Are rail companies poised to miss grain shipping targets?

The next few weeks will be crucial as farmers 
wait to see if grain backlogs will again be a problem 
on the Canadian Prairies

This year’s Prairie harvest may not be quite the record-breaking bin buster that 2013 was, but it doesn’t mean farmers will be free of transportation problems.

Mark Hemmes, president of Quorum Corp. — the Edmonton-based company which was contracted by the federal government to monitor grain transport in the West — said that the next few weeks will be critical in setting the pace for grain movement this winter.

“Going forward, I think the impacts of last year’s record crop are going to continue to impact this year’s movement, simply because of the large size of the carry-out,” he told participants at the recent Cereals North America conference in downtown Winnipeg.

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Although not record breaking, Western Canada is still seeing very high yields this fall.

Hemmes expects the crop will be between 73 million and 75 million tonnes, down from the approximately 82 million tonnes harvested in 2013.

The resulting backlog of grain during the previous harvest was in part due to the perfect storm of high yields and brutally cold weather, Hemmes said, but those weren’t the only issues.

Even with a smaller crop and balmy temperatures this fall, rail companies are already falling behind the minimum requirements imposed by the federal government this spring, according to opposition members of Parliament.

“Despite Conservative promises… the rail companies have not hit their targets for three weeks and no fines have been issued, not a single one,” said Manitoba MP Niki Ashton, raising this issue in Parliament on October 31. “Why is it so complicated? The rail companies clearly have not delivered.”

That targets have been missed was not disputed by the government.

“An enforcement process is underway, given CN’s failure to meet the minimum grain volume requirements,” Jeff Watson, parliamentary secretary to the minister of transport, responded. “That company is in fact facing fines and the enforcement process, as I said, is underway.”

That points to the fact that not all of the transpiration issues can be pinned on weather and volume, Hemmes said.

“A lot of people, when they were talking about what happened last year thought it was all about the big crop and cold weather, and certainly those two things had a lot to do with the challenges we faced last year. But I think probably those two issues actually brought forward a whole series of other issues — systemic ones,” he said.

One of those issues is that there has been a sustained increase in annual average production for the last five years.

Planning and prediction is also an issue, as grain companies and railroads begin to sell goods and order ships before final yields are known.

“Conversely at the port locations and the terminals, we were seeing record-low inventories being carried, so what does that tell you? It tells you the problem was between the country and the terminal,” Hemmes said.

Grain companies have spoken about the need for greater transparency, he added, but where that goes remains to be seen.

That doesn’t mean railroads haven’t become more efficient. Hemmes believes they have improved substantially over the last half-decade. The question is, whether they have improved enough.

“The next few weeks will tell us how well things will move through the winter,” he said.

About the author

Reporter

Shannon VanRaes is a journalist and photojournalist at the Manitoba Co-operator. She also writes a weekly urban affairs column for Metro Winnipeg, and has previously reported for the Winnipeg Sun, Outwords Magazine and the Portage Daily Graphic.

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