The Canadian Wheat Board’s troubled tendering system continues to run into a stone wall of resistance from grain companies.
Two grain terminal operators last week told the board they wouldn’t accept tendered grain at their facilities in Vancouver.
Saskatchewan Wheat Pool and James Richardson International refused to authorize CN Rail to pick up grain at Northwest Terminal in Unity, Sask., for shipment to the West Coast.
After the board intervened, CN agreed to load and ship the cars, even though the railway’s tariff specified a terminal operator must authorize all shipments.
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The cars are to be spotted at NWT and shipped out this week, although it wasn’t clear which terminals they will be sent to, or what will happen when the cars get to Vancouver.
“If it arrives at our terminal, without assurances that the grain is going to move out of the terminal, we won’t be unloading it,” said Will Hill, senior vice-president of Sask Pool’s grain group.
No one from JRI could be reached for comment. A senior CWB official vowed the agency wouldn’t allow disgruntled grain handlers to undermine the new tendering system.
“We will do whatever is necessary to make sure this process moves ahead,” said Adrian Measner, the board’s executive vice-president of marketing.
The board is relying on the Canada Grain Act, which requires terminal operators to accept any grain lawfully delivered and for which there is space in the terminal. A company that fails to comply can be fined or have its operating licence
suspended.
Hill said the pool doesn’t want to handle tendered grain because it has no assurance that the grain will move out of the terminal promptly, and the system of penalties for non-performance is inadequate.
“We don’t have any problem giving authorization for tendered grain, when the rules are defined and the penalties are set out,” Hill said.
Measner said the board feels the tender document provides a balanced system of penalties and has asked the grain handlers to put in writing what they don’t like.
He said the actions by JRI and Sask Pool show why the board must be directly involved in transportation logistics; to protect the interests of farmers, small shippers and companies without terminals.
And he added the board will monitor the situation over the next few weeks to ensure all players in the system live up to their legal obligations to ship and handle grain.
“Certainly this was a move that would limit competition and could be viewed in no other way, and that needs to be watched very closely,” said Measner.
Hill rejected any suggestion the companies are being anti-competitive or trying to undermine the new system. The grain companies and the board have been unable to agree on rules that will govern grain transportation logistics under the new federal legislation.
The board is required to move 25 percent of its program this year through commercial tenders, but so far the major grain companies have not participated.
The initial tender for 250,000 tonnes generated bids for 17,000 tonnes from two independent inland terminal operators in Saskatchewan, while the second tender for 90,000 tonnes elicited bids for 6,300 tonnes.
The two sides also disagree over rules that will govern the allocation of cars for the other 75 percent of the board’s program.
The grain handlers have asked the federal government to appoint a mediator to resolve the impasse, but have received no response.
