Lots has changed since the federal government appointed Quorum Corporation in 2001 to monitor Western Canada’s grain handling and transportation system, especially the amount of grain to be monitored.
In 2001 Western Canada’s total grain supply — production plus carry-in from the previous year — was about 50 million tonnes. This year it’s about 80 million — a 60 per cent jump in 17 years.
Between 2004 and 2012 total western grain supply averaged around 60 million tonnes, but it exceeded 80 million tonnes in 2013-14 thanks to record crop production and has averaged 79.1 million the last six years.
“In 2013-14 we hit that huge level of (grain supply) and everyone said that was an anomaly,” Quorum’s president Mark Hemmes said in an interview Nov. 2 during the Fields on Wheels conference in Winnipeg. “Well that anomaly has carried forward for six years.”
In fact, “we’ve created a whole new normal,” Hemmes told the conference.
“That’s a phenomenal increase,” he added. “It has basically changed the whole dynamic of how grain moves in the system.”
And Hemmes expects the West’s annual grain supply to increase 2.5 to three per cent a year.
“There’s no reason that couldn’t continue,” he said. “As cropping practices change, more investments in inputs, improved science in everything from the seeding to the seed itself — all of that stuff is leading towards increased yields.”
In 2001 three-quarters of the West’s exported grain was shipped from West Coast ports (Vancouver and Prince Rupert). Now about 48 per cent of exports take the route, but while the percentage is lower, the volume is higher because so much more is being produced.
About 25 per cent of Western Canada’s grain ends up in domestic markets and the rest is exported, including to the United States, which has become a much bigger customer, Hemmes said.
In 2001 Western Canada exported about two million tonnes of grain to the U.S., today it’s around 10.5 million.
“That’s one of the most significant changes we’ve seen in the market,” he said.
The biggest jump in grain exports to the U.S. started after Aug. 1, 2012 when the Canadian Wheat Board was shut down.
“The amount of wheat and durum that was going across the border in the very first year it doubled and it continued to increase,” Hemmes said. “We saw an increase in 2013-14 and 2014-15. Then it started to tail back a bit. I think it was largely because the Canadian grain companies were reacting (with higher prices) to ensure they didn’t lose out.”
The increase in western Canadian grain exports to U.S. also coincided with the rise of U.S. ethanol production and increased production of Canadian canola oil and meal, he said.
These days canola oil and meal accounts for most of Western Canada’s grain exports to the U.S., Hemmes said. Wheat and durum, oats, barley and pulses make up the rest.
In 2017-18 most of it — 8.1 million tonnes — went south by rail and the remaining 2.4 million tonnes were trucked.
Since 2001 western Canadian canola production has jumped, as has the domestic production of canola oil and meal. Twenty years ago about four million tonnes of canola oil and meal were exported from West Coast ports versus about 12 million now, Hemmes said.
Still the majority of Western Canada’s canola oil and meal is exported to the U.S. — mostly by rail, but by truck too.
Most canola seed exports go through Vancouver.
The volume of western grain exported in containers is increasing too. Hemmes estimates in 2017 just over four million tonnes of grain were shipped out that way, representing almost nine per cent of total grain exports.
As western Canadian grain production increases, so too does grain handling and export terminal capacity, Hemmes said.
“We have more capacity now without all the new builds to handle what we’ve got for the next 10 years probably,” he said. “That incremental capacity like G3 and the expansions (at the Port of Vancouver) will take us for at least another 30 years if not more. If trade routes start to shift again like to Africa and the Med (Mediterranean), Thunder Bay will be back on the books and start to grow the traffic through there. Thunder Bay is the most underutilized port in North America and the opportunities are phenomenal there because it is an efficient port. The only thing it doesn’t have is the ability to take Panamax-sized vessels. But that’s what the lake fleet is doing — feeding it down to Montreal and the lower (St. Lawrence) river where they’ll put it into Panamax vessels.”