Grain sellers work to address quality concerns

Canada’s grain promotion and grain trade organizations have been stamping out fires and talking with buyers in the chaotic first years since the Canadian Wheat Board’s monopoly died.

They’re hoping both actions and words can keep customers happy and avoid losing markets that prairie farmers built during the CWB era.

“We’re listening to them. We’re going around the world. We’re hearing what they have to say,” said Dave Burrows, director of client relations at the Canadian International Grains Institute.

“While there is no single desk, there are still so many organizations, valuable organizations, that underpin the whole industry that are there to ensure customer satisfaction and that the Canadian brand is not at all lagging.”

Burrows recently returned from Cameroon, where CIGI staff held talks with West African buyers organized by Swiss grain firm IFACO and its Canadian subsidiary, Agrohall.

IFACO and Agrohall are worried that Canadian grain quality and consistency have become undependable since the end of the CWB monopoly and since the Canadian Grain Commission changed grading practices.

IFACO’s Erwan Boubet said some customers have told him they don’t want Canadian wheat because of recent problems with consistency, but Burrows said he didn’t hear anything that severe from West African customers.

“Nobody is saying, ‘I can make a better loaf with somebody else’s wheat,’ ” he said. “The strength of the Canadian brand has been such that they’re willing to work with us as we overcome whatever issues we have.”

Leaders of the grain commission, the Western Grain Elevator Association and Cereals Canada also acknowledge recent customer worries but are also confident in the Canadian industry’s ability to improve performance and keep customer loyalty.

“If these customers are dissatisfied, then they’re not going to come back, and nobody wants that to happen,” said Randy Dennis, chief grading officer at the grain commission.

“The companies are aware that we are monitoring each of these (ocean-going ship) loads, and if we see issues with the companies not abiding by our expectations, then we can put some other things in place, and they don’t want us to go down that path.”

Dennis was referring to composite grading of vessel loads, which has replaced the incremental grading that was most common until late 2012.

IFACO and Singaporean miller Prima Group have complained that composite loading has resulted in their companies or customers receiving sub-specification wheat from Canada.

Dennis said the grain commission expects Canadian grain companies to use composite loading to minimize the disruption caused by small variations in grain being loaded and not as a way to dump lower quality grain into a shipment that also contains higher value product.

“The composite is used on the basis as it always was intended to, not for wild fluctuations, but covering over those settled overages,” said Dennis.

Wade Sobkowich, executive director of the elevator association, said customer worries have prompted his members to focus more on ensuring fewer divergences in composite loading.

“Our terminals have become more acutely aware in past months of a need to ensure consistency in cargoes, and they have been exercising more due diligence in ensuring that the cargo not only averages at the quality specifications contracted but that it is more uniformly representative of the contracted specifications,” said Sobkowich. “They are very much aware of that.”

One thing that won’t change is the switch from CWB’s focus on giving customers more than they paid for to the grain companies’ focus on just meeting specifications.

It’s a change that customers might not have understood.

“We don’t want to be selling high-grade brands for discount prices,” said Cereals Canada president Cam Dahl.

“That’s not happening (now). That’s not a bad thing for Canadian producers, is it?”

Burrows noted the same difference. “The grain companies are now adhering to the terms of the sales contract and not giving away that extra quality,” he said.

“If we give it away, that’s less value we can return to the Canadian grain industry and less value we can return to the Canadian farmer.”

However, all acknowledged that many customers might not have realized how significantly this could change the nature of the wheat they were accepting and how they might have to make tougher deals with suppliers to ensure they are just as happy with the grain they get as they were in the monopoly days.

“We do need to communicate to customers what their options are,” said Dahl.

Dennis said some millers might not understand that something has changed on the contracting side, so they need to talk to their buyers and make sure all their concerns are covered.

“Ensure that whoever’s doing your contracting, on behalf of your company, is aware of your particular parameters … so that there is no confusion,” said Dennis.

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