The farmer-owned grain companies using the Canadian Wheat Board’s new tendering system to get rail cars say they are doing it for a simple reason.
It is good business.
“It’s given us an opportunity to move additional volumes of grain,” said Jason Skinner, general manager of North West Terminal at Unity, Sask.
There are no politics involved in the decision to participate in the tenders, he said. It is simply a fact that the more grain the terminal handles, the more money it makes for its farmer-shareholders.
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That’s the same attitude being taken by Mid-Sask Terminal in Watrous, says director of operations Russ Strueby.
“It’s movement,” he said in an interview last week. “Without it, our market share wouldn’t be enough to handle anywhere near the amount of grain that wants to come in here.”
Mark Schell, chief operating officer of Southwest Terminal at Gull Lake, Sask., says farmers in his area had a good crop, so there is strong pressure to move grain out of the terminal as quickly as possible.
“These are cars that are above and beyond the normal car supply we would get,” he said. “We didn’t feel we had any alternative.”
The major grain handling companies have refused to participate in the weekly grain shipping tenders that have been offered by the CWB this fall under the terms of the new grain transportation legislation.
They don’t like the fact that the terms of the tender document identify the board as the shipper of CWB grain, rather than the grain companies, and they don’t like the system of penalties and rewards.
One of the major line companies said it has made an offer on some of the board’s tenders, but admits it unilaterally rewrote the terms of the tender before submitting its bid.
However, after initial hesitancy, most of the farmer-owned inland terminals have been participating, joined in recent weeks by some small local grain dealers.
As of Dec. 1, the wheat board had issued 14 tenders for about 1.5 million tonnes of wheat and durum for shipment to Thunder Bay, Ont., Vancouver, Eastern Canada and the United States.
Of that total, 144,000 tonnes had been successfully bid on by 10 companies.
The board is required to tender 25 percent of its grain shipments this crop year. CWB spokesperson Trish Jordan said the board’s position is that as long as it offers “fair and reasonable” tenders on 25 percent of its shipping program, it will have lived up to its end of the bargain, regardless of how much business is actually picked up.
“The intent is clearly there on our part,” she said.
NWT has been most active in the tenders to date, picking up 700 rail cars.
The tenders are actually based on rail cars, not grain. Using a rough average of about 85 tonnes of grain per car, that translates into 59,500 tonnes of grain that the terminal wouldn’t otherwise have handled. And based on a handling tariff of $10 a tonne, that works out to $595,000 in additional revenue.
SWT ranks second with 414 cars, although 300 of those were for shipment to the U.S., business which is conducted under a separate tender document.
Schell said there are terms of the tender he’s doesn’t particularly like, but the farmer-board members want to deliver grain and want to increase SWT’s handle, and the tenders offer an opportunity to do so.
“They want to move grain and I can’t sit back and not ship it,” he said. “I’m making the same money on tendered grain as other grain, so why wouldn’t I?”
The other companies using the tendering system so far include: Mid-Sask Terminal (263 cars), Terminal 22 of Balcarres, Sask., (200), Viking Grain and Livestock of Viking, Alta., (56), Great Sandhills Terminal of Leader, Sask., (50), Mainline Terminal of Moosomin, Sask., (45 ), Delmar Commodities of Winkler, Man., (31), North East Terminal of Wadena, Sask.,(25) and Great Northern Grain of Nampa, Alta., (10).
Some terminal companies have not participated, including Prairie West Terminal at Plenty, Sask., a joint venture between local farmers and Agricore, one of the companies refusing to participate in CWB tenders.
PWT spokesperson Evan Simpson said the company is receiving more cars from Agricore to make up for the cars it might otherwise get from tendering.
“The only reason we would tender is to get additional cars and they are giving us additional cars,” he said. “There is still grain moving and we’re still getting our fair share.”
Agricore controls grain marketing at Prairie West. Other inland terminals, including NWT, also have partnerships with major grain companies, but are allowed to make independent marketing decisions.
