Elevators delay farmer deliveries as rail blockades persist

Farmers have begun feeling the pinch of railway blockades as some grain elevators can no longer accept any more grain.

The Western Grain Elevator Association has said some elevators have had to delay farmer deliveries because of numerous transportation issues.

The late harvest last year, the Canadian National Railway strike earlier this year, and recent bad weather along the line and Port of Vancouver have contributed to the problem. The blockades have only made the delays worse, the association said.

“Because of this slowdown, we are seeing elevators at certain locations on CN lines delaying farmer deliveries,” said Wade Sobkowich, executive director of the association. “There is a such a backlog and there is a lot to catch up on.”

The blockades were established last week by protesters in support of Wet’suwet’en hereditary chiefs, who oppose an LNG pipeline in northern British Columbia. The pipeline, however, has support from the 20 First Nations band councils that have signed agreements in favour of the project.

It’s put the federal government in a politically tricky situation as it tries to balance reconciliation with indigenous peoples and the economy.

But for each day the blockades have remained, it has taken a toll on businesses. Farmers and agricultural companies have urged the federal government to take action.

Sobkowich estimated the delays are costing the grain sector $9 million a day. He said those costs are associated with penalties for extending contracts and for lost productivity.

John Heimbecker, the CEO of Parrish & Heimbecker, said the delays are having a dramatic impact on business.

He said extra costs will be felt by everyone in the industry and that the railways can’t catch up.

“There is no extra asset the railways can deploy. Once you lose business, you’ve lost it, it’s gone,” he said. “There will be a huge amount of loss because the shipping is so backed up.”

CN, however, says it’s possible to recover.

Sean Finn, executive vice-president of CN, said it’s going to take two to three weeks for the company to get back up to speed for its western Canadian operations, as long as the weather co-operates.

He said if the blockade ends immediately in Ontario, the company could catch up in three to four weeks from there.

He said Western Canada has lost 35 percent of its capacity. The movement of grain is down about 200,000 tonnes compared to last year, though he believes the dip can be recovered through efforts.

“We have invested a lot of capital and there is lots of track capacity, even though it’s not perfect yet,” he said. “The catch-up relies on there being no more blockades.”

With the backlogs at the elevators, farmers who are delivering their grain and don’t have contracts may experience depressed prices, said Mohammad Torshizi, an assistant professor at the University of Alberta who has studied the effects of limited grain export capacity on farmers’ income.

Otherwise, he said, they will have to store it, which will result in storage costs and potential interest charges.

Mark Hemmes, president of Quorum Corp., which oversees the federal grain monitoring program, said it’s going to take months before the system returns to normal.

He said it will push farmer cash flow possibly into the summer.

“The country elevators are starting to fill up,” Hemmes said Wednesday. “Once they get to a point where they can’t accept any more grain, it’ll have an impact on farmers because they won’t be able to deliver their grain.”

Past research by Torshizi shows that when farmers experienced the rail crisis following the 2013-14 crop year, farm income was reduced by at least $5 billion over the 2013-14 and 2014-15 crop years. There was record grain production levels, followed by an early and cold winter, causing slower-than-normal movement.

As of Wednesday, there were 44 ships at the Port of Vancouver waiting to anchor. Prince Rupert also had an above normal number of ships looking to dock. The large amount is due to the past strike and weather challenges, with the blockade only exacerbating the issue, Hemmes said.

As for the blockades, the RCMP has said it plans to leave its outpost in Wet’suwet’en territory. This may encourage protesters to leave the Belleville, Ont., site.

Sobkowich said the government shouldn’t be enabling protesters to block railways. It’s damaging the country’s reputation, he added.

“It’s embarrassing for one thing,” he said. “We end up looking real bad, and the next time customers buy our products, they could put a risk premium for our grain because they have no confidence we will deliver it in a timely way.”

Heimbecker said the costs to Canada are enormous, possibly in the hundreds of millions of dollars.

“The losses that have occurred can’t be earned back,” he said. “All that can happen now is that future losses can be minimized by a speedy end to this. That’s the best we can hope for now.”

Finn said the blockades need to come down in a peaceful way. Canadian jobs and livelihoods are on the line, he said.

He said the dispute should be dealt with in meeting rooms and not on railway tracks.

Contact jeremy.simes@producer.com

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