Logistics important | Canada has an export edge because of its complex and diverse handling abilities
Amid the frustration, financial pain and fretting over Canada’s clogged grain transportation system, speakers at the Canadian Global Crops Symposium lauded its usual performance and structure.
They said it was key to what gives Canadian crops an edge in world markets.
“All food and agriculture supply chains are complex, but Canada’s is even more so,” Cargill Inc. executive chair Greg Page told the conference April 15.
He said the average Cargill facility in the United States handles only two crops and its facilities in Brazil often handle only one crop. However, the average Cargill Canada facility deals with five or six crops.
“This complexity and diversity is a challenge we have to work on together, but it’s an enormous strength for Canada,” said Page.
Mark Hemmes of federally appointed grain system monitor Quorum Corp. struck the same note as he introduced a panel discussion on the future needs of grain logistics.
“Canada has one of the best if not the best and most advanced grain handling and transportation system in the world, but we have challenges like no other one has, and for that reason we have to be good,” said Hemmes.
“Being really good at this isn’t good enough. We have to be the best and be continually getting better.”
Speakers repeatedly noted the wide range of crops that Canadian farmers grow and the massive amount of on-farm storage that exists in Canada but not in key competitors such as the United States and Australia.
As a result, Canada has evolved a “just-in-time” grain handling system that is normally more efficient and creates more value than bulk storage systems based on giant elevators and terminals that can’t do as good a job separating crops, qualities and specific grades.
Rabobank managing director Bill Cordingley said Canada’s system “in a normal situation is a very efficient system.”
The problems in a year like this one were seen at the Port of Vancouver, where the number of grain ships at anchor swelled while ships for other commodities became less backlogged, even though all commodities were affected by slow rail service.
“That is an issue with the supply chain,” said Chris Wellstood of Port Metro Vancouver.
Terminal operators told the port that ships couldn’t be fully loaded because the clogged prairie elevator system and rail service were providing only enough for partial loading of various crops and grades. As a result, ships would wait until they could be filled.
Cargill Canada chief executive officer Jeff Vassart said the Canadian system needs to build more capacity and develop an even more collaborative approach in the future. However, he also said the industry needs to realize that while this year has created uniquely bad luck for grain shippers and farmers, it is usually a great advantage.
“Complex, yes, but even more powerful because I think it gives us the opportunity as an industry to truly differentiate and serve the individual needs of customers here at home and all around the world,” said Vassart.
“We have an infrastructure and a supply chain unlike anywhere else in the world. We need to take full advantage of that in order to truly be that market leader.”
However, Vassart said system capacity needs to be built not just for a slow-but-steady growth in crop production but also to be able to handle way-above-trend growth as was seen last year.
“I think this past year is an indication, when the stars align, of what we’re truly capable of in terms of production,” said Vassart.
“To only use a long-term yield trend to predict what the size of our production and what our crops will be going forward, I’m not sure that positions ourselves to be successful in the future.”