opinion
While city dailies across Canada have been turning their backs on agriculture, replacing farm-reporting beats with trendy consumer- and nutrition-oriented assignments, there are still a few that give their readers good agricultural coverage.
One of them, the Regina LeaderPost, recently described how the railway system is straining to get enough grain to export positions. Delays in loading ships in harbor have already cost farmers millions of dollars.
Why? The newspaper explained: “Far more canola and special crops like peas and lentils are moving. Because they have specific destinations and are not shared like board grains, cars containing special crops take on average 34 days to return to the Prairies. Board grain cars take 20 days.”
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Or, to put it another way, there are a lot of potential advantages to orderly marketing, and greater transportation efficiency is one of them.
A phrase like “greater transportation efficiency” may seem bureaucratic and ambiguous, but that can translate fast into hard money.
As the Producer reported last week, grain-trade analysts say canola prices would be $3 to $5 higher right now if there were no transportation delays.
The “soft,” or indirect, costs can also be substantial in the long run — customers who are irritated by delays, or who lose confidence in Canada as a reliable supplier of canola and other commodities.
The basic fact is that farmers pay, one way or another, for all inefficiencies in the rail system. That’s because the price they receive for their exported commodities is the world price less transportation costs.
The higher those costs are, the less is left for farmers’ take-home pay. That is true regardless of whether the higher costs are due to demurrage payments to ships, or more car-days rental paid to railways, or higher fuel taxes imposed on the railways.
The farmers also ultimately pay regardless of whether their product is being exported on their behalf by the wheat board, or has been sold to a grain trader.
When the board pays higher costs, it obviously has less money left to divide among producers.
What is perhaps less obvious is that there is the same effect when a private company faces higher costs.
The private company is in business to make a profit, and if its transportation costs go up it will seek to maintain its profit margin by paying less for the farmers’ production.
Either way, farmers pay. But they might pay significantly less if orderly-marketing principles were extended to more commodities.
