Improving information flow crucial to grain movement

The next time you are asked to complete a Statistics Canada crop survey, think positively about it.

Information is the lifeblood of any system, and it is clear this year that information gaps in the grain industry contribute to costly inefficiencies.

Much more must be done to correct problems in the grain transportation logistics system, but it has quickly become apparent that lack of information and communication is one problem.

The federal government has responded by ordering improvements to the Grain Monitoring Program to widen the amount of information collected and the frequency.

The data covers the size of the hopper car fleet, the number of cars the grain companies order, railway performance in filling those orders, the performance of port terminals when unloading cars, the time it takes to cycle from country elevator to delivery point and back and the amount of grain moved in containers.

An adage of business is that measuring a thing is the first step in understanding it and through understanding comes the ability to control and improve.

The collection of this information will help the grain and rail companies identify problem areas to rectify. It also helps hold players to account for shortcomings.

The government should also start to collect export sales data.

Grain exporters in the United States must report sales to the agriculture department, which releases it weekly.

This way, the transportation system knows the volume of grain it will be expected to move and when it must be moved. Also, everyone in the market knows if sales are keeping pace with expectations and adjust grain prices accordingly.

If movement is too fast, the price rises to ration demand, and if it is too low, the price falls to stimulate demand.

Statistics Canada keeps track only of exports and reports monthly. The picture is like looking through the rearview mirror. It is always about two months behind, lessening its value in planning and marketing.

Statistics Canada also collects and reports data on the size of the crop.

The railways partly blame their performance shortfall on not knowing the true magnitude of the record-breaking crop until the fall, and then it took time to put in place the staff and equipment needed to haul it.

This ignorance is hard to accept because by August it was becoming obvious that the crop would easily surpass the average. However, the situation again makes clear the need for accurate and open information on crop size.

That’s why we are concerned about Statistic Canada’s plan to drop the September crop production survey in favour of a mathematical model that uses satellite data to produce production estimates.

We encourage the agency to adopt new technology to complement and elaborate on the information from its surveys, but the remote sensing technology is not yet accurate enough to stand on its own.

The September survey already tends to be conservative relative to final production. This is likely a result of farmers not wanting to count their bushels before they are in the bin and an effort by some to “talk up” the market by leaving the impression of a short crop.

However, any action that lessens the quality of the information ultimately hurts all players in the industry.

Questionable reports give more power to rumour and those who would manipulate the market to their own benefit.

Filling out Statistics Canada surveys or amassing data for government reports might be a hassle and appear to be an intrusion on privacy.

However, the benefits from accurate information — from fair crop pricing to efficient grain logistics to ensuring crop inputs are available when needed — far outweigh the costs of collecting it.

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