Changes to make producer car use fairer and more efficient took effect Aug. 1.
Now farmers shipping producer cars, or administrators ordering producer cars for farmers, are restricted to twice the number of cars a siding can spot. For example, a farmer can apply for eight producer cars at a four-car spot. After that the next farmer in the producer car queue can get cars delivered to that site.
“It allows a bit more fair access,” Canadian Grain Commission (CGC) producer car officer Garth Steidel said in an interview earlier this month.
Under the Canada Grain Act western Canadian farmers can order rail cars to ship their own grain, bypassing elevators and saving on handling fees.
Producer car orders are allocated on a first-in, first-out basis, but there have been times when a farmer or administrator will monopolize a rail siding, Steidel said.
The CGC, which oversees producer car applications, is also tightening up and clarifying producer car rules, added Catherine Jaworski, the CGC’s manager of producer protection.
“When the marketing system for wheat and barley was changed (Aug. 1, 2012) we had this huge influx of new companies (buying grain via producer car) and there was a lot of confusion around the rules so we thought we’d better do a major review from A to Z of producer cars and that’s where we came up with some of these changes and clarifications.”
Wheat board grain made up most producer car shipments until its sales monopoly ended. Now instead of getting a wheat board identification number when a producer car is ordered, the CGC generates one.
Since the end of the monopoly the CGC has also required producer car shippers confirm they have a sale for the grain being shipped. But now the CGC will seek “destination authorization,” by asking the terminal operator if it will receive the producer car a farmer is ordering.
“If they say ‘no,’ we cancel the cars outright when we do the application process,” Steidel said.
“They (farmers) have to confirm their sale to us and then we go from there,” Jaworski said.
“This way is making sure the right grain is moving, at the right time, to the right destination and we’re getting it right. Terminals have handling agreements. They don’t want stuff showing up there willy-nilly.”
The CGC is also requesting producer car shippers supply an email address so it can contact the shipper to confirm the grain has a sale.
“We want to verify it is a true order and they have a confirmed sale and it’s not a phantom order,” Steidel said.
Cleaning up backlog
Last year the CGC found some farmers no longer wanted their producer car by the time it was to be delivered. As a result the CGC cancelled around 1,000 orders, Steidel said.
“Part of that problem was coming off 2013-14 we carried over a number of (producer car) applications because we couldn’t get those cars allocated by the railways (sooner),” Jaworski said. “We had a huge carry-over so it was really hard to get a true sense of what the demand was. We needed to clean it up.”
In the 2014-15 crop year that ended July 31, the CGC received 17,308 producer car orders and allocated 12,005 cars.
Since producer cars are ordered by farmers, or by administrators on their behalf, the farmer has to cancel the order if he or she no longer wants a car. There have been times when farmers cancelled cars, but administrators demanded the farmer deliver the car because the grain to be delivered was under contract, Jaworski said.
“So we wanted to make it very clear that we cancel cars when producers tell us because that’s who we are ordering those cars from the railways for,” she said. “Out of courtesy we tell the administrators.”
The CGC now also requires a shipping report so it will know if a car was loaded and unloaded. It used to get that information until the CGC stopped mandatory inward inspection at terminal elevators.
Producer car shippers will also get more flexibility in picking which cars get spotted, when their producer car orders exceed the number of cars that can be spotted.
Although the 12,005 producer cars allocated in 2014-15 was up from the 10,000 allocated the year previous, it was still below the modern record of 14,341 set in 2012-13 — the final year of the wheat’s single sales desk.
The most producer cars allocated ever was 51,000 in 1912-13, before elevator numbers peaked in Western Canada.