Author Topic: Grain Boom Busts Canada Farmers as Rail Lags:  (Read 1068 times)

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Offline kelee877

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Grain Boom Busts Canada Farmers as Rail Lags:
« on: March 04, 2014, 07:01:11 AM »
Part of the perfect storm, we finally have a good year for crops and nobody wants them and no way to transport them...sheesh ???

Canada’s grain-supply boom is turning into a bust for farmers as record harvests and railroad logjams make sales almost impossible.

[Consider Dennis Gallant, 76. He has yet to collect one cent on the wheat, canola, barley and oats harvested last year on the 1,000-acre farm in Warren, Manitoba, he has run since 1960. He has called the local grain elevator every 10 days since October. The answer since is always the same. No thanks. We’re full.

“This is crazy,” said Gallant, who normally has unloaded half his crop by March. The delays mean C$200,000 ($180,000) in lost revenue as prices slumped, and Gallant says he needs a C$100,000 loan to cover expenses. “We’re bloody strapped.”

Four months after the harvest, the crush of new supply is overwhelming a rail system needed to get grain to export depots across Canada, the world’s top canola and oat supplier and No. 2 shipper of wheat. A backlog of rail-car orders tops 60,000, eight times more than a year ago, boosting transport costs as most crop prices drop. The National Farmers Union estimates lost sales at C$3.5 billion, and Agriculture Minister Gerry Ritz threatened mandates if railroads don’t fix the problem.

Constraints in moving crops for Canadian Pacific Railway Ltd. and Canadian National Railway Co. (CNR) have been exacerbated by an unusually frigid winter across the Prairie Provinces and a surge in shipments of crude by rail in Canada, the top supplier of imported oil to the U.S. Grain companies halted purchases of some crops and pulled back on sales, prompting the biggest crisis for the industry since the government dismantled the grain-marketing monopoly of the Canadian Wheat Board in 2012.[size=2.125em]Record Harvest[/size]Farmers collected more wheat, canola and corn than ever before in 2013, and surges from multiple crops in the same season placed unprecedented pressure on rail lines that handle 95 percent of Canada’s output.[/font]

More than 60,000 rail-car orders wait to be filled by railways, compared with a backlog last year of 7,300, said Mark Hemmes, the president of Edmonton-based Quorum Corp., which was appointed by the federal government to monitor Canada’s grain transportation system. Railroads are allocating fewer grain cars in the Prairies, where most crops are stranded, he said. They plan to send an average of 3,800 per week, down from about 5,000 in late 2013, he said. Each car can carry 90 metric tons.

]Expanding SurplusThe delays have left more stockpiles of the two biggest crops than a year earlier. As of Dec. 31, wheat inventories were up 38 percent at 28.31 million tons and canola jumped 55 percent to 12.6 million tons, Statistics Canada data show. Reserves of coarse grains, including corn, barley and oats, increased 19 percent.

“This is the highest backlog ever,” said Wade Sobkowich, executive director of the Winnipeg-based Western Grain Elevator Association, which represents handlers including Glencore Xstrata Plc’s Viterra unit and Richardson International. “We are many weeks behind in shipping, and we are paying vessel demurrage and contract-extension penalties on the sales in place right now.

As grain sits unsold, prices are dropping. Last year’s record Canadian wheat crop of 37.5 million tons helped to expand the global surplus. World output will reach a record 708 million tons in the 12 months that end in June, the London-based Intern
« Last Edit: March 04, 2014, 07:03:16 AM by kelee877 »

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Offline zeker

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Re: Grain Boom Busts Canada Farmers as Rail Lags:
« Reply #1 on: March 04, 2014, 07:35:15 AM »
the longer that grain sits, the more apt it is to become wet or infested. ruined.
the farmers' bills still come due, as he waits to sell his product.
of all the things I,ve lost.. I miss my mind, the most

Offline tazweiss

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Re: Grain Boom Busts Canada Farmers as Rail Lags:
« Reply #2 on: March 04, 2014, 09:18:12 AM »
With a lotta luck, his grain will make it through.  His current difficulties may even be a blessing in disguise.  Because of the weather extremes around the world, many are expecting major crop failures.  With major crop failures come (sometimes) signifigant price hikes.  It may be to his advantage to sell his grain later, rather than sooner.  I know it sounds a little, overly optimistic but stranger things have happened.
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Offline JustABear

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Re: Grain Boom Busts Canada Farmers as Rail Lags:
« Reply #3 on: March 04, 2014, 01:54:58 PM »
It would seem the decision of the Federal Government to end the monopoly of the Canadian Wheat Board as both a major marketer and shipping arranger and advocate for farmers has had some input into this problem. Previously the Board had a huge market share and therefore had clout in the market and could affect pricing. At the same time it also had influence on major shippers and could bring pressure to bear on behalf of farmers. With that leverage gone the farmers are individuals taking on Goliath with predictable results. As in all things a National Strategy with Canadian focus would be beneficial. In major areas such as farming, industry, manufacturing etc Canada would gain. Sadly the only focus is on corporate profits and the people and country as a whole suffer.