Grain firm paints rosy picture for marketing system

More efficient | New environment will allow companies to source and deliver grain from producer to port, says Richardson International

Changes to Western Canada’s grain marketing system will result in a more efficient grain handling system, faster movement of wheat, durum and barley and fewer delivery bottlenecks at country elevators and port terminals, says the president of Richardson International.

Curt Vossen said the Canadian Wheat Board’s traditional methods of calling producers’ grain into the grain handling system were responsible for inefficiencies and delays at country and port facilities.

He said the new environment will give grain handling companies greater control over all aspects of grain movement, including car allocation, vessel freight arrangements, on-time delivery of grain and efficient throughput at port facilities.

“At our terminal in Vancouver, we don’t handle any wheat board grains today,” Vossen told wheat growers at a recent industry meeting.

“The only way that I can get that facility to basically fill and empty every week is to run non-board grains through it almost exclusively. Why do I do that? Because I can manage my logistical pipeline from Point A to Point B.… if I have anyone else in the middle of that continuum, I’ve got a disconnect and I’ve got a problem.”

Vossen said the new grain marketing environment, which allows Richardson to source and deliver grain from the producer to the end user, will result in more efficient deliveries and optimize the industry’s total grain handling capacity.

“What we see now … is cereals that come into the system, flood the system, wait for a vessel opportunity … and congest space at both the country and port position. You’re going to see less of that in the future, I think.”

Vossen also rejected the notion that private companies will balk at the opportunity to sign commercial grain handling agreements with a wheat board that no longer has single-desk powers.

He said a critical consideration for all major grain exporters in Canada is access to reliable grain supplies, including those that are contracted through the CWB.

“From our perspective, we’re quite happy to work with them, and I know others are as well,” Vossen said.

“We’ve offered to (enter) into long-term handling agreements with them based on the same type of dynamic that we’ve had with them in the past. We will continue to co-operate with them and I’m absolutely certain others will as well.”

Gord Flaten, the board’s vice-president of marketing and sales, shared a similar view last week during a presentation in Saskatoon, saying the board was negotiating agreements with all grain handling companies and did not anticipate problems in signing contractual agreements.

“Grain elevators need volume,” Flaten said.

“For those companies to be profitable, they need to generate quite a bit of volume going through their facilities and we can bring them more than they would have on their own.”

Vossen said private companies are gearing up to play an expanded role in the new grain marketing environment.

Bunge and Archer Daniels Midland have expressed interest in expanding their involvement in the Canadian cereal grains industry and Cenex Harvest States, a global exporter based in the United States, recently opened a Canadian office in Winnipeg.

In anticipation of an open market in cereals, Richardson is expanding rail car receiving capacity at its terminal in Vancouver and also plans to expand the facility’s storage capacity in the near future. Receiving capacity at the port is expected to increase to 300 rail cars per day from 150.

The company will also continue to build high throughput fertilizer blending stations in Western Canada to take advantage of backhaul opportunities.

The facilities will be designed to provide blended product to farmers and retail fertilizer locations and will be in close proximity to Richardson’s country terminals.

Richardson has built two or three of the facilities on a trial basis and plans to open facilities at 10 other retail locations across the West, he said.

They will be able to load a B-train with custom blended fertilizer in 10 to 15 minutes.

Vossen said there will be challenges as the industry moves forward, but elevator and port capacity for a voluntary CWB will not be as big an issue as many expect.

The wheat board also has access to a network of proxy facilities, including port facilities at Churchill, Thunder Bay and Vancouver, he said.

The board has been working with those facilities for years under long-term supply and throughput agreements.

“These facilities need the board as much as the board needs these facilities,” he said.

Richardson began offering delivery contracts to wheat and barley farmers shortly after Bill C-18 received royal assent in mid-December.

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