Shipments down 40 percent | Farm group blames decline on elimination of single desk
The amount of Canadian grain shipped on producer cars is down sharply in 2012-13, according to figures obtained through the Canadian Grain Commission.
Producer car shipments as of early July were down almost 40 percent from the previous year, according to the CGC figures.
As of July 10, the number of hopper cars filled by grain growers stood at 8,487, down from 13,038 a year earlier.
The Canadian Wheat Board Alliance, which strongly opposed Ottawa’s decision to end the CWB marketing monopoly, said the lower numbers are directly tied to the elimination of single-desk marketing.
Read Also
Geopolitics can change trade routes
WHISTLER, B.C. — Today’s geopolitical tensions could have dire long-term consequences, says the director of international policy at the University…
Based on estimated savings of $1,000 per car, Canadian farmers have lost nearly $5 million in shipping discounts over the past year, the CWBA added.
“When the Harper government introduced legislation eliminating the single desk … agriculture minister (Gerry) Ritz poured scorn on the concern that without the access to port terminals provided by the single desk wheat board, producer cars would be at risk,” CWBA chair Bill Gehl said in a July 10 news release.
“These numbers show minister Ritz was wrong.”
Gehl said a reduction in producer car shipments will further erode farmer influence in the grain industry, leaving growers, producer car loading groups and short-line railways in a vulnerable position.
Short-line railways that depend heavily on grain revenues will be most at risk, he added.
The CWBA is calling for new regulations that would ensure farmers and producer car shippers are guaranteed access to port facilities.
Most port capacity is owned and controlled by major grain handling companies.
“Many prairie farmers and their communities have made substantial investments in producer car loading facilities, including short-line railways, and have benefited from this infrastructure,” Gehl said.
“Now we see the economic base of those operations withering with the end of the single desk.”
Ritz refuted Gehl’s assessment, saying Ottawa’s decision to eliminate the single desk has benefited western Canadian farmers.
He said in an email that total farm cash receipts reached a record $53 billion over the past year, up nearly $4 billion from 2011.
“It is clear the system is working,” Ritz said.
“As has always been the case, producer cars remain available to farmers through the Canadian Grain Commission. We will continue to modernize our grain sector to give farmers the best possible conditions to drive growth and stimulate our economy.”
Tim Coulter, a producer car shipper from Briercrest, Sask., said producer car numbers are down slightly in his area.
However, producer car loading sites are busy and farmers still see them as an attractive alternative to shipping grain through line companies, which usually involves longer hauls, higher elevation fees and, in some cases, grade discounts.
Official numbers are not available, but Coulter said traffic at his producer car loading site, Briercrest Grain, will likely be down 20 percent this year.
He said Briercrest Grain has lost some customers since the single desk was eliminated, but it has gained others.
Reduced loadings were expected, he added, given the nature of the marketing changes that took place last August.
Producer car shipments are likely to rebound next year as uncertainty in the industry continues to diminish, he said.
“There is a certain element out there that has switched over to the open market and that stands to reason,” Coulter said.
“With the elimination of the wheat board (monopoly), there was a certain amount of exploration with farmers now being able to market with the big companies on their own.”
Coulter, a board member of Briercrest Grain and president of Producer Car Shippers of Canada, said the process for ordering and allocating producer cars has worked well during the past 12 months, at least in his area.
“As far as I’m concerned, it has been awesome,” he said.
“I can only speak for CN because that’s the line that we’re shipping on here … but we’ve had absolutely no trouble getting cars. CN has been very good to deal with, and the Canadian Grain Commission has been very good about allocating cars.”
Briercrest Grain is located on track owned by Southern Rails Co-operative (SRC), one of 13 short-line railway companies operating in Saskatchewan.
Grain collected on the line is transferred to Canadian National Railway tracks at Moose Jaw, Sask.
Coulter, who also sits on the SRC board, said major grain handling companies are paying attention to what producer car loading groups are doing.
Line companies are competing aggressively with producer car groups for farmers’ grain and in some cases are reconsidering grade discounts to secure business and ensure adequate tonnage.
As well, export companies that source grain through producer cars are becoming more familiar with the process and more comfortable with the quality and consistency of the grain being shipped.
Producer payments are also being issued more quickly.
“Some companies are realizing that … producer cars are a good way to know exactly what they’re getting in their cars,” Coulter said.
“The turnaround time from shipping a producer car to getting paid has really shortened up.”
