MELFORT, Sask. – The Canadian Wheat Board will fight any suggestion that it get out of the grain transportation business.
Some grain companies have been pushing for a system in which the board would announce what grains it needs at port to fill sales contracts and then leave it up to the grain handlers and railways to get it there.
But CWB commissioner Gordon Machej said such a system, known as f.o.b. (free on board) buying, is a bad idea.
“We absolutely have no appetite for that kind of system,” he said.
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He told about 75 producers attending a CWB district meeting March 4 that f.o.b. buying is “a nice way of telling the wheat board it should get out of the grain transportation business” and that wouldn’t be a positive development for prairie grain farmers.
Under the current system, the board allocates cars to about 199 train runs across the Prairies, which gives it control over what grain arrives at port and when. It has agreed to allocate to 30 to 40 shipping zones instead but won’t retreat any further.
Grain company support
Some grain companies promoted f.o.b. buying during discussions by a committee of senior grain industry officials last year.
The idea was not adopted but Machej said the board doesn’t expect it to go away.
“It could be something that comes back for discussion in the next year or so,” he said in an interview.
Machej expects the pressure to mount as companies pare down their elevator systems and build expensive, high capacity facilities that need large volumes of grain to be viable.
He said it’s understandable that the companies want the handling and transportation system to be as efficient as possible, but he rejected the idea that turning the board into an f.o.b. buyer would produce that desired result.
“I suppose it would provide them with more flexibility in their operations, but we certainly sense that efficient movement can still take place under the current system of allocation.”
Efficiencies lost
The board believes the current system adds efficiencies that would disappear under f.o.b. buying. He said he doubted car pooling at Vancouver would be retained if individual companies were in control.
Under the system now in place, rail cars go to whichever terminal needs them to fill a vessel, regardless of the company that shipped them to the port. Car pooling provides a significant boost to operational efficiency, with some studies suggesting it increases handlings at Vancouver by about 15 percent.
