American oat millers could shut down this spring if rail cars aren’t available to ship western Canadian oats south, says an industry analyst.
Randy Strychar told Grainworld in Winnipeg Feb. 24 that oat stockpiles at mills in the U.S. Midwest have reached dangerously low levels and there is no easy way to maintain or rebuild those stocks.
“There is less than 20 days of oat grind … 4.8 million bushels of oats, sitting right now at commercial facilities (in the U.S.),” he said.
“If we can’t get rail cars down to them, they’re going to run out of oats….”
Federal agriculture minister Gerry Ritz had previously met with representatives of Canadian National Railway and Canadian Pacific Railway in Winnipeg and later told a news conference at Grainworld that they are adding thousands of more cars to alleviate the grain transportation logjam in Western Canada.
However, Ritz said the railways intend to use the additional capacity to move grain to Vancouver and Prince Rupert.
“They’ve told the grain companies that they’re not going to entertain anything, in the next short time, that goes to the U.S. or Thunder Bay.”
Strychar said the announcement was “vague” and not helpful for the oat industry, which is desperate for rail cars.
“I know there are problems, I know they’re working on solutions, but the oat industry can’t wait for them.”
He said U.S. millers grind 8.75 million bushels of oats every month. They could use up these supplies by April, he added, assuming they have reserves of five million bu. and another five million bu. on the books that are scheduled for transport.
Shawna Mathieson of the Prairie Oat Growers Association (POGA) said Strychar’s warnings of a shutdown are legitimate.
“They (millers) are running drastically short on oats…. If the situation is not remedied, there is that potential.”
Willie Zuchkan, a producer from Foam Lake, Sask., and vice-president of POGA, doubts the mills will close.
He said they will slow production, if necessary, and then find other sources.
“When the ice comes off the Mississippi, they’ll start importing oats from Scandinavia,” he said.
“Once they do that, it will be a significant cost to the oat producers of Canada…. For every vessel coming over from Scandinavia, it’s going to cost us, in roundabout figures, about $7.5 million.”
Mathieson said trucking isn’t efficient because restrictions on large double trailers in the U.S. means they cannot be used to get the oats to desired markets.
Real Tetrault, president of Emerson Milling, an oat miller in southern Manitoba, said Super B large double trailers haul 3,000 bu. per shipment.
“Going to the U.S., you can only send a tandem load of oats. You’re sending 1,400 bushels at a time … so it’s much more expensive to send product into the U.S.”
Mathieson said the announcement that railways are focused on shipping grain to Vancouver and Prince Rupert could exacerbate a critical situation.
“The outlook at this point doesn’t seem positive,” he said. “We would hope that (it) gets remedied shortly once the situation becomes even more critical … for Canadian oat growers and also the mills.”