Bottlenecks called threat to export dream

Logistical constrictions tighten as country tries to ship more food overseas, speakers argue at Grain World conference

Western Canadian farmers have incredible potential to become the world’s suppliers of premium proteins.

The region has already begun producing ever larger amounts of the crops that consumers around the planet have been clamouring for.

However, bottlenecks and logistical constrictions get tighter at the same rate, and that potential might be strangled without policy, commitment, effort, focus and money, the Grain World conference was told Nov. 13-14.

“As soon as you do some of these (infrastructure expansion) projects … you’re sold out again,” said David Przednowek, Canadian National Railway’s director of grain marketing.

“Some major corridor projects have to happen in order to increase capacity to the West Coast.”

Murad Al-Katib, president of AGT Food and Ingredients, said the federal government needs to make sure its rules and regulations allow for Western Canada to boost crop production the way it claims to because regulatory overhang could prevent it from happening.

“We don’t need regulatory chokeholds in order to protect public safety and public trust.… We need a modern regulatory system,” said Al-Katib, who also chairs the federal strategy for boosting long-term growth in agriculture.

“Today there is no economic quantification of regulation. That is one of the biggest barriers to our system.”

The underlying theme of Grain World’s prairie-focused discussions was that the booming farming region is well-positioned to supply and benefit from the growing global demand for food, but it needs to set itself up correctly in order to achieve what’s possible.

Frederic Seppey, Agriculture Canada’s assistant deputy minister who has been the country’s chief agriculture negotiator, set the optimistic tone by lauding Canada’s goal of $75 billion in annual agriculture and food exports by 2025, which was boosted in September to $85 billion by Al-Katib’s strategy board. That’s a big jump from the $64 billion achieved at the time the goal was set, but reasonable.

“Canada is a trading nation,” said Seppey.

To make it happen, the federal government is pursuing trade agreements around the world, attempting to strengthen multilateral institutions and supporting a rules-based approach to world trade.

A panel of grain logistics players also seemed optimistic about Canada’s prospects but warned about the bottlenecks that exist now and will get tighter as Canada’s exports attempt to expand.

“During peak times there are capacity constraints which limit grain off the West Coast,” said Mark Dyck, director of logistics for G3.

Dyck, Przednowek and Richard Helm of Navico Chartering illustrated the way that grain will be diverted from westward routes when they become clogged, which occurs most years from harvest until almost spring. Prices might be better and costs lower if crops are shipped out of Vancouver or Prince Rupert, but they will flow south or east if those routes hit capacity.

“Capacity constraints is a major factor influencing grain movement,” said Dyck.

The good news is that companies throughout the system are investing money to boost capacity, from elevators through railways to port operators.

However, that then increases the problems with capacity in Vancouver, which includes two bridges and a tunnel that can carry only so much crop.

More good news is that money from the National Trade Corridors Fund is helping expand those bottlenecks as well as other parts of the system.

However, continual investment will be necessary if crop production continues to grow and exports bloom.

“The biggest challenge and opportunity is infrastructure investment,” said Dyck.

Przednowek said the increased production that creates greater pressure from bottlenecks also leads to capacity-boosting investment that barely keeps up with demand.

“We’re sold out again. We’re at capacity,” he said about the situation after recent improvements.

Further growth in capacity is coming with major investments, such as G3’s new terminal, but it won’t be enough if further increases aren’t achieved.

Al-Katib said Canada should have a long-term strategy for achieving its export goals, because letting any part fail will break the machine.

“We have an underdeveloped value chain in this country,” said Al-Katib, highlighting food processing and transportation as particular areas of underinvestment already. Those areas need to improve if Canada wants its farmers to reach the nation’s goals.

“We never talk about the economics (of failing to address issues that stop Canada meeting its potential).”

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