The number of independent, farmer-owned grain terminals in Western Canada has been in a state of slow decline over the past decade or so.
However, those that remain still hold a trump card: local ownership and close connections with grassroots farmers.
Local leadership also means these terminals are often more adept at identifying new business opportunities and capitalizing on them quickly.
“I think our members are probably closer to the grassroots than some of the larger line companies,” said Kevin Hursh, executive director of the Inland Terminal Association of Canada.
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“Because of that, I think they’ve learned to be more nimble and (more responsive) to customer needs. Every ITAC terminal is a little bit different … but if there is a common denominator between all of them, it’s the producer influence — the relationship with farmer shareholders who are advising and suggesting ways that ITAC companies can compete and get better.”
ITAC’s membership now comprises five farmer-owned terminal companies: CMI Terminal at Naicam, Sask., Gardiner Dam Terminal at Strongfield, Sask. (although it just signed a deal to be purchased by Viterra), Northwest Terminal at Unity, Sask., Providence Grain Solutions at Fort Saskatchewan, Alta., and South West Terminal at Gull Lake, Sask.
Representatives of the five companies met in Saskatoon Nov. 4-6 during ITAC’s annual convention.
Hursh said there is a widening consensus that Western Canada’s agricultural economy is heading into a period of slower growth and tighter margins.
For ITAC facilities, it will be more important than ever to keep an ear to the ground, maintain strong producer ties and focus on customer service, he added.
“I think it’s fair to say that there’s a belief the ag economy is heading into tough times,” he said.
“Commodity markets are soft. Lentils are in the doldrums. Durum is selling at a steep discount … and we’re also into a higher cost structure.”
“Land costs are high. Land rents are high. Machinery costs are high. Interest rates are edging upwards and we’ve also got a lot of trade uncertainty around the world.”
Within that context, grain handling volumes at some ITAC elevators are down and margins are tightening, he added.
In recent years, the prairie grain-handling industry has also become more competitive with the emergence of new players such as G3 and GrainsConnect — companies that are investing aggressively to secure a share of the western Canadian market.
“ITAC members definitely realize that it’s a competitive environment out there so you better serve your customers well or you won’t have their business,” Hursh said.
Independents that identify new business opportunities and new ways of attracting and retaining customers will be in a good position to weather tough economic times ahead, he added.
While larger line companies have been investing in new high-throughput elevators with loop track configurations, ITAC members have also been looking for ways to enhance efficiency.
Hursh said association members are considering projects aimed at increasing volumes, expanding track capacities and improving logistics.
On a positive note, Hursh said many of the pressing transportation issues that have plagued the western Canadian grain industry have been addressed.
The relationship between shippers and rail carriers has improved.
“In terms of transportation, I think the attitude has really changed,” Hursh said.
“The railways are much more forthright than they were in the past. They’re part of the discussion and they’re investing in their own hopper car fleets because Bill C-49 gave them the confidence to do that.…
“We’re still going to have transportation problems from time to time and things aren’t always going to go well … but I think we’re much more positive on that front than we’ve been in the past.”
