Your Reading List

Unexpectedly big crop moving slower than last year

That worries KAP president Dan Mazier, but the WGEA and 
grain monitor aren’t overly concerned — yet

Western Canada’s bigger-than-expected crop is moving to export slower than at last crop year’s record pace, and while grain companies aren’t panicking, Keystone Agricultural Producers’ (KAP) president Dan Mazier says it’s costing farmers.

KAP president Dan Mazier is worried about a decline in grain movement so far this crop year compared to last, especially on CN Rail lines, but grain companies and the grain monitor aren’t overly concerned yet.
photo: KAP

“It may not be a crisis, but it’s still taking money out of farmers’ pocket,” Mazier said in an interview Oct. 20.

Elevators Mazier delivers to on a CN line are plugged with grain so he and others can’t deliver. Even if they could, prices have dropped because buyers widened the basis (difference between the elevator and port price) to discourage deliveries.

“I am asking farmers if they are seeing (grain) contracts delayed please phone the KAP office,” Mazier said. “We’ve got to get on this.”

What was expected to be among the smallest crops in the past five years turned out better than expected and could be the third largest in five years.

Related Articles

Quorum Corporation, which the federal government has hired to monitor Western Canada’s grain pipeline, estimates farmers harvested around 67 million tonnes, up from earlier estimates of 62 million.

“If I was a betting man I’d say it could go to 68.5 million tonnes or even 69 million,” Quorum president Mark Hemmes said in an interview Oct. 20.

That compares to last crop year’s 72.6 million tonnes, the second largest on record.

Mazier said he wants to avoid a repeat of the grain backlog of 2013-14 following a record 77-million-tonne harvest and the coldest winter in 100 years. As a result, University of Saskatchewan agricultural economist Richard Gray estimated western farmers lost $5 billion to $6.7 billion in reduced revenue in 2013-14 and 2014-15.

Mazier said he was going to raise grain transportation concerns while in Ottawa this week for meetings.

For most of the current crop year, which began Aug. 1, Mazier said CN Rail hasn’t delivered as many cars as it did a year ago, based on data published by the Ag Transport Coalition (ATC). It reports weekly on the number of cars most grain companies order and the number the railways deliver.

Hopper order fulfillment time: Grain year 2017-18.

In week 10 and the previous six weeks, CN’s car fulfilment percentage never exceeded 87 per cent, remaining mainly in the low 80s, and in week six, the company hit just 66 per cent.

To fulfil an order a car must be delivered in the week it was ordered for.

Moreover, CN has cancelled 1,596 car orders — equivalent to about 3,800 super B loads of grain, Mazier said.

“That is just crap,” he said.

“Something is going on. Why is CN cancelling orders?

Grain companies are monitoring grain movement closely, Wade Sobkowich, executive director of the Western Grain Elevators Association (WGEA), said in an interview.

“We’re not at that point yet where companies are losing sales or there are huge backlogs, but the elevators are pretty full and we need to make sure we get the capacity… to keep the system fluid,” he said.

Last year CN’s car fulfilment percentage was seldom below 90 per cent, while CP Rail rarely hit 90. It’s the reverse this crop year.

Sobkowich said he understands Mazier’s concerns, but added it’s not unusual for some elevators to be plugged in fall.

“I think, on average, elevators are at about 82 per cent operating capacity,” Sobkowich said.

“So long as we don’t go down into the 60s and 70s for an extended period of time and we return to the 90s at some point I think we’ll be able to manage through it without major issues.

“We want, like Dan, to avoid a repeat of 2013-14, but we don’t want to cry wolf.”

Most car orders so far that didn’t get filled in the week requested have been filled the following week, Sobkowich said.

As of week 10 CN and CP were in total eight and three per cent, respectively, behind in filling car orders, ATC data shows.

Although Sobkowich is optimistic, grain-moving conditions have been ideal, he said, adding he hopes the railways are prepared for cold weather, which slows trains.

“We won’t be setting any (grain movement) record this (crop) year,” Quorum’s Hemmes said.

In 2016-17 Western Canada put a record 36.9 million tonnes through export terminals at Vancouver, Prince Rupert and Thunder Bay.

Movement is closer to the five-year average, Hemmes said.

“It’s not a horrible year,” he said. “There are some concerns out there. Is it working as well as last year? No, it isn’t. Are we seeing the kind of performance we saw from CN last year? No, we’re not.

“We’re not having a bad year. Things are moving along.

“Are shippers ecstatic about the (railways’) performance? No, they’re not. But are we panicking, are we looking at a repeat of 2013-14? Not by any stretch.”

As for the CN and CP trading places, Hemmes suspects it relates to last crop year. CN had moved most of the grain from its area by June and started storing cars. However, CP was still working flat out when the new crop was coming off.

“They (CP) never slowed down, so they could really hammer it out,” Hemmes said.

“There isn’t an on/off switch with railways. When they slow it down it takes a few weeks to start it up again.”

In September CP moved a record 28,122 carloads of western grain and grain products beating the previous record of 27,068 set in May 2014.

“We gained momentum,” CP president and CEO Keith Creel told shareholders Oct. 17. “We established a rhythm, and in September on the Canadian side, we set an all-time grain record for grain loading for this company, an accomplishment that was entirely supply chain driven and related and we all should be proud of working in concert both with the ports, as well as our partners in business, the grain shippers.”

Neither railway accepts the ATC’s data, in part because the railways don’t count every car order placed, Sobkowich said.

CN says it can only deliver a maximum of 5,500 cars a week, dropping to 4,000 in winter.

CN has delivered 88 to 97 per cent of “planned orders” in the last six weeks, CN spokeswoman Kate Fenske said in an email.

“And we have been able to address all unfulfilled orders in the following week,” she wrote. “There was no backlog coming into the month of October.

“The overall Canadian economy is strong which is driving increases in traffic across many supply chains and a wide variety of commodities, especially in Western Canada. Having said that, CN recorded its second-best September of all time for moving Canadian grain.”

The WGEA and farm groups such as KAP hope C-49, the Transportation Modernization Act currently before Par­liament, will pass giving shippers more tools to hold the railways to account when they fail to provide contracted service.

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

Comments

explore

Stories from our other publications