The National Farmers Union says a hike in elevator tariffs and storage fees is proof that grain companies have been lying to producers for years.
“They tell farmers over and over and over that deregulation and the closure of elevators will lead to lower costs for farmers, and then they go and raise rates,” said NFU executive secretary Darrin Qualman.
Grain companies are required to file a schedule of tariffs with the Canadian Grain Commission before the beginning of each crop year. These are maximum tariffs. The actual fees charged for elevation, cleaning, storage and other services could be lower.
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While rates have remained relatively stable in the past, elevation fees for four of the eight major grain companies jumped substantially this September.
Saskatchewan Wheat Pool hiked its elevation fees by 12 percent for wheat, barley and canola compared to last year’s rates. Agricore bumped its wheat elevation fees up nearly 14 percent in Alberta.
Louis Dreyfus implemented almost a 10 percent increase for wheat delivered to its Saskatchewan facilities.
A spokesperson for one of the grain companies said it is just bringing its rates in line with the rest of the industry.
“We purposely a couple of years ago went lower than most others and thought that would be a real competitive advantage and, simply put, it didn’t prove to be that way. We just didn’t get any credit for it,” said Agricore CEO Gord Cummings.
He said Agricore discovered that competitors who had higher tariffs would provide larger trucking allowances and farmers reacted more favorably to those incentives than they did to lower rates.
Agricore’s new maximum elevation fees are $11 per tonne for wheat, which places the company at the higher end of the spectrum. But these are the initial filings; other companies could soon be submitting new rates as well.
Cummings said tariffs aren’t the main concern for most farmers. The real issue is what they will net after grading, protein adjustments, dockage and trucking allowances.
“In the end the tariffs bear little relationship to what the final financial transaction is, quite frankly,” he said.
“Generally farmers look at the net number. They don’t look at the individual numbers, including the tariff number.”
Qualman doesn’t expect the farmers’ bottom line to improve under a regime with higher tariffs.
More for storage
Three companies also raised their storage fees. UGG’s rate rose by about 17 percent for wheat, barley and canola.
Saskatchewan Wheat Pool and AgPro Grain (a wholly owned subsidiary of the pool) raised their storage rates by 155 percent for wheat and barley. Granular storage rates went up 109 percent at the pool and 201 percent at Agricore.
The pool and AgPro are now charging producers 12 cents per tonne per day to store wheat in their facilities, a full three cents more than the nearest competitor and more than 21/2 times what ConAgra charges.
Nobody from the pool was available to comment on the new rates.
A trend that has emerged with the new rates is that companies are setting a standard fee for their facilities in all three prairie provinces, rather than a different fee for each province.
Last year, Agricore’s maximum wheat elevation fee was 58 cents per tonne lower in Alberta than it was in Manitoba. Now farmers in both provinces are facing $11 per tonne maximums. Cummings said it’s easier to
offer deals and specials across the board when there’s one uniform fee.
He also said the actual rates that grain companies charge are far lower than the maximum rates.
“I’ve seen calculations that say just how much money we should be making based on these tariffs and then when you look at what we really make, it ain’t nowhere near that.”
Qualman doesn’t buy that statement.
“They wouldn’t raise the maximum tariffs unless they planned to actually charge more in some or all of their elevators.”
