Mapping out new sales of Canadian grains to Mexico

I am as happy as a kid with a mountain of Hallowe’en candy and a new scooter!!!!

I am holding in my hands a Mexican railroad map, and golly is it cool.

 

No, not your cup of tea? Well, you’ve got to understand that I have a lifelong love of maps, as my father did, and that I spent endless hours as a child drawing maps of pirate islands, mysterious planets and creepy underground kingdoms. But alas, a career in cartography was not to be mine because I am the klutziest draftsman you’ll ever meet, so I joined a trade in which scribbling illegibly is a requirement: journalism.

What I have always loved about railroad maps is following the circuitous routes through mountains, cities, across rivers and over vast empty spaces and seeing how they joined places and communities profoundly different in nature. Kind of cool, I always think, that you can climb aboard a train in a northern city on the edge of the arctic and follow a path all the way down to the tropics, or cross multiple mountain ranges, deserts, rivers and international boundaries and be on the same voyage.

That’s exactly what Canadian crops do some of the time when they are heading towards the Mexican market, and that’s a form of trade and business that Mexican traders, grain company officials and railway company officers would like to increase. That’s the strong sense I got from meeting with a group of Mexican grain industry people yesterday at the Canadian International Grains Institute. They want to do more business and think they can rail more down into their lucrative market.

Lots already goes. Mexico is a major customer of Canadian canaryseed (in hot climates people tend to own birds as pets, rather than dogs and cats that suffer in the tropics), and a massive consumer of Canadian canola. Much goes by ship still, but railways connect directly between Canada and Mexico. Well, they connect directly, but through that crazy bowl of spaghetti called the United States of America. Railing gets complicated going through there because there are so many Americans in the way, and they do like to build cities, freeways and anything other than pipelines, it seems. So increasing railway traffic between Canada and Mexico involves not just our two big-butt railways – CN and CP – but also dealing with interactions with lots of other railways, transport systems and trade complications.

That’s something that Ferromex agribusiness executive Jana Jacqueline Padilla Jones was doing while at the CIGI course. She and the other Mexican attendees met with representatives of eight Canadian grain companies, with CN and CP, and with most of the elements of the Canadian grain industry. When I spoke to her she was enthused about the opportunities she saw to boost Canada-Mexico railway trade, opportunities she felt more confident about after having met with the Canadian industry people. She and a number of colleagues seemed both bullish and excited about Canada-Mexico ag trade, and that was a relief.

It was a relief because lots of anxiety roams around the edges of the Canadian grain industry as the post-monopoly industry is worked-in, and foreign customers have all heard of the changes and don’t know what they’ll mean. Many – and I’ve met quite a few foreign buyers of Canadian grain – worry we’ll lose our quality and consistency, which are world-renowned. That’d be a tragedy.

Canadian grain company people appear convinced that they’ll be able to still provide that quality and consistency, and they don’t think we’ll jettison our entire quality system the way they think Australia punted its. That remains to be seen.

But CIGI’s doing its bit – and a bigger bit than it had to do before the monopoly ended – of convincing foreign buyers that Canada’s still going to be a source of high quality, consistent and reliable grain. That’s why this group of Mexicans was invited to attend: the Canadian embassy in Mexico had heard that there were many rumours – some possibly started by U.S. wheat interests – that the Canadian system was falling apart and that quality would disappear as quickly as Australia’s did. The embassy talked to Agriculture Canada, and Agriculture Canada talked to CIGI, and CIGI set up the course to convince serious Mexican buyers of Canadian grain that the system could still give them what they want.

From meeting with a number of them yesterday, I got the sense that CIGI accomplished its mission, and to these senior grain industry people, Canada still seemed like a premium and preferred source of crops.

The nicest part to see was that not only did the people I met seem to feel reassured about the situation, but some like Jana Jacqueline Padilla Jones had actually had their confidence raised, and saw the potential for more trade. From visiting Winnipeg, they had more business contacts and could more easily get trade done.

So, if prairie farmers are lucky, down the red lines on my railway map will soon be flowing more Canadian crops, connecting distant, northern end-of-the-world places like the prairies with the hot, southern, populous nation at the other end. And I’ll spend more time looking at my maps and knowing where the grain’s going.

About the author

Ed White — Ed White has specialized in markets coverage since 2001 and has achieved the Derivatives Market Specialist (DMS) designation with the Canadian Securities Institute.

Also by this author

Respond





You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>