The railways recently cut 19 producer car loading sites across the West even though farmers are using producer cars more than ever as they struggle to get a record crop to market.
“If anything we need more producer car sites, not less,” Keystone Agricultural Producers’ (KAP) president Doug Chorney said in an interview.
“KAP’s policy is regardless of whether they are being used or not we want producer car loading sites to be there as an alternative to farmers.”
Tim Coulter, former president of the Canadian Producer Car Shippers of Canada, agrees and suggests the federal government consider a moratorium on site abandonments.
“I’ve had more phone calls in the last month (from farmers about producer cars) than since I became president of the association (three years ago),” Coulter said.
CP recently cut five sites leaving 94 and CN cut 14, leaving 48.
“CP cut sites that weren’t being used,” CP spokesman Ed Greenberg said in an email.
“CP still has coverage for local producers to order and ship producer cars with our network of producer car loading sites across Western Canada,” he wrote.
CN Rail did not respond by press time.
The railways must notify the public through local newspaper ads 60 days before closing a producer car loading site.
The hard-won right of farmers to order and fill rail cars with their own grain goes back more than 100 years and is enshrined in the Canada Grains Act.
Not only are producer cars giving farmers an opportunity to move their grain, bypassing elevators plugged because of a lack of trains, but they are also returning higher prices, Chorney said.
Chorney, who farms near East Selkirk said he will net $5.75 a bushel — 32 per cent more than the local elevator is paying — for his No. 1 Canada Western Red Spring wheat (12.5 per cent protein) being exported to an American buyer in producer cars being loaded this week.
“That’s unbelievable,” he said, adding a farmer in northwestern Manitoba with the same wheat was offered just $3.89 a bushel by the local elevator.
“That’s a joke,” Chorney said. “We know wheat is worth $10 a bushel in Vancouver…”
Producer car shippers traditionally saved money by avoiding elevator charges, loading the cars themselves or hiring someone to do it for them. But the bigger saving now is on the basis (difference between cash and futures prices).
Grain prices at western Canadian elevators are low because the railways are not moving grain fast enough, said Wade Sobkowich, executive director of the Western Grain Elevator Association, which represents the major elevator companies. Lower elevator prices are meant to discourage farmers from delivering, he said.
More from the Manitoba Co-operator website: Poor rail service blamed for some Canadian mills closing temporarily after running out of grain
“There’s a 55,000-car shortfall right now and we know there are 50 vessels waiting off the West Coast right now for grain — 50,” Sobkowich said. “It’s a record.”
It’s the railways’ fault, according to Chorney. They chose not to invest more in surge capacity confident they will eventually move most of the grain anyway.
“A single act by (rail) companies in Canada has taken more wealth from Prairie agribusiness and farmers… it’s criminal,” he said. “But the fact that the federal government is not holding some sort of Royal Commission to investigate this is disappointing because no single act has done more damage to both grain companies and farmers.”
The railways blame a record crop and bad winter weather for the delays.
But it’s not just farmers and grain companies that are suffering — millers and canola crushers are too. One grain industry official said some mills in Eastern Canada and the northeast United States are running dangerously low.
According to one unconfirmed report one Manitoba crushing plant briefly shut down because of poor rail service. A company official did not respond to a request for an interview.
Jim Everson, executive director of the Canadian Oilseed Processors Association, said he couldn’t say whether the report was true or not. However, he did say crushers are encountering delays in moving canola oil and meal to their customers.
Producer cars are proving to be an important option for farmers this crop year, Chorney said.
“I’m getting calls every single day (from farmers) trying to find producer car sites,” he said.
Canadian Grain Commission statistics show producer car orders so far this crop year are up more than 60 per cent from the same time last year to 13,494. It’s almost certain producer car shipments in the 2013-14 crop year ending July 31 will shatter the previous modern record of 14,341 set in 2011-12.
Even though access to producers is a farmer’s right Coulter fears the railways will try to discourage them.
Meanwhile, the railways told MPs last week removing the cap on what the railways can earn shipping western grain to export would result in better service. The WGEA doesn’t believe it.
Half of the shortfall in grain car deliveries are to destinations the cap doesn’t apply to, Sobkowich said.
“So the railways can charge whatever they want and we still can’t get service to those areas, so how does the revenue cap have anything to do with it?”