Grain handling companies have only themselves to blame if they lose business to producer car shippers, say farmers involved in developing producer car loading sites across the Prairies.
By closing hundreds of elevators and raising handling fees, they’ve driven farmers to take grain shipping matters into their own hands.
“With the prices that grain companies are charging, it’s become very economical to load your own car,” said Kelvin Grisdale, a founding member of Shand Creek Grain Ltd., which operates a small producer car loading site at Clemenceau, Sask.
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Farmers who load an 88-tonne rail car can pocket an extra $1,000, which works out to more than $11 a tonne, he said. In these days of tight margins that’s no small saving.
The number of producer cars shipped so far this crop year is up 55 percent over last year. And last year, producer car numbers were 37 percent higher than the previous year.
A number of producer car loading sites are being built across the Prairies to handle the increased demand, ranging from small trackside loading sites like Shand Creek to outfits like West Central Rail and Road, which plans to build a network of modern storage and loading facilities and work closely with the Canadian Wheat Board on sophisticated grain collection and shipping programs.
None of that sits too well with the grain handlers represented by the Western Grain Elevators Association, which sees the producer car facilities as a competitive threat and has lobbied the Canadian Grain Commission to require them to obtain a primary elevator licence.
A WGEA official says if producer car facilities are not required to be licensed, they will gain an unfair competitive advantage by avoiding some administration and quality control costs and having preferred access to rail cars.
However Paul Beingnessner, a former short-line rail manager and now a grain transportation policy adviser, said avoiding costs is the whole point of shipping producer cars.
“If the grain companies build concrete elevators that are not cost effective they shouldn’t then try to penalize somebody else to try to make them more cost effective,” he said.
The big companies should work with the producer car groups, not against them, said Kyle Korneychuk, chair of Prairie Alliance for the Future, which is working on plans for a producer-car based grain shipping network.
“If you’re running a business and you consolidate and you’ve left an area where there’s some entrepreneurial spirit left, why not partner with these groups?” he said. “You reduce your costs and they get to haul grain.”
Here’s how the West Central system would work.
The company would have contracts with a number of farmers. After harvest, the private grain testing firm SGS Canada Inc. would take samples of the grain stored in those farmers’ bins and prepare quality specifications. Using that information, the company would work with the wheat board to bring in the appropriate blend of grain to fill producer cars to meet sales orders.
Producer car proponents say the key point is that West Central never takes ownership of the grain. The grain remains in the possession of the farmer until it is unloaded at port and taken by the Canadian Wheat Board. All West Central does is provide identity-preserved trackside storage and logistical assistance to farmers shipping producer cars.
Bernie Churko, general manager of Saskatchewan Grain Car Corp. and a director of West Central, said the system will allow producer cars to be part of a modern, efficient grain handling and collection system, with its emphasis on multiple car loading, timely shipments and precise quality control.
“It enables (producer cars) to co-exist with other players,” he said. “We have to come up with new ways of doing it to maintain producer cars’ rights.”
