Canadian-owned grain buyer Parrish & Heimbecker Limited has said it’s closing its Glossop location, set between Strathclair and Newdale on the Yellowhead Highway, as of Jan. 31. P&H’s crop input operations on the site, however, will continue unchanged, the company said.

“Our crop inputs business, which includes seed, fertilizer, and crop protection product sales and support, will continue to operate out of our Glossop site,” a company spokesperson told the Co-operator by email. “There are no immediate plans for the buildings on-site.”

Why it matters: Other options exist, but producers needing to make room quickly at harvest might feel the pinch.

In an email to producers, P&H pointed growers to the company’s other elevators in western Manitoba. Those include Virden and Gladstone, both about 100 kilometres away, and Gilbert Plains, just under 165 kilometres away, through Riding Mountain National Park.

Those locations will “handle all grain contracts and deliveries, providing you with uninterrupted service and support,” the email said.

The elevator is not the only grain marketing option in the area, but its closure does remove P&H from the immediate local competition. There are two other elevators within a half-hour drive on the same highway: one in Shoal Lake, a little over 20 kilometres to the northwest, and one in Minnedosa, 35 kilomtres to the southeast. Both are owned by Richardson Pioneer.

Further out, but still within an hour’s radius of Glossop, producers could opt for the elevator at Kemnay west of Brandon, also owned by Richardson Pioneer. Others include Forrest, located north of Brandon, Souris or Binscarth, all owned by Viterra, or Cargill’s location in Oakner, south of Hamiota.

Andrew Dalgarno, who farms near Newdale, noted the previous loss of his community’s elevator. Newdale had been a location for Delmar Commodities, which was acquired by Ceres Global in 2019. Today, the nearest elevator operated by that company is in Gladstone.

“There are still some options,” Dalgarno said.

The biggest impact from the Glossop closure, he said, would be for producers needing quick grain movement at harvest.

“The biggest thing for guys right around here is off the field at harvest time,” he said. “There’s one less option for guys that are tight on space. Glossop has a grain dryer, so for guys that want to sell a certain amount just in case they have tough grain, and then they’ve got a place to move it to, things like that.”

The timing, with producers told of the closure only weeks before the shutdown, may also be raising concern among those with open contracts, Dalgarno said.

In the same emailed message to growers, P&H said those with outstanding contracts would be hearing from the company “to discuss the transition and address any concerns you may have.”

As for crop inputs, Dalgarno suggested that the company might need to be especially aggressive on pricing.

“I’ve heard a lot of guys say, ‘if they’re not going to buy my grain, why would I go there for my crop inputs?’”

The steel elevator on site was constructed in 1994 and was Pioneer’s first high-throughput facility, according to the company history on the James Richardson and Sons Limited website.

P&H acquired the site from James Richardson International in 2007.

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It’s big, modern, full service, and importantly — perfectly upright.

On the wall inside the main office hangs a photo of the elevator’s predecessor at Transcona, which operated successfully for over a century.

It was built in 1912 for the Canadian Pacific Railway. In 1913, operators filled the silos on only one side of the elevator. The full silos sank into the earth and the elevator tilted at an angle of nearly 29 degrees, the Manitoba Historical Society says.

By digging out the opposite side, CPR was able to right the elevator, albeit now sitting 20 feet lower than before, P&H construction engineer Zach Harrison told the Co-operator.

The incident is a well-known, geotechnical engineering case study, he added.

P&H bought the elevator in 1970, according to the Manitoba Historical Society, and operated until the new site was ready this summer.

Modern elevators are loaded corner to corner, and this one was given time to settle before ramping up to full swing.

“You’re safe. It won’t tip,” Harrison said.

The terminal includes a 25,000-tonne elevator, 150-car loop track on a Canadian National rail line, 6,000-tonne dry fertilizer shed, chemical shed, and seed treatment facility. The Co-operator toured the site on November 17.

