The company that owns the Port of Churchill has applied for a license to buy grain in Canada.
Officials from OmniTrax Canada said the company has applied to the Canadian Grain Commission for a grain dealers’ licence that would allow it to buy grain directly from farmers.
The company is also looking for ways to secure grain supplies in the Port of Churchill catchment area, which includes much of central, eastern and northeastern Saskatchewan as well as western Manitoba.
Paul Stow, vice-president of business development with OmniTrax Canada, said the company is looking at all opportunities, including partnerships with farm groups and the construction of new grain collection facilities in some regions of Saskatchewan and Manitoba.
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The move is part of an OmniTrax action plan aimed at maintaining grain volumes through the port after grain marketing changes take effect Aug. 1.
“Some of the components (of our action plan) include putting up potential producer car loading facilities or grain gathering facilities so we would be able to buy grain in the country, ship it up to Churchill, extract that value and … make sure that the port continues to succeed,” Stow said. “We’d be open to any opportunities.”
The northern Manitoba port normally handles 500,000 to 550,000 tonnes of grain per year, although it has the ability to handle 780,000 tonnes per year.
In a normal shipping season, most of the grain that moves through Churchill is wheat and barley exported by the CWB.
It is widely expected that CWB grain will continue to comprise a large component of Churchill’s grain business after Aug. 1, but is unclear how CWB grain volumes might be affected when the single desk is eliminated.
In a presentation to the Hudson Bay Route Association last month, Mark Thibeault, manager of supply optimization with the CWB, suggested that the relationship between producer cars, the Port of Churchill and lost elevation tariffs could affect CWB efforts to negotiate grain handling agreements with Canadian elevator companies.
Elevator companies forego as much as $15 in potential elevation fees for each tonne of grain that is loaded on a producer car.
“We’re negotiating with grain companies right now … and I strongly believe that if we utilize Churchill, we’re going to have to pay them some type of money in our agreement … because there’s an opportunity cost … (associated) by not moving grain through their own facilities,” Thibeault said.
Many industry analysts see OmniTrax and the CWB as likely allies for producer car shippers.
Grain that is harvested in the Churchill catchment area can be shipped to port position at a relatively low cost through the northern Manitoba route.
In addition, neither the CWB nor OmniTrax owns country elevators, but both companies are eager to secure grain supplies and maintain export volumes.
Stow did not identify communities where OmniTrax is most likely to focus its efforts, but suggested that the company will consider any grain origination proposals that have the potential to boost port business.
“We don’t have a defined area that we’re looking to target in the beginning,” he said.
“I guess it depends on who wants to do something. If there’s a group in Tisdale, (Sask.,) that wants to do something, then we’d certainly consider Tisdale. If there’s a group in Saskatoon that wants to do something, then we’d take a look at that. It’s a matter of finding the right partners at the right time.”
The CWB announced recently that it will eliminate the Churchill Storage Program as of Aug. 1.
That program offered farmers in the Churchill catchment area premiums and storage payments of roughly $12.50 per tonne for No. 1 & 2 CWRS wheat that was stored on farm for eventual delivery through the Port of Churchill.
Those payments were roughly equal to the rail freight savings realized by the CWB when it shipped grain through the Port of Churchill rather than Vancouver or Thunder Bay.
