There are some among us who plan their drive across the Canadian Prairies so they do most of it under the cover of darkness, ostensibly to avoid the tedium of vast horizons on which there is “nothing” to see. To each their own.
I’ve taken that drive twice this spring — with the help of good company and a bag of Manitoba-grown sunflower seeds. Each time, I found the experience awe inspiring.
Most recently, what was most impressive was just how green it is from Alberta, which suffered a crippling drought last year, across Saskatchewan to Manitoba, where farmers right now are feeling the effects of a little too much rain.
After a seeding season that was frighteningly dry, no one here is complaining too much. Any crop losses from those drowned-out low spots will be more than offset by the yields coming off the rest of the fields. And the sense of relief farther west was palpable.
Some farm leaders are observing the same thing. Agricultural Producers of Saskatchewan issued a release recently urging the railways and the grain industry to prepare for a potentially large crop.
President Norm Hall notes that in 2013-14 the railways claimed surprise at the size of the crop, which led to a “logistical nightmare,” costing farmers $1.5 billion in lost revenues.
To be fair, everyone, even farmers, was surprised at the size of the 2013 harvest. Overall, western Canadian farmers produced a whopping 77 million tonnes, a 28 per cent increase of the previous record of 60 million tonnes set in 2008.
Of course, it’s too soon, way too soon to be predicting a 2016 bin buster considering the long list of ways things can go wrong before harvest. Production variability has historically been one of the logistical wild cards for this sector trying to plan.
But the emerging reality for the grain-handling and transportation sector is that despite year-to-year variability there continues to be sustained annual growth in production.
In its report issued earlier this year, the panel reviewing the Canadian Transportation Act found volumes have increased on average about one per cent per year over the past three decades as a result of investments in technology and better agronomic management. Another report found that wheat yields have increased 43 per cent and canola by 56 per cent since the early 1980s. That pace of growth is expected to speed up, not slow down.
As well, production of wheat and coarse grains is giving way to more oilseeds, pulses and special crops. This too changes the grain-handling and transportation dynamic.
Canada faces several unique challenges relative to its competitors in the global marketplace.
Farmers here are more heavily dependent on the export market, exporting 70 per cent of their wheat, 50 per cent of oilseeds and 25 per cent of coarse grains.
Their grain must travel farther to reach tidewater. Western Canadian grain travels between 1,450 km and 1,950 km, while other grain-producing countries, such as Australia, Brazil, or any of the European countries, deal with a much shorter haul, in the range of 320-400 km, the federal report said.
Ninety-four per cent of Canadian grain exports move by rail, compared to 50 per cent in the U.S. and Australia.
There is a shortage of “adequate” off-farm storage. Combined commercial port and inland storage in Canada can hold about 20 per cent of average annual production. The U.S. can store more than 50 per cent of its crop. Australia has room for 175 per cent.
The “just-in-time” delivery approach this country has relied upon is an even bigger challenge now that the co-ordinating function the former Canadian Wheat Board played in drawing grain into the system using quotas and contracts has ended.
The point is, if the 2016 crop doesn’t turn out to be a whopper the next one might; the pressure on the handling system is intensifying.
The industry heaved a sigh of relief this last month when the federal government opted to extend the emergency provisions imposed on the railways during the 2013-14 grain transportation crisis.
But other than that, there has been no indication that the need for policy to address these increasing pressures on the grain-handling system is very high in the federal government’s priorities.
These temporary provisions buy the government some time to more fully consider the report’s recommendations or alternatives as proposed by many of the industry groups that have responded.
But policy development and implementation is a lengthy process — even when there is consensus. Until the constraints on the grain-handling and transportation system are addressed, Canada and its farmers will struggle to reap the full benefits of their productivity.