“Because a good portion of our customer base is east of the city as well as northeast and southeast, we decided to make a commitment to the agricultural producers… and build a brand new terminal out here,” said general manager David Yarycky.

Safety — food safety, and for the people who work there — is a significant part of the elevator’s features.

As farmers will know well, the grain is probed before it actually reaches the elevator and samples are checked for out-of-condition grain, insects and contaminants.

“I’m sure if you poured yourself a bowl of cereal, you wouldn’t like to see a small pellet of fertilizer come out,” Yarycky said.

The system funnels the sample to the far end of the terminal’s office where staff can analyze it. The sampling system can call samples from either of the elevators’ two ‘legs’ (grain-elevating systems), the truck probe, and an unload pit.

The unload pit is used for dumping rail cars if a contaminant is found in them, and also if grain is brought by rail to be transported elsewhere. The site has done this with American corn this year.

Samples from each truck are kept for a year. Then, if a customer finds an issue with the grain, P&H can trace it back to the elevator, load and producer.

One thing about the new elevator, Yarycky said, it sure is clean. It has extensive dust control measures in place. For instance, the conveyor that brings the grain from the truck is enclosed along its length to keep dust from blowing everywhere.

There are also dust-collection systems along the conveyor.

“Dust can especially be a problem because: (a) for breathing in, and (b) some forms of grain dust, especially corn and oats, can be on the explosive side,” Yarycky said.

That’s no joke. In 2018, for instance, dust ignited at an elevator at Crystal City, Man. The explosion sent one employee to the hospital with second-degree burns. The fire levelled the elevator and spread to town businesses, destroying a hardware store, according to a 2018 CBC report.

At the P&H elevator, sensors throughout the conveyors and other machinery, monitor belts and bearings for any sign they’re heating up. They’ll automatically shut machinery down if they spot a problem.

Yarycky said he was particularly impressed with the ‘boot,’ or basement enclosing the bottom of the terminal’s bucket elevators.

“It’s massive,” he said, explaining that in old elevators the space can be so cramped it’s difficult to move, never mind deal with mechanical issues or spilled grain.

The space is large enough to not be considered a “confined space,” which would by law require many additional safety measures. In case of a medical emergency, a stretcher could be lowered in. An injured person wouldn’t need to be hauled out by rope.

“If you had to ask me what the best safety feature of the new elevators is, I would say this,” Yarycky said.

It’s also waterproofed.

Harrison and Yarycky explained that in older elevators, because the boot was so confined, workers were reluctant to go down to clean up spilled grain. The boot might fill with grain and muck, making it difficult to monitor the machinery inside.

“Grain would get over top of your bearings, and if you ever had a bearing heated up, then it would start a fire,” Yarycky said.

He’s sometimes flabbergasted how clean it is, he added.

Across the yard, the 6,000-tonne fertilizer shed holds all the essentials, along with options for micronutrient coatings.

Bulk fertilizer is dumped from a conveyor into its appropriate bin — wood lined, because fertilizer is incredibly corrosive and would eat through any mild steel. Harrison and Yarycky were keen to note the shed holds only non-combustible fertilizer. That too won’t blow up.

A front-end loader dumps fertilizer from the bins into hoppers, which each sit on load cells (scales, essentially) so when an employee punches in the required blend of nutrients, the system metes it out precisely.

Quickly too, Harrison assured the Co-operator. The system is capable of loading 300 tonnes per hour.

“Farmers are in and out… it’s very efficient,” he said.

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Casey McCawley, Parrish & Heimbecker’s (P&H) director of West Coast operations and a director of the terminal to be co-owned by P&H and Paterson GlobalFoods (PGF), says that’s good news for farmers looking for efficient grain transportation.

“The average car turnaround time to the West Coast is about 13 days,” McCawley said in an interview Dec. 5. “If we are measuring against this benchmark, I can tell you that we will be extremely efficient. The rail connectivity at this terminal is good. It connects directly with CN, CP, BN (railways) and the SRY (Southern Railway of British Columbia).

