The Canadian Wheat Board has turned to a U.S. railway in an effort to get better rail service and save farmers money.
The marketing agency is shipping grain south on Burlington Northern Santa Fe (BNSF), mainly to U.S. flour mills.
Rick Steinke, the board’s director of logistics, said the use of the U.S. carrier is designed to accomplish three things:
- Take advantage of cheaper rates offered by BNSF to reduce transportation costs for farmers.
- Put competitive pressure on Canada’s two national railways to offer better rates and service.
- Increase rail shipping capacity to move as much grain as possible while prices are high.
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“We have used BN in the past but we have expanded it dramatically this year because of the Canadian rail rates,” he said after speaking to farmers attending a CWB meeting held as part of Crop Production Week.
Steinke declined to say how much grain will be shipped on the U.S. railway or how much money will be saved, citing confidentiality requirements.
“The savings are significant. I’ll leave it at that.”
He said the board would just as soon use the Canadian carriers but felt it had to do something to try to put a lid on farmers’ transportation bills.
“The rates keep going up, that’s the problem,” he said, from an average of $32 a tonne in 1995 to $42 a tonne this year.
BNSF shipments are moved south from Winnipeg and out of Saskatchewan through Northgate, N.D., southeast of Estevan, to U.S. mills as far away as Winchester, Virginia. Grain can also be shipped to U.S. Gulf ports and directly to Mexico.
Meanwhile, the board is trying to move as much grain as possible before the end of May, when market signals indicate wheat prices could decline from their high levels.
“Price signals can change but at the moment it looks like almost $1 a bushel less for farmers if we ship after the end of May versus shipping it today,” said Steinke. “So we’re trying to maximize movement in front of that.”
That effort has included near-record shipments through Churchill, a strong winter rail program to ship grain directly from the Prairies to export terminals on the St. Lawrence River and even truck movement to nearby U.S. mills.
“We’re trying to do anything we can for incremental capacity,” he said.
The contract call on hard red spring wheat is 50 percent, but Steinke expects that will increase soon to bring in as much grain as possible before road bans and spring seeding.
“We’d like to see over 70 percent movement of CWRS before the end of March.”
