Rail deliverydelays take toll on CWB

The CWB’s pool programs have been hit hard by this year’s transportation delays.

The delays might also affect CWB’s ability to attract new pool business in 2014-15, a company official said.

Vice-president Gord Flaten said delivery opportunities for grain contracted through CWB pool programs have been limited.

“Like everybody else, we’ve had lots of issues getting deliveries as scheduled this year so we are behind in some of our early delivery contracts,” he said. “What we have been focusing on, and what most farmers who have those contracts have been focusing on, is just trying to find any delivery opportunity.”

Some farmers who contracted grain under CWB pool programs are withdrawing from the pools and selling grain to competing elevator companies that offer immediate delivery.

Terms of CWB’s 2013-14 early de-livery pool stipulate that grain must be available for delivery by Jan. 31, 2014. The deadline was extended to the end of February but deliveries are still more than four months behind schedule.

“We still have guys that are looking for deliveries … even for their early delivery pool contract,” Flaten said.

“It’s frustrating when things don’t work out as planned, so that might affect some people’s decision to sign up (to CWB pools) next year … but I think most people recognize that the whole environment changes from year to year.”

CWB is not releasing information about the amount of grain contracted under its 2013-14 pool programs or the volume of grain that remains to be delivered against pool contracts.

However, with only one month remaining in the 2013-14 crop year, farmers are worried that a significant amount of grain contracted into last year’s pools will still be sitting in the bin when harvest begins.

Last week, The Western Producer received a number of emails suggesting that elevator companies are refusing to accept delivery of CWB grain, knowing that farmers will buy out of CWB contracts if they have an opportunity to deliver to another elevator on the cash market.

“Elevator companies have been refusing to accept delivery of board grain but will take it if you sign a contract with them,” said an email from an anonymous source.

“If you phone the (CWB) and ask about your options, they will tell you that you can either roll to next year or buy out of your contract.… We don’t want to deliver next year and we don’t want to pay because the CWB can’t meet its obligations. We want our bins empty before harvest and we want to get paid for last year’s crop.”

Flaten did not suggest that competing elevator companies are intentionally denying delivery opportunities to CWB customers as a way to generate extra tonnage for themselves.

However, he conceded that delivery opportunities for CWB grain have been hit and miss this year.

“Sometimes the (delivery) opportunities come up without much prior notice,” he said. “It varies a bit by company and it varies within a company, station by station.… We’ve got the sales and can move it, but it depends partly … on each company’s own selling and movement programs, too. Everybody has shipments that are behind schedule, so if a company or a station has a lot of cash business of their own that they want to move, they may prioritize that over the pool contracts.”

Flaten declined to share details about the terms of CWB’s grain handling agreements, including contractual penalties that could be applied against elevator companies that fail to meet their obligations to handle CWB grain.

CWB still sees value in maintaining its agreements with competing elevator companies, he added.

“We’re still interested in having handling agreements with companies that do want to work with farmers who have pool contracts,” he said.

“I expect we’ll have most, if not all of the companies working with our contracts into the future. The vision is to have a mix of ways to originate grain, so we will definitely be buying grain through our own facilities, but we do intend to keep promoting producer cars and buying grain through handling agreements with other companies.”

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