“We look at rail connectivity as one of the drivers. Rail capacity into the (Vancouver) gateway is at a premium. It is essential to grow, not only in our industry, but other bulk commodities as well, such as containers. We are very encouraged by the rail metrics that we have in terms of car turnaround times at that facility. The location is not encumbered by rail bottlenecks, like bridges, tunnels and congested rail yards.”

If approved by the Port of Vancouver, the new terminal to be built at the Fraser Surrey Docks on the Fraser River and will have a total of 97,000 tonnes of storage capacity, McCawley said. The new facility will add 77,000 tonnes to the existing 20,000-tonne terminal that P&H and PGF already operate on the site.

The current operation uses ‘direct hits’ matching Prairie grain trains with arriving ships. Its success has given the companies the confidence to build a new terminal, McCawley said.

The companies also co-own and operate Alliance Grain Terminal (AGT), a 102,070-tonne storage capacity grain export terminal, on the south shore of Burrard Inlet.

“While we are building terminal capacity we are adding inland capacity by expanding our inland footprint,” McCawley said. “We see both projects being co-ordinated and being built hand in hand. We need to build them both.”

Meanwhile, G3 is proposing a 200,000-tonne storage grain export terminal be built on the north shore of Burrard Inlet.

If both terminals are constructed it will boost Vancouver’s grain storage capacity of almost 978,000 tonnes by 28 per cent to 1.55 million.

Currently Panamax ships can’t fully load in the Fraser River because of the George Massey Tunnel, which goes under the river. However, plans are underway to replace the tunnel with a bridge, which means ships could take on more cargo.

The current draft restriction is 11.5 metres, McCawley said.

“It means we can load — it depends a little bit with the title influence on the river — up to 54,000 to 55,000 tonnes in a Panamax,” he said.

“For larger vessels we top up at our deepwater terminal (AGT) in Burrard Inlet.”

With western Canadian grain production increasing, additional export capacity at Vancouver will help farmers, University of Saskatchewan agricultural economist Richard Gray has said. When capacity is constrained the result is lower elevator prices, he has said.

Public hearings into the proposed Fraser Grain Terminal wrapped up Dec. 1.

“There is a very rigorous approval process in order to get a development permit,” McCawley said. “A lot of consultation goes on with stakeholders, including First Nations, residents around the area, municipalities, you name it.”

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Western Canadian grain production is on the upswing and because of rising demand in Asia, Canadian grain companies want to export through the West Coast because that’s where prices are highest. Additional grain export capacity from Vancouver will help Prairie grain farmers get better returns, Gray said.

Parrish and Heimbecker Limited (P&H) and Paterson GlobalFoods Inc. (PGF) are the latest to announce plans to build an export terminal in British Columbia’s lower mainland. If approved by the Port of Vancouver, Fraser Grain Terminal, to be built at the Fraser Surrey Docks on the Fraser River, will have total of 97,000 tonnes of storage capacity, Casey McCawley, P & H’s director of West Coast operations said in an interview Dec. 5.

Seventy-seven thousand tonnes will be new, plus 20,000 tonnes of existing storage. The two companies already operate a facility on that site. The operation uses ‘direct hits’ matching Prairie grain trains with arriving ships. Its success has given the companies the confidence to build a new terminal, McCawley said.

The companies also own and operate Alliance Grain Terminal, a 102,070 tonne storage capacity grain export terminal, on the south shore of Burrard Inlet.

“While we are building terminal capacity we are adding inland capacity by expanding our inland footprint,” McCawley said. “We see both projects being co-ordinated and being built hand-in-hand. We need to build them both.”

Meanwhile, G3 is proposing a 200,000 tonne storage grain export terminal be built on the north shore of Burrard Inlet.

If both terminals are constructed it will boost Vancouver’s grain storage capacity of almost 978,000 tonnes by 28 per cent to 1.55 million.

“This would be very helpful and would increase the return to Western Canadian grain farms,” Gray said in an email Dec. 2. “It is very good news. I hope both will proceed to completion.”

