Volume 40, Number 6 | MARCH 4, 2014
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PRACTICAL PRODUCTION TIPS FOR THE PRAIRIE FARMER
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Delays caused by harsh winter Prairie farmers are left frustrated by slowed grain movement. Railway officials say weather and a large crop are the culprits
PHOTO: LISA GUENTHER
BY LISA GUENTHER
M
ost years Jay Millard trucks about 10 loads of grain a month. But between September and mid-January this year, he’d only hauled six loads of wheat and five of canola. “There’s just no movement. I don’t have an empty bin in the yard, and there’s still grain on the ground,” said Millard, who runs a mixed farm and trucking business near Livelong, in northwestern Saskatchewan. Millard says this is the worst he’s seen it in the 20 years he’s been trucking. “There was always a trickle going all the time. There’s nothing (this year).” Millard’s had phone calls about hauling to the U.S. “But it’s just not viable. Not from here, anyway.” The lack of movement has Millard thinking about summerfallowing some of his acres in 2014. “What’s the point of growing it if you can’t ship it and don’t get paid for it?” The problem, in Millard’s opinion, is the railroads. “You’ve got no competition and no accountability so why bother hauling grain?”
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RAILWAYS SAY WEATHER AND CROP VOLUMES CHALLENGING Ed Greenberg, Canadian Pacific (CP) spokesperson, wrote via email that as grain is CP’s largest commodity, it’s very important to the railway. “The fact is this crop year is at extraordinary levels,” he wrote. CP has also been dealing with extreme weather, Greenberg wrote. But CP’s grain products volumes from September through January were 17 per cent above the five year average, he added. CN spokesman Mark Hallman said CN is not flat-lining service for grain shippers. After harvest, grain hopper placements in Western Canada were 12 per cent higher than the five year average, he said. But the polar vortex, which first hammered North America in early December, “has temporarily curtailed throughput capabilities for all the commodities we move, not just grain. CN is suffering as much as grain producers, if not more,” Hallman wrote in an email. Asked how CN is suffering, given their 2013 fourth quarter revenues were up for grain and fertilizer markets, Hallman stated, “When I say CN is suffering, it’s that the harsh winter conditions
are increasing costs of rail operations, not revenues. Revenues minus costs equal income.” A media release posted to CN’s website six days prior to the email exchange provided more details. At $2,612 million, overall net income for 2013 was slightly lower than 2012, which hit $2,680 million. But CN booked $635 million of net income in the fourth quarter of 2013, compared to $610 million for the fourth quarter of 2012. The January 30 release attributes CN’s revenue increases to higher freight volumes due to strong energy markets, market share gains, a growing North America economy, a weaker Canadian dollar, freight rate increases, and a higher fuel surcharge. Canadian Pacific released its 2013 financials on January 29. Last year the railway reported $82 million in net income for the fourth quarter, a significant lift over $15 million in 2012’s fourth quarter. Adjusted net income for the last quarter of 2013 was $338 million, which was a 49 per cent boost over the same quarter in 2012. Full media releases on each railway’s financials are available on their websites, under news or media. O n F e b r u a r y 1 0 t h , Wa d e Sobkowich, executive director
of the Western Grain Elevators Association, told the House of Commons agriculture committee the railways are only providing between 3,000 to 4,000 cars a week right now. Asked whether CN will add more grain cars to the system to deal with the current backlog, Hallman wrote that “putting too many grain hoppers in the system will create inefficiencies, like putting more cars on a freeway at rush hour — it will ultimately slow down the system.” Last fall’s bumper crop “generated a significant increase in grain car orders, and CN performed well until recent weather challenges took a toll,” Hallman said.
TRANSPORTATION CONSULTANT SKEPTICAL Terry Whiteside, a Montanabased transportation and marketing consultant, was skeptical about the assertion that 2013’s bin buster was responsible for this year’s transportation woes. “Look, we’ve been growing wheat and grains on the Prairies, for what, 150 years? The railroads have been hauling it for 100. It comes by every year about the same time.” “The problem is that they’re
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already at capacity with all these other commodities, and then grain came on top of it,” Whiteside told reporters at CropSphere in Saskatoon in January. “But grain should not have to pay for that. Because think about grain. Grain is the lifeblood of the Prairies. It’s the lifeblood of Canada. It’s the balance of payments.” Although it’s likely cold comfort, U.S. farmers have faced many of the same transportation issues as their Canadian cousins. Montana terminals are paying premiums of up to $3,000 per car, said Whiteside. One elevator ordered trains last summer when it cost $700 to $900 per car. “Now they can sell them for $3,000 a car. So they got into the car-brokering business, the train-brokering business, and they’re still piling grain on the ground in Montana right now, this week,” said Whiteside. “Now that’s nuts. We’ve never had a situation like that before.” Four railways control 95 per cent of the business in the United States, Whiteside said. He characterizes railways on both sides of the border as “duopolies.” Duopolies price the same way,
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Wheat & Chaff ..................
2
Features ............................
5
Crop Advisor’s Casebook
7
Columns ........................... 20 Machinery & Shop ............ 32 Cattleman’s Corner .......... 37
Everything you forgot about growing flax
SARAH WEIGUM PAGE 20
The super-sized rotary pull-type combine that never was SCOTT GARVEY PAGE 32
FarmLife ............................ 41