Wheat Growers Support Return to Demand-Driven Grain Shipping Mode
CALGARY, AB: The Western Canadian Wheat Growers Association supports the federal government’s decision to end the grain shipping volume mandates for CN and CP effective March 28.
“The Wheat Growers support the government’s decision to end the rail shipping mandates,” says Levi Wood, President of the Wheat Growers. “The Order was necessary to reduce the grain shipping backlog, however it is now time to see a return to a system where the marketplace determines grain shipping patterns rather than a government decree.”
The Wheat Growers maintain the grain shipping Order, first issued by the government in March 2014, was essential to move the record 2013 crop and the ensuing backlog in grain shipments. At the time of the initial Order, rail grain shipments were down 2% from the previous year despite a 2013 prairie crop that was 34% bigger than the previous year.
The government Order, and subsequent Orders, have had the desired effect of increasing grain movement and reducing the rail shipping backlog. Ultimately a record amount of grain was shipped in the 2013-14 crop year and rail shipments from prairie elevators during the first six months of this crop year (August to January) are at record levels. As a result, the grain carryout at July 31 is expected to be back within the range of normal levels.
However one side effect of the Order is that it caused the railways to limit the shipment of wheat and oats into U.S. markets. According to the Grain Monitor, year to date rail shipments from prairie elevators “are up only 10.2% while shipments out of the four western ports are up 27.5% suggesting that railways are focusing their resources on the movements to western ports where they can achieve the quickest cycles in order to meet the volume thresholds.” Producer car shipments and shipments from shortlines have also been limited.
So while the Order may have resulted in the most grain moving to market in the fastest possible way, it may not have resulted in the highest returns to farmers. Suspending the Order should see a return to market-driven grain shipping patterns.
“The grain shipping system still needs a significant overhaul to avoid a repeat of the problems we faced in the past 16 months,” says Wood. “But the emergency situation is over, and the focus should now be on gaining changes to the Canada Transportation Act that will improve railway service and increase grain shipping capacity to meet the long-term needs of our industry.”
About the Wheat Growers:
Founded in 1970, the Western Canadian Wheat Growers Association is a voluntary farmer-run advocacy organization dedicated to developing public policy solutions that strengthen the profitability and sustainability of farming, and the agricultural industry as a whole. For more information, please visit wheatgrowers.ca.