With Western Canadian crop production increasing, there are times when there’s more grain than the port, and pipeline serving it, can handle, Gray has said in previous interviews. When that happens grain companies ration the grain moving west by widening the basis (difference between Freight on Board grain prices in Vancouver and what farmers receive at their local elevator), resulting in lower prices for farmers.

The proposed terminal, which will include a semi-loop track and holding tracks to reduce shunting during unloading, will be modern and efficient, McCawley said.

“With our choice of location… we are very encouraged by the rail metrics that we have in terms of car turnaround times at that facility,” he said. “The location is not encumbered by rail bottlenecks, like bridges, Tunnels and congested rail yards.”

The facility will be serviced by CN, CP and BN railways and Southern Railway of British Columbia (SRY), a regional railway.

“Our project will support Canadian farmers, increase efficiency in grain exports and build strong business relationships with customers around the world,” states the document explaining the project. “Since 2014, exports of grain and specialty crops have increased by more than 20 per cent, with China and India becoming increasingly important destinations for Canadian products. This project will help address two major constraints in getting Canadian grain to overseas customers today — limited Western Canada rail capacity and a shortage of port industrial land for grain handling.”

Currently Panamax ships can’t fully load in the Fraser River because of the George Massey Tunnel, which goes under the river. However, plans are underway to replace the tunnel with a bridge, which means ships can take on more cargo.

The current draft restriction is 11.5 metres, McCawley said.

“It means we can load — it depends a little bit with the tidal influence on the river — up to 54,000 to 55,000 tonnes in a Panamax,” he said.

“For larger vessels we top up up at our deepwater terminal (AGT) in Burrard inlet.”

Industry observers say the Port of Vancouver could currently ship out around 30 million tonnes of grain a year. Port figures show in 2015 almost 25.1 million tonnes of grain (3.6 million tonnes of it in containers) were exported — up considerably from 10 years ago when the average was around 17 million tonnes.

“With Western Canadian grain production growing by about three per cent a year it won’t be long until we hit that 30 million tonnes and we will need extra capacity,” one grain industry official said.

The public had 20 days ending Dec. 1 to comment on the proposed new terminal, including at two open houses.

The plan for the Fraser Grain Terminal calls for the demolition of two existing buildings and the new construction of the following:

• Unloading station and transfer tower with fully enclosed conveying equipment and a built-in dust suppression system.
• Thirty-four above-ground steel storage bins (24 and 10, 3,000 and 500 tonnes, respectively).
• A travelling ship loader with telescopic cascading spout to reduce dust during vessel loading, replacing existing ship loader fitted with older technology.
• A semi-loop rail track and holding tracks to reduce shunting during unloading.
• A container loading facility and storage yards.
• A rail and truck loading facility.
• An administration building and maintenance shop.

As part of the review process before construction is approved studies will be done in a number areas from air quality and the impact on endangered species to noise and traffic in the area.

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Last week it announced six more grain companies will handle its grain making it practical for farmers across the West to patronize the board, and it announced a big wheat sale to Japan.

Until the new handling agreements were announced June 21 at the Farm Progress Show in Regina, some wondered if the “new” post-monopoly board would be dead on arrival Aug. 1.

Agriculture Minister Gerry Ritz, who had been trumpeting a “strong and viable wheat board” in an open market, conceded in an interview on CFAM last week the first year will be tough for the board. Grain companies want to secure as much grain as they can directly from farmers, but he said that was normal in business.

Tools to compete

When asked to comment further Ritz said in an email the government is committed to ensuring the board has the tools to compete in an open market and is sure the CWB will be “a strong and active player in an open grains market…”

The new agreements, which include Viterra, Canada’s biggest grain company, along with former deals with Cargill and South West Terminal, bring the number of elevators handling board grain to 120. Those facilities represent almost half of the West’s grain-handling capacity, but cover the entire region geographically, said Gord Flaten, the board’s vice-president for grain procurement.

