Abundant harvests that are setting new records for grain movement by railways show how Canada’s agriculture sector is helping the country get through the COVID-19 crisis, said an industry leader.
“We know agriculture is a keystone of the Canadian economy,” said Jeff Nielsen, chair of the Grain Growers of Canada. “We’ll be there to pull Canada through and past this issue we’re facing right now.”
Canadian National Railway shipped more than 3.12 million tonnes of Canadian grain in November, setting a new grain movement record. It follows a record of 3.27 million tonnes moved in October.
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“We’ve had a record every month from March right through to November,” said David Przednowek, director of sales and marketing for bulk at CN.
Due to seasonal demand, which usually declines from May to July, the railway typically has about 5,000 hopper cars parked in August, he said. “I think this year in August, we might have had 1,000 cars parked.”
Demand not only failed to slow, it continued to run straight on through, he said.
“We didn’t move more grain because we moved less of everything else. We moved more grain because we had record demand for grain movement in a period where typically things are very slow.”
Canadian Pacific Railway is also setting new records, shipping 3.04 million tonnes of grain and grain products in October. It not only surpassed the previous record set in April by 6.9 percent, it marked the first time the company has moved more than three million tonnes in a single month.
“I wish to thank our shipper customers, supply chain participants and Canadian farmers for their efforts, support and collaboration, which have led to all-time records for shipping Canadian grain and grain products despite the pandemic,” said Murray Hamilton, CP’s assistant vice-president, sales and marketing for grain, in a company statement.
Many farmers were able to complete harvest early this due to favourable conditions in many areas, said Statistics Canada.
Total Canadian wheat production alone increased 7.7 percent to 35.2 million tonnes this year largely due to higher production on the Prairies, with farmers also producing more oats, barley, corn for grain and soybeans than last year, StatCan reported in a statement.
The agriculture sector has demonstrated its economic strength and resilience during the pandemic, said Nielsen, who farms southeast of Olds, Alta. He added he not want to belittle the overall impact of the crisis on rural communities or Canada as a whole.
“Of course, everyone’s concerned about COVID and the ongoing effects through our friends and family.”
Early in the pandemic, agriculture in terms of grain and pulses wasn’t as affected as beef and pork, he said. “We found a little bit more resilience there.”
Although farmers were facing potential difficulties moving grain at the start of 2020, the economic slowdown caused by the pandemic reduced the level of other goods and commodities competing for space in the railway system, he said.
“With that, we actually saw the opening of transportation corridors …. We were facing a pinch point, and just due to the amount of sectors shutting down, we are still moving grain. Yet, we’re highly concerned that we’re into the fall of 2020 and where we see 35 vessels, say, off the west shore of Vancouver right now waiting for grain, we’re concerned that we’re going to have international customers asking ‘where’s the grain we ordered?’”
Farmers are benefiting from the fact that good-quality harvests are being met by rising markets, said Nielsen. “But we also know that markets are finicky and they can turn on us in a real heartbeat, too. We do hope that markets will continue to rise, but that’s not a guarantee.”
Although things such as crude oil, frac sand and pipe have not recovered to their previous levels, grain isn’t the only part of CN’s business that has performed strongly this year, said Przednowek. Intermodal movement has also been setting records as the manufacturing sector recovers within regions such as Asia, he said.
“We’ve had a very strong movement of lumber as well. You can think about strong housing starts and home reno projects … so there’s a lot of segments of the business that are actually very strong.”
Przednowek said the demand for grain movement will likely remain at historically high levels due to the combined factors of “strong global demand and record production that will continue right through the winter into the early spring — and then we’ll see what happens once we get deeper into the crop year.”
