Western Canada’s grain companies are adding capacity to the handling system, demonstrating they don’t see last year’s record crop as an anomaly, says Curt Vossen, Richardson International’s president and CEO.
Last week the CWB announced its plan to buy Prairie West Terminal, which has four country elevators with 77,000 tonnes of storage, he said on the sidelines of the Canadian Global Crops Symposium in Winnipeg last month.
Before that CWB announced it’s building new high-throughput elevators at Bloom, Man. and Colonsay, Sask.
CWB says it plans further expansion.
Last month Cargill announced it’s adding 20,000 tonnes of capacity to its elevator at Morris. The firm is spending $50 million on its Vancouver terminal, including measures to increase throughput.
It also is spending $150 million adding 80,000 tonnes of capacity to its Vancouver terminal.
“And there will be more,” Vossen said. “There are people who want to get into the Canadian marketplace. There’s the big U.S. company CHS and Bunge and Gavilon and all of them want a piece of this marketplace and some of them will come and new facilities will be built.”
More can also be done with existing capacity, added Vossen, speaking from experience. He believed the maximum capacity of Richardson’s 98,000-tonne Vancouver facility was 3.1 million tonnes until last year, when it did just under four million.
The new addition was to bring capacity to 5.5 million tonnes, but now Vossen believes it could be more.
“The conventional wisdom was that Vancouver could handle 18 million or maybe 20 million tonnes (a year),” Vossen said. “We (collectively) could do… 24 million or maybe 25 million tonnes at Vancouver… and maybe six million tonnes at Prince Rupert so now you’re over 30 million tonnes.”
“The industry, when there’s an opportunity, will respond, is responding,” Vossen said.
Nine billion dollars is being invested at Port Metro Vancouver, said Chris Wellstood, the port’s executive vice-president and chief marketing officer. Contrary to popular belief there are lots of places to build more terminal elevators at the port, he said.
Meanwhile, CN Rail is adding capacity with its new Fleet Integration Program, said J.J. Ruest, CN’s executive vice-president and chief marketing officer. Under the program grain companies supply CN with cars they own or have leased. The cars are pooled and are part of CN’s fleet. The grain companies are guaranteed to get the equivalent number of cars back to ship grain not subject to the maximum revenue entitlement to commercial destinations, which include the United States and domestic customers such as flour mills and livestock feeders.
“You get back what you put in,” Ruest said.
“It’s one of the ways to increase the size of the fleet. It’s a way to respond to people who want better service for commercial grain and it’s possibly a way forward to get that piece of the business more commercial based more on market signals.”
If a grain company has more business lined up it can add more cars to the program knowing it will get more cars back ensuring it gets additional capacity, he said.
CN’s program has added 800 cars from five grain companies and Ruest said he expects more will be added.