Agreements were also struck with Mission Terminal, West Central Road and Rail, Delmar Commodities, Linear Grain and Agro Source.

It’s expected the agreement with Viterra will continue if Glencore International buys Viterra, board CEO and president Ian White said.

The board also expects to get handling agreements with all the other grain companies, including Richardson, Parrish & Heimbecker and Paterson, by month’s end, he added.

“CWB is ready to do business with partners who are committed to helping us serve Prairie farmers and their global grain customers,” White said.

“Farmers should now be able to move ahead and sign CWB contracts with confidence.”

Flaten also said the wheat board has struck a deal with Japan to supply it with 50 per cent of the Canada Western Red Spring wheat it will buy during the first half of the new crop year. Typically Japan buys a total of 800,000 to one million tonnes of wheat from Canada annually, he said.

“That’s definitely good for CWB and the farmers that participate in our pools,” he said. “That’s a good market.

“It’s a good deal for the Japanese because they want to make the transition very carefully as well to make sure they’re going to be well supplied.”

Sign up now

To take advantage of sales to Japan and other markets, the board is urging farmers to contract with its pools right away. Traditionally farmers don’t sign up until after harvest, but now the board must compete with other buyers. Before it can do much forward selling it needs to know how much grain it’s getting, Flaten said.

“There’s also no risk for a farmer to sign up early to these pools,” Flaten told reporters. “We have an Act of God clause that removes any of the risk for farmers… if they have a production problem like hail damage. They can also change their grades and switch to cash contracts.”

Farmers who delay might not get into the pools, especially the early pool that ends Jan. 31, White said.

Some companies will handle the board’s cash contracts and others won’t. Farmers who sell on a cash basis to the board can negotiate with different companies to handle the grain, Flaten said. The same applies to pooled grain.

“That gives (farmers) some market power to negotiate the best deal they can on handling and freight charges,” he said.

White said the handling agreements took longer than predicted because they are new and complex, he said. He declined to say how much market share the board expects to earn.

The board will soon announce its initial payments, White said. In the past they’ve been about 65 per cent of the expected final return. But the new CWB hopes to offer a higher initial payment. The government will guarantee the traditional initial and the board will look at ways to cover the rest.

Producer cars will be a big part of the board’s new business, Flaten said.

“We have a special contract for them and we expect to be able to handle a large number of tonnes through producer cars.”

The board won’t rule out sending producer cars to Churchill, but it’s unlikely, he said. Timing producer car arrivals and grade fluctuations make producer cars more difficult to handle at smaller ports, Flaten said.

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Nine agricultural companies supported the first annual Ag Shed Building Challenge, providing a total of 13 teams and 120 volunteers at the May 24 building spree.

“Team Canola from the Manitoba Canola Growers Association were the Hammer for Hope Champions — completing a shed the fastest to our quality standards,” said Habitat spokesperson Kim Wilson. “Team Hammer Time from Cargill won the Best Team Spirit Award.”

The companies represented at the event included: Canadian Pacific, Canadian Canola Growers Association, Manitoba Pork Council/CPC National Traceability Program, Monsanto, Parrish and Heimbecker Ltd., Richardson International, and Wall Grain. Each team raised $2,500 in donations as an entry.

Habitat for Humanity builds homes for families in need, but the modest, energy-efficient homes are built without garages. The storage sheds are offered as storage space.

After being selected into the Habitat program and completing a minimum of 350 volunteer hours, homeowners purchase their homes at full market value through no money down, interest-free mortgages. Payments are set at 25 per cent of the family’s income rather than the property value.

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Coal from Montana is expected to be a bright spot, but increased grain movement is expected following a $30-million investment by Parrish and Heimbecker in its grain-handling facility at Hamilton, the St. Lawrence Seaway Management Corporation said in a news release.

Canadian and international carriers are also in the process of building new vessels, with some scheduled to begin service on the seaway this year.

