The 68 percent drop from last year may put the federal program’s $9 per tonne grain shipping subsidy in jeopardy
One thing jumps out at Neil Townsend when he scans the Canadian Grain Commission’s weekly report on grain movement.
“What the heck is happening in Churchill?” said the director of G3 Market Research.
“We’ve barely exported anything out of Churchill this year.”
The port has shipped 144,000 tonnes of grain through the first 11 weeks of the 2015-16 campaign. That is down 68 percent from the same period a year ago and 61 percent from two years ago.
Merv Tweed, president of OmniTrax Canada, which owns the Port of Churchill and the Hudson Bay Railway that services it, disputes the commission’s numbers.
He said the port has handled more than 144,000 tonnes of grain, although he was unwilling to provide OmniTrax’s numbers. However, he acknowledged it has been a disappointing season.
“Our volumes are off our expectations, for sure,” said Tweed.
The port usually expects to export at least 500,000 tonnes of grain a year. However, that does not appear even close to possible this year, given a shutdown date at the end of October.
Tweed said the railway is not to blame.
“Our rail has never been in better shape. That is definitely not a factor in why there is less grain being shipped up there,” he said.
Tweed offered no further explanation for the dramatic decline in grain traffic through Churchill. He said that is a question for grain producers and shippers.
However, he said in a September interview that the arrival of the first grain ship at the port was later than usual.
“The challenge this year is just the fact that the crop last year was sold off and there wasn’t a lot of product to move early in the season,” he said.
Townsend said that is a valid point. Last year’s crop was poor quality, so there wasn’t a lot of No. 3 or better carryout available to move at the beginning of the 2015-16 campaign.
He also said this year’s harvest progress was particularly slow in the normal catchment area for the northern port, which is farmland northwest of Saskatoon.
“In the first five or six weeks of harvest, we didn’t pull off a lot of grain that would naturally flow up to Churchill.”
Churchill mainly handles wheat and durum, and Townsend said the port’s poor performance is contributing to the sluggish pace of exports for those two crops.
Wheat exports through week 11 were 3.65 million tonnes, down from 4.13 million tonnes a year ago. Durum exports were 540,300 tonnes, which is less than half the 1.13 million tonnes shipped out a year ago.
Churchill’s long-term feasibility could be in jeopardy because of the expiry of a $9 per tone grain shipping subsidy that expires in 2017.
“It means we have to re-evaluate our position up there and make a decision as we go forward,” Tweed said in the September interview.
“I’m convinced that the Port of Churchill is important enough to senior levels of government that a subsidy of some form of help will be provided.”
The five-year, $25 million subsidy is part of the 2012 Port of Churchill Utilization Program, which was designed to help offset the demise of the single-desk marketing mandate of the Canadian Wheat Board, which was the port’s most important customer.