Producer car shipments in decline: CGC

The amount of grain being shipped in producer cars is dropping, according to statistics from the Canadian Grain Commission.

CGC figures show that 5,519 producer cars containing cereal grains, oilseeds, pulses and other crops were shipped in the 2016-17 crop year.

That’s slightly lower than the 2015-16 crop year, when 5,871 producer car shipments were recorded. It’s down sharply from 2013-14, when more than 15,000 producer cars were shipped.

Since 2011-12, western Canadian farmers have shipped an average of 10,012 producer cars per year.

Remi Gosselin, a spokesperson for the Canadian Grain Commission, said there could be a number of factors influencing demand for producer cars.

For starters, congestion in the grain handling and transportation system during the 2013-14 crop year caused a spike in producer car orders as shippers sought ways to get around delivery bottlenecks at country elevators and unfavourable basis levels.

“The system (now) is not as congested as it was (in 2013-14) so basically, we’re seeing producer car administrators order their cars on a weekly basis, rather than up front, at the beginning of the crop year,” Gosselin said.

Ordering cars on a weekly basis might result in fewer producer car orders being placed because shippers can more accurately gauge their hopper car needs.

“We’ve (also) tightened up our administrative processes (for producer cars),” Gosselin added.

“One of the things that we’re requiring producers to do now is that they need to have a confirmed sale before they place an order with the grain commission to ship their grain via producer cars.”

Garth Steidl, producer car officer at the commission, said demand for producer cars varies from year to year, depending on basis levels and savings that can be realized by avoiding elevation and handling charges.

“It tends to be very cyclical,” Steidl said.

“One year you’ll have a larger number of producer cars and the next (year) you’ll be down.”

Steidl said prairie farmers also have more delivery options than they did a few years ago.

Elevator companies are adding new primary elevators at locations across the West. New processing plants are also coming on line, offering new delivery options and reducing interest in producer cars.

“There are a lot more competing companies out there wanting to buy… grain, so producers have a lot of options,” Steidl said.

“If it’s easier for (a grower) to deliver to a GrainsConnect primary elevator or a pea processing plant in Vanscoy, than it is to load producer cars, then the producer will make (those) decisions….”

Catherine Jaworski, manager of policy, planning and producer protection at the commission, said recent changes in the grain industry may be influencing producer car loadings.

The elimination of the Canadian Wheat Board monopoly led to some producer car loading facilities being bought by elevator companies.

As well, new producer car rules that took effect on Aug. 1, 2015 — namely the requirements for confirmed sales and destination authorization — may have had an impact on use in the post-CWB era.

“We won’t allocate a car unless we know that the destination has authorized that delivery because we don’t want to be in a position where we’re approving a car and when it gets down to a facility and they don’t want that commodity or they haven’t got space for it,” Jaworski said.

“It could be that over time now, a couple of years, the rules are being understood and people are following the rules and now what we’re seeing is the true demand (in)… this new environment.”

The 2016-17 producer car numbers were confirmed by the CGC earlier this year, just weeks before Canadian Pacific Railway anounced plans to close 17 producer car loading sites across the West.

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