For grain, farmers and railways there’s never a normal year, but let’s start acting normal again

For the past few years there has been no normal year in Prairie crop production or Prairie grain handling.

That’s a big problem, because without a “norm” to hold present performance against, it’s hard to tell if we’ve got a problem.

The first year after the Canadian Wheat Board’s monopolies were unravelled was anything but normal, with some old players disappearing, other old players taking on new roles, and new actors coming onto the Prairie stage to play newly written parts.

It was an easy, high quality crop for the system to handle, so despite early misgivings, by the end of the year the system seemed to be working great. Farmers were able to market their former board crops without too many problems and the transportation system shot them off to buyers.

Last year was the evil mirror image of that first non-CWB year, with everything that seemed to have worked the year before failing and leaving farmers in a terrible situation. Farmers couldn’t move most of their crops. Basis levels were hugely negative for farmers. Buyers became frustrated and abandoned Canada. The government was provoked to make an extraordinary intervention in the system and impose punitive legislation on the railways.

If the first non-CWB year allowed deregulationists to crow loudly “I told you so” and celebrate the wonders of market freedom, last year allowed pro-CWBers to claim that they “told you so” and had foreseen the oncoming farmers’ plight and been proven prescient.

In both cases I think it’s simplistic for anyone to claim to have had their ideological views vindicated. 2012-13 was an easy year for the system and it did well. 2013-14 was an awful year for the system and it did poorly. All that does is lays out extremes of an industry spectrum that “normal” years will fall into. And we don’t know where on that spectrum between superb and disastrous normal will end up being.

It’d be nice to think that 2014-15 will reveal what the system’s like in a “normal” year. The crop isn’t as monstrously large as in 2013-14, but it’s not a small, high quality crop either. If anything, it’s likely to be on the challenged side of the spectrum because of late harvest and a plethora of quality problems to be managed.

But that doesn’t make this year normal, or in a normal range. We still have the government’s punitive shipping minimums in place and there’s no question those rules distort railway, port and grain company behaviour. We have lingering after affects of last year’s massive crop working their way through the system, with normalization of the old crop there competing with new crop supplies coming into the system. We have a much wider range of quality specs to move, especially on the damaged side. And the American railway system is jammed up, creating complications for Canadian crops flowing south or needing to connect through U.S. railways and transportation channels.

These wacky years have each created their own moods, their unique tones. The first saw the dispiriting of the pro-monopoly lefties, as their predictions of dire consequences seemed to be proven false and the righties vindicated in their predictions that marketing freedom truly would be a blessing for the average farmer. The next year saw the bewilderment of the righties, as they faced some of the very dangers the lefties had warned about and they had no free market answer for.

Tremendous ill will between right and left arose in those two years, and last year brought about an unprecedented amount of outrage about the railways and deregulated system, with some of the harshest views and thoughts vented by the grain companies, who were stuck in the middle.

This year’s mood seems less angry, less outraged, and that’s to be expected, considering the resumption of adequate grain car flow to ports and the ability of stranded crops like oats to get down to U.S. buyers again. But I also sense there’s a more constructive mood out there, after the glib optimism of 2012-13 and furious outrage of 2013-14 have left many wanting to get beyond the politics and ideology and into practical solutions.

I saw what I thought was evidence of this newly constructive mood at Cereals North America, at Fields on Wheels and at Informa Economics’ fall outlook conference, and some of that has made it into stories in our paper. (See “Grain Crisis Forcing Cooperation Across Logistics System“) Tomorrow’s Western Producer (December 18 edition) contains both a story and a column by me on elements of this sense of constructive engagement. One deals with the reflections of one of the most sage right wing deregulationists about blind spots on his side of the issue in the years leading up to the CWB monopoly suspension. The other contains my view that farmers and the rest of the grain industry need to take a leap-of-faith and start working cooperatively again, since last year’s combativeness is not only unhealthy in the long run, but in the short term is also creating unplanned costs and complications. Since all the elements of the Prairie grain industry are permanently trapped together – including the railways – they’d better learn to work together.

We can’t predict how this year will work out. That’s left, to a large degree, to the weather. But I think it’s a time for constructive engagement between all the players, because neither the glib triumphalism of the right nor the cynical dejection of the left have held the answers to our problems.



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