MOOSE JAW, Sask. – Politics, not bottlenecks, is the real problem in grain transportation, a commodity expert told a recent conference here.
Larry Weber, who operates Weber Commodities in Saskatoon, said politics and the railways have been linked since Canada’s earliest days.
The two large railways still have a formidable political presence with 117 registered lobbyists in Ottawa, he said, and they retain immense power.
The attitude in Winnipeg, where
Weber once worked as Pioneer Grain’s transportation manager, is, “don’t upset them,” he said.
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But Weber said shippers and farmers have to take that risk because the level of service they are receiving is not adequate. For example, strikes have hampered lentil sales every year for the last four years.
“We have a reputation worldwide as a third-world country shipper,” Weber told the annual Farming For Profit? conference.
Processors are backing up their risk to the farmgate by discounting lentils as much as two cents a pound, or $44 per tonne.
“Everyone’s scared to buy unless they’re taking that $44 a tonne protection, because they don’t know if they’re going to get the product out. Our market is severely damaged.”
Inadequate rail service leads to wider basis and lower farm prices for canola, and Canada lost one of two 650,000 tonne pea sales to India last month because railway constraints meant exporters couldn’t guarantee delivery of the second shipment.
New pea crop that was at $6 a bushel in mid-May fell to $5.25 in June.
“That risk has been shoved back to the farm,” Weber said.
He offered a list of examples where politics favours railways. In one case, a special crops company sued a railway only to have the bank pull the company’s line of credit one day before the judgment was going to go in the company’s favour. The railway dealt with the same bank.
From 1995 to 2005, a 3,500 acre farm paid an additional $560,000 in freight – an amount that far exceeds any government assistance to the farmer.
And the revenue cap is only protecting the railways, Weber added. It offers no incentive for the railways to provide cars. By fall harvest time, when farmers need cars, the railways are worrying about reaching the cap.
“When we need the railways to perform to the best of their ability, they’re pulling equipment away,” he said.
Some in the audience laughed when Weber showed a 110-kilometre-long line of soybean trucks waiting to unload in Brazil. But he noted that at least the product is moving and the farmer will have a cheque in two days.
Weber said farmers and farm organizations have to work together to solve the politics of this problem.
“Now is the perfect time to do it,” he said. “The railways are scared to death about biofuels” because 25 percent of the exportable product could be used for fuel instead.
The level of service complaint launched by Great Northern Grain and the Canadian Wheat Board is a good first step, he said.
Paul Beingessner, a farmer and transportation consultant, said shippers shouldn’t hesitate to make complaints because, without them, the railways can say everything is fine.
He said farmers have to make their voices heard. They could find support from grain companies that historically aligned with railways but are also starting to complain about service.
Weber added the industry can’t afford another strike. It’s going to take three to five years to build up a reputation as a reliable shipper after the problems of the last few years.
India is considered more reliable than Vancouver, he said.
