Producer cars were popular with farmers in the early days of the grain trade. They could receive better prices by avoiding elevation charges and having grain weighed by Board of Grain Commissioners employees.
However, there were downsides. Producers had to have sufficient grain of one type and grade to load a car. While they could in theory load different grades into a boxcar, this meant “bulkheads” or walls had to be built to divide it into different compartments. As well as bearing the expense of the lumber, the producer had to pay for the increased loading expenses. Railways disliked bulkheading as it resulted in damage to the wooden sides of the car, and it appears not to have been common.
Other downsides included complicated damage claims in the case of leaks and potential demurrage charges if the car was slow to unload at port.
Once the car was loaded and ready to ship to a terminal, grain companies or grain dealers could offer to pay “track” price before the car even left the point. Track price was usually higher than street price as the grain companies or dealers knew the grain was loaded on a car and ready to move to port or wherever the customer wanted it.
Grain cars moving to port were sampled at Winnipeg, Calgary and Edmonton and the samples graded while the car moved to port. As the car passed these points and was sampled and graded, the producer could then be offered a “billed and inspected” price by grain companies or grain dealers. Billed and inspected price was higher than track price as the grade and volume of grain was known, plus the grain was closer to port than where it originated.
When the grain was unloaded and weighed into a port terminal, the producer could then be offered a “spot” price. Spot prices were higher than billed and inspected price as the grain was at port ready to be loaded onto a vessel.
The “street” price for grain was usually the lowest price available, making loading a producer car attractive.
The farmers could and did use commission agents and the commission houses of grain companies to assist with producer cars. These agents and organizations would act as agents of the farmer in disputes over grade and weights, or arrange storage and sale at port.
Many wagon loads
Against the benefits, the producer would have to consider the problems in loading a rail car at the time. Depending on the car supplied the producer would need approximately 1,800 bushels. The railways during the fall “grain rush” only allowed 24 hours for loading. Considering the average grain wagon could haul at most 100 bushels then seven or eight trips would be needed.
Obtaining a producer car was fairly simple. Each railway station had to maintain a car order book in which everyone wanting a car filled out a page. Cars were allocated on the strict order the pages were filled out. Producers were restricted to having one car on order and grain elevators to two. The railways operated a car distribution system which allocated cars on the basis of demand. At the time, railways operated two to three trains a week on most branch lines.
Several important factors facilitated the use of producer cars. Until the 1920s, most terminals were not owned by grain companies. They were “public” terminals and accepted any grain offered. They simply handled and stored grain. This situation began to change in the 1920s and many terminals became semi-public, handling grain owned by their company as well as handling others.
There was also a “no-mixing” rule. By 1930 this rule had evolved and was only applicable to the top grades of wheat. Once a load had a grade of No. 3 Northern or higher assigned to it, no other grades of wheat were allowed to be blended with it, either at the elevator or at the port. Wheat grading No. 3 or higher arriving at port was forwarded to whatever terminal had space, regardless of who owned the grain. Rather than actual ownership, the shipper received a warehouse receipt, which was a recognized financial instrument. The owners could deposit warehouse receipts with the Port Shippers Clearance Association and in return receive a Shippers Certificate which could be sold if the owner wanted to ship grain. When the vessel arrived, the clearance association assigned the vessel to whichever terminal had the necessary grade.
The no-mixing rule meant that at least for the top grades of wheat the ports were relatively fluid and shipping into a port one of the top grades of wheat using a producer car was fairly easy.
However, using a producer car to move wheat grading No. 4 or lower was more of a problem. The car had to be directed to a particular terminal to be unloaded with an agreement for handling to be arranged beforehand. Demurrage could be charged if the car had to wait for space to be unloaded.