For years Canada’s grain industry engaged in self-flagellation, condemning the grain-handling and transportation system as inefficient. Not anymore.
“We have arguably the world’s most efficient handling network,” Don Solman, Richardson’s vice-president of finance and chief financial officer told the Grain Industry Symposium Nov. 21. “Back in the 1990s, basically the network was rebuilt with large high throughputs.”
Now the handling system turns seven times a year and is profitable enough to attract additional capital to further improve efficiency, he told the meeting organized by the Canada Grains Council and Grain Growers of Canada.
“I want to send the message that the system today is an efficient system…” Solman said.
“Our infrastructure is best in class.”
The timing couldn’t be better. World grain prices are high. The demand for grain is growing by two per cent a year — double the percentage growth seen during the previous 30 years — as world population rises to nine billion by 2050, Solman said. Will grain prices remain strong?
“Certainly the demand factors would suggest that is a reasonable conclusion,” he said.
Channelling 40 per cent of U.S. corn into ethanol production, coupled with the recent U.S. drought has contributed to the current near-record grain prices hurting North American livestock producers.
“I don’t know what the solution is other than some intervention by governments for some period of time until we can get things working better,” Solman said later during a question period.
Increasing shale gas development in the U.S. could see less demand for grains in biofuels, he said. If so prices could soften, helping livestock feeders, he said.
Solman recited a litany of reasons contributing to Canada’s competitiveness: weather that’s more stable than other parts of the world, a stable political and financial environment, grain companies with a reputation for integrity, high-quality grains, a solid regulatory system and in many crops having a big piece of the market.
There are 600 organizations and regulatory agencies involved in Canada’s grain sector. They all need to strive for efficiency, Solman said.
Research and development will continue to be important.
“We have an opportunity in the crops that we dominate in to make them even better than they are today,” he said.
Those crops include canola, flax, oats, durum and even spring wheat.
“We need to be proactive rather than reactive (on market access),” Solman said. “So when somebody says ‘you can’t do this,’ we need to be there saying ‘no, we can… because we have a pretty big stick and we’re important and we think we’re being reasonable.’ So we really need to push our position and become a little more aggressive… to ensure that Canada has a dominant position within global agriculture.”
The Canadian “brand” couldn’t be more respected. Regulations are necessary to protect it but must truly add value, he said.
“With the exception of canola we do not see a lot of investment in processing (in Canada),” Solman said.
Agriculture Minister Gerry Ritz predicted ending the Canadian Wheat Board’s monopoly would trigger a spate of wheat processing.
Canada’s grain companies have consolidated and so have farmers, Solman said.
“We’ll see larger farmers,” he said. “We will see what I call more corporate-type farms and I think we’ll continue to see some investment in farmland in Canada.”
Richardson does not oppose foreigners buying Canadian farmland, he said.