Build it and they will come.
At least that’s the hope of grain handling companies competing for a share of the market in western Manitoba.
The Brandon region’s skyline has been redrawn in recent years by construction of several new high-volume elevators. Only time will tell whether farmers grow enough grain to support them all.
“I think the risk of over building is very severe,” said Barry Prentice, a professor and grain transportation analyst at the University of Manitoba.
“Many of us don’t think there’s enough grain to go around.”
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Freight and grain handling costs are pivotal points in the debate about how much is too much in terms of high volume terminals.
Unless those costs are trimmed, it’s likely that more grain will be siphoned away from export markets, Prentice said.
“It’s a very fluid, very dynamic situation.”
Western Manitoba is one of the most expensive places from which to ship grain to port. That lends some lustre to crops that can be processed closer to home or fed to swine and cattle herds.
The $120 million Maple Leaf Pork plant at Brandon is already stirring more growth within the hog industry.
But the president of Agricore sees no cause for alarm.
“There will still be lots of grain for the export market,” said Charlie Swanson. “We’re not going to walk it all off the farm in Western Canada.”
Other grain companies seem equally sure of themselves. Among them is Saskatchewan Wheat Pool, which recently completed a 42,000 tonne terminal near Brandon and is building an equally large facility at Boissevain, Man.
The two terminals are part of Project Horizon, the wheat pool’s strategy to reshape its grain handling facilities on the Prairies. The pool’s interim chief executive officer stands behind the decision to make a major play in Manitoba.
“From Saskatchewan Pool’s point of view, we have a plan that we believe is the right one,” said Bill Hunt.
“We plan to execute our plan and execute it successfully.”
Art Enns of the Western Canadian Wheat Growers Association welcomes new facilities. He shares the belief they can put more money in producers’ pockets.
“It’s giving the producer an extra marketing edge, because everyone’s competing for his grain.”
Grain companies say the new elevators will translate into savings for producers. Larger rail car spots offer a chance to gain discounts on freight costs, savings that can be passed to producers.
And the new concrete and steel structures are more efficient than their wooden predecessors, said Swanson. They can clean to export standards and a larger capacity makes it easier to blend a lower grade of grain with a higher grade if a farmer’s sample is borderline.
Companies such as Agricore also promise extended hours of service during peak seasons.
Presence known
Many of the towering terminals were built in the past two years. Killarney, Man., has three, the most of any community in the region. Agricore, Pioneer Grain and Paterson Grain each has a presence there.
Although the abundance of new terminals brings more competition, it may eventually have a reverse effect, said Daryl Kraft, head of the University of Manitoba agriculture economics department.
Kraft thinks the ledgers of several high throughputs will be blotted with red ink as they compete for market share. That could speed the closure of older wooden elevators in a bid to trim costs. It could also hasten the move toward consolidation of grain companies.
“To universally say that every one of these facilities will be able to meet their business plan projections would be unrealistic at this time,” said Kraft.
“I will be really surprised if all of them meet their projections. I wouldn’t be surprised if (only) one or two of them are successful.”
