about anything since the system has been sculpted over the last 25-years to reflect what the grain elevator companies and railways have envisioned as the ultimate.

Gone are elevators in every rural community in favour of ‘more efficient’, large-scale, inland terminals. The terminals were suggested to be better suited to segregating export crops based on volumes of grains of specific grade and other characteristics. They were also built to take larger farm trucks and to fill unit trains, all things which were supposed to create efficiencies and enhance the sales opportunities.

Miles and miles of track have been ripped from the Prairie landscape as branch lines were abandoned in what was said to be a modernization to create efficiencies in the system. It was a move which will ultimately cost provinces and municipalities millions in road costs as grids and highways are punched by larger farm trucks hauling grain longer distances to elevators, but in a year like this the greater efficiencies still seem lacking.

We should expect, given past rationalization of the grain handling system, that it could now gear up to handle larger crops. In fact, it should have been the true motive for the changes.

Farming has been pushing toward producing more and more crop through continuous cropping, new varieties, broadened fertilizer regimes and chemical weed control. The infrastructure beyond the farm-gate should have seen larger crops as a likelihood, and we should have expected the moves they have made were ones which would allow bumper crops to get to waiting markets in a timely fashion.

That this year the Canadian Prairie infrastructure seems unable to ramp up to meet the needs of a farmers when bins are overflowing suggests the system remains flawed even after it has forever changed the landscape in abandoning small towns across the region.

Calvin Daniels is Assistant Editor with Yorkton This Week.



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