Cross border grain trade may see hurdles

VALLEY CITY, N.D. — Farmers in northern North Dakota expect to see more Canadian licence plates at local elevators come Aug. 1.

But they aren’t sure if Canadian farmers will be seeing many American licence plates in the post-CWB monopoly era.

“What if it’s cheaper to railroad it through Canada?” farmer Greg Svenningsen said on his eastern North Dakota farm.

“One thing farmers worry about is that all this grain might move south and flood our markets, but can we move it north? Are there going to be constraints on that?”

The answer is probably yes, but it’s something many in the prairie grain industry, including farm groups, are trying to avoid.

“If we want to be able to sell our grain in there … with minimal restrictions, then with trade being a two-way street it’s got to work both ways,” said Grain Growers of Canada executive director Richard Phillips.

Farm groups, commodity groups, grain companies and processors have formed an informal committee that is trying to compile information that will help growers on both sides of the border sell into the other country after Aug. 1.

They are also trying to alleviate some of the regulatory problems that could prevent farmers from trading across the border.

Most varieties of U.S. wheat grown in North Dakota and Montana aren’t registered in Canada, so if they are sold to a Canadian elevator, the grading system requires that it be regarded as feed wheat, regardless of its quality or characteristics, Phillips said.

That would slam the door shut to any significant sales from U.S. farmers to Canadian elevators of any quality wheat.

On the other hand, some U.S. buyers aren’t interested in Canadian grain, even if they are legally allowed to buy it. Keystone Agricultural Producers president Doug Chorney said a major North Dakota buyer said he wouldn’t take any Canadian crops, board or non-board.

“He said, ‘we only buy grain grown in America. We’re not interested in buying any of your grain at any price,’ ” said Chorney.

“Those made-in-the-U.S.A. policies of some companies might be something that Canadian farmers aren’t ready for.”

Few expect there to be much truck trade between Canada and the United States by individual farmers.

“Prices will arbitrage, so there won’t be an incentive to do it,” said Chuck Penner of LeftField Commodity Research.

Chorney said farmers will be unlikely to haul much by themselves, but independent grain elevators and grain merchants might try to supply American buyers with bigger sales.

“I think a lot of (North Dakota buyers who have said they are interested in Canadian grain) are looking to buy in bulk rather than from farmers randomly driving down to North Dakota elevators,” said Chorney.

Some farmers in Canada have long coveted the right to haul to U.S. elevators with no restrictions in hopes of higher prices. Some U.S. farmers are hoping that Western Canada’s two competing railways might sometimes create attractive basis levels from which they could profit.

“Is that going to be there for us?” said Svenningsen.

Chorney said the lack of certainty is common across the Prairies and Great Plains.

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