On and on and on and on and on and on and on . . .

I was just talking to Manitoba farmer Chuck Fossay about a Prairie grain industry story that’s going to go on and on and on and on and on and on and on and on . . .

And even though both Chuck and I are in the warm and humid climes of San Antonio for the Canola Council of Canada annual convention, we couldn’t help but chat about the chronic backlogs of grain that are bedevilling the lives of farmers back home.

It’s a story that hangs over everything else in Prairie ag these days and it’s hard to get away from it.

Chuck was guessing that a short 2014 crop would make the backlog last 18 months, a decent crop will allow it to linger for 24 months, and another big bin-buster make it last 36 months or longer.

That analysis sounded a lot like what I was hearing at the Grainworld conference in Winnipeg yesterday. All farmers want to grow a big crop, but all other farmers and the grain industry are worried about what will happen if they manage to do it.

Dean O’Harris of Parrish and Heimbecker talked about his worried about what will happen to the carryout if the grain system truly is millions of tonnes behind expectations, as many think it is, and the Prairies produce more than 30 million tonnes of wheat (including durum) this year. With the clogged export channel crimping exports, export targets are unlikely to be met, allowing the carryout to pile up and up. From last year’s 18 percent stocks-to-use ratio we have soared to 37 percent and if we’re lucky we’ll drop down to a still-very-high 30 percent next year. But what happens if we get 32 million tonnes of wheat? What if we get 34?

Ditto canola, which I’m going to hear a lot about today, tomorrow and Thursday. The conference is mostly focusing on broader global issues of supply and demand, as well as food and diet trends, but I suspect the jammed-up gears of the Prairie grain system will run under the conf like a main circuit cable plugging me directly into Kurtz. (Sorry, my soul started channeling Apocalypse Now there.)

Yesterday federal agriculture minister Gerry Ritz and his provincial compadres along with farmer reps from across the Prairies met in Winnipeg to talk about getting better railway service. And the railways met with the big boys and said they were working on various plans to make things go a bunch better. And everyone got to play their role and it was a good bit of grain industry drama. But no one really thinks there’s much that can be done to quickly alleviate this mess. In the end, there’s a couple of pipelines with limited capacity and too much crop trying to pass through them. This nasty winter we still suffering through (well, not me right now, but you are) isn’t helping things, and while no one wants to sympathize with the railways, there’s no question this sort of crap weather makes tracks brittle and causes lots more breakdowns than our usual balmy winter weather. You can’t have the coldest winter in almost a century without an impact.

But there’s no doubt lots of structural improvement that can be made in the railway system and hopefully the present outrage and exasperation will lead to toughened controls on the railways so that they at least have to reveal what they’re doing and how they’re making decisions. After all, they aren’t in a competitive business where users have freedom of choice.

Ritz yesterday told me he was willing to do what it takes to get better railway service, even if that requires legislation or regulatory changes. He’s been sounding like that for a few weeks, but it’s quite a change in tone from the usual non-interventionism line that his government takes unless a real problem develops. So if there ever was a time to refresh the structure of the Prairie grain transportation system, it’s now, when there’s both a problem and the willingness to do something about it.

How to change things? I’ll leave that to y’all and the people who know what they’re talking about. (I still like my idea of having inspectors working inside the railways observing what’s going on, like meat inspectors at a slaughter plant.)

But if rules, systems, regulations, approaches, legislation gets refreshed because of this present conundrum, then that at least would provide something positive to this story.

Because otherwise, as Chuck and I were just noting, this story’s going to go on and on and on and on and on and on and on and on and on without much to make it bearable. All we’ll be able to do is stand back and say: The horror, the horror.

By the way, here’s a clip of me waking up in San Antonio this morning.

 

 

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.

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