Canada’s grain-handling and transportation system performed above average during the first 13 weeks of the new crop year, but it’s too soon to tell if there’s a connection with ending of the Canadian Wheat Board’s monopoly, according to Mark Hemmes, president of Quorum Corporation, the firm hired by the federal government to monitor system performance.
There were near-record grain car unloads at Vancouver in recent weeks, Hemmes told the Fields on Wheels conference in Winnipeg Nov. 9.
“Is this all about the CWB? No, I’m not ready to say that yet,” he said. “But I can tell you things are looking really good and this has got to do with the amount of volume that’s moving through and the kind of good weather that we’ve had and the fact that the railways went into this crop year with a mindset that nobody is going to blame us for this (if movement suffered).”
Not the same
When the Australian Wheat Board lost its monopoly several years ago, logistical mayhem followed as companies eager to lock up market share oversold pipeline capacity. It took some months for exports to smooth out.
That hasn’t happened here. In fact, grain company officials and open-market supporters predicted system performance would improve post-CWB monopoly because companies would control all grain movement themselves.
It’s too soon to credit the demise of the board’s single desk, but had performance declined many people would be blaming the open market, said Richard Wansbutter, Viterra’s vice-president government and commercial relations.
“Three or four months isn’t a trend necessarily, but I’ve got to tell you it’s moving in the right direction,” he said as the meeting concluded.
Thunder Bay moved more grain in September and October than during the same period since 1998, said Tim Heney, chief executive officer of the Thunder Bay Port Authority.
Hemmes credited it partly to Thunder Bay’s ability to turn cars around faster, translating into more attractive freight rates.
Thunder Bay also received more ocean vessels during the same period than over the past four or five years, Heney said.
Above-average system performance so far this crop year follows above-average performance last crop year, during which the wheat still had a monopoly on the sale of western wheat and barley destined for export of domestic human consumption.
“It was probably the best year in the 12 years we’re looking at it under the grain-monitoring program,” Hemmes said.
There were improvements in every category from car unloads and car cycles, to the time grain was stored in the country and total time in the system.
Last year grain was in the system a total of 49 days after being delivered to a country elevator, compared to 78 days in 1999-2000. Loaded transit times for grain cars fell to an average of 5.5 days from 8.5 days.
Concerns that the grain companies wouldn’t handle CWB grain have not come true and the three big grain companies that own 90 per cent of Vancouver’s grain export capacity are handling grain sourced by smaller companies, he said.
“The bottom line — and this is what I believed — these guys are in this to move grain and to move as much as they can… and to make money and that’s the way they’ve been behaving, and that’s a good thing,” he said.
Producer cars still here
Hemmes said he expected producer cars to disappear, but they haven’t.
“So the short lines we were concerned about seem to be doing OK so far,” he said. “The jury is still out but where we thought producer cars would totally dry up, they have not.”
Churchill will export about 490,000 tonnes of grain this year, which is close to average, Hemmes said.
“I would have to say its (future is) fully dependent on the $9 a tonne (federal subsidy that expires in four years), after that they’re going to have to find some other way to incent the grain that way because the economics I’m not certain will be there,” he said.
Leonard Gluska of the Churchill-promoting Hudson Bay Route Association, said Manitoba’s northern port has a $32-a-tonne freight advantage over Montreal when shipping from Humboldt, Sask., to Brazil.
One of Churchill’s disadvantages is the grain it exports has to be held over almost a year, resulting in higher storage costs.
In an interview Hemmes said Churchill is also at a disadvantage because no grain company owns a terminal there.
“If you own a facility in Thunder Bay are you really inclined to use the one at Churchill?” he said.
Heney said Ottawa’s $9-a-tonne Churchill subsidy is unfair to Thunder Bay, which is competitive without being subsidized.