La Niña moves on

sydney / reuters

A weather pattern blamed for heavy rains and crop destruction in the Asia-Pacific region over the past two years has run its course slightly ahead of schedule, forecasters in Australia said March 27.

The Australian Bureau of Meteorology said climate models indicate the weather phenomenon known as La Niña, the girl child, has come to an end, after earlier this month predicting it would drag on for a further month or two.

Sea surface temperatures across the central tropical Pacific Ocean were now at neutral levels, according to the bureau.

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“Consolidation of the fertilizer industry worldwide is far from over.”

– JOERGEN OLE HASLESTAD

Aprotracted takeover battle in the global fertilizer industry ended this week with a victory for CF Industries Holdings Inc., but the losers are unlikely to wait long before climbing back into the fray.

CF Industries’ agreement to acquire Terra Industries brought to a close a year-long battle in which CF was alternately cast as both predator and prey.

In the end, the $4.7-billion CF-Terra deal scuppered Agrium Inc.’s efforts to snap up CF, while forcing Norway’s Yara to bow out of a bidding war for Terra.

Even so, the forces pushing both of those fertilizer companies to grow through acquisitions won’t fade away. Their strategies, however, may need to be adjusted.

Although Agrium dropped its bid for CF, the Canadian fertilizer maker has already said it will seek fresh growth opportunities across the agricultural value chain – from supplying farmers to producing fertilizers, and other businesses in between.

Agrium’s growth ambitions mirror those of other players in the sector. While mega-deals are unlikely, most analysts see scope for smaller acquisitions, as companies look to replace aging assets, secure strategic supplies and fill gaps in their geographic footprints.

That said, M&A activity and rising fertilizer prices have begun to drive up valuations in the industry. As a consequence, fertilizer makers may have to expand through allied businesses.

Calgary, Alberta-based Agrium is already the largest North American agricultural products retailer and it has repeatedly expressed a desire to further expand its retail footprint.

“Not that long ago, Agrium bought some retail outlets and I think that is what they will continue to do – focus on retail and focus on the potash expansion, which is what the market wants them to do anyway,” said Broadpoint AmTech analyst Edlain Rodriguez.

Agrium chief executive Mike Wilson is a shrewd dealmaker, who has grown the company through a series of takeovers. Many believe he is unlikely to sit on his hands as larger rivals look to consolidate.

Wilson led Agrium’s takeovers of Royster-Clark in 2006, UAP in 2008 and numerous small deals, including its acquisition of 32 retail outlets from Archer Daniels Midland in 2007.

One gap in Agrium’s retail footprint is Western Canada. Although the company does have a presence in the region, the dominant farm-supply retailer there is Viterra, a grain handler that also owns over 250 retail outlets in the region.

“I believe Viterra and Agrium would be a very nice matchup,” said independent analyst Chris Damas, who argues that Viterra’s stock has languished despite the company’s growth prospects.

That said, there are drawbacks as well. Many of Viterra’s retail outlets are integrated with its grain terminals, and Agrium is not familiar with the grain-handling business.

“Viterra is in so many other different businesses that don’t fit Agrium’s sweet spot,” said analyst Robert Winslow of Wellington West Capital Markets. “Not to say it’s impossible, but I think it’s unlikely.”

David MacKay, president of the Canadian Association of Agri-Retailers, notes that other possible targets in Canada include privately owned James Richardson, with about 70 to 80 outlets, along with smaller networks owned by Cargill, Paterson Grain, and Parrish & Heimbecker.

Agrium’s growth ambitions are echoed by others in the sector, as a sharp decline in fertilizer demand in 2009 is already giving way to a strong rebound in 2010, pushing up fertilizer pricing even as the price of major grains have fallen in recent weeks.

Norway’s Yara, despite bowing out of the takeover battle for Terra, remains upbeat on consolidation prospects within the fertilizer sector.

“Consolidation of the fertilizer industry worldwide is far from over,” said Yara chief executive Joergen Ole Haslestad.

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