WHEN does a grain bin become a primary elevator? That’s the question before the Canadian Grain Commission as the industry struggles to find a compromise between producers’ rights to load and ship their own rail cars, and the need for fair regulations between those competing for farmers’ grain.
The right to ship producer cars is guaranteed in the Canada Grains Act. It offers farmers a way to get their grain to port without having to go through traditional elevators.
But regulations have not kept pace with technology. Computers have allowed for on-farm testing and tracking of grain quality for blending and just-in-time shipping outside traditional elevators. As well, producers can co-ordinate large rail shipments from the farm.
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The original concept behind producer cars was designed for a few rail cars to be used by one or two producers. It was not set up to deal with well-organized groups like West Central Road and Rail Ltd., which wants to load as many as 100 cars at a time.
As attractive as it may seem to farmers who want to bypass handling fees charged by traditional elevators, regulations must encourage investment, development and efficiencies in Western Canada’s grain handling system.
Currently, the car allocation system gives producer car shippers an advantage by allowing them first options on rail car orders. That served as a much-needed safeguard when producer cars meant one or two producers auguring grain into rail cars on their own.
But by ordering 50 to 100 cars at a time, West Central has crossed into uncharted territory.
While the West Central plan does not buy or sell grain as elevators do, the absence of having to post a bond, which could cost $10,000 or more, gives it another important advantage.
In the past, elevator companies have offset these advantages by offering deals through blending different qualities of grain. But the West Central plan includes plans for blending, levelling the playing field in this area.
To use a trucking analogy, nobody disputes a farmer’s right to buy a semi-trailer to truck his grain to an elevator. But if a group of 20 farmers get together and lease a fleet of trucks to move grain around the countryside, they’d likely face resistance from trucking companies that are subject to additional regulations and licensing fees.
Producer cars have been and must remain an integral right in the Canada Grains Act. But it is vital that the CGC find a way to accommodate them that accounts for today’s new technology.
The potential exists today for greater volumes to be shipped via producer cars than were originally intended.
The grain commission must strike a balance between producer rights and fair competition, whether that means volume limitations on producer car shipments, changes in car allocation, or other changes to level the playing field.
