In the 1970s, groups of Canadian farmers from the Canadian West regularly flew to the Port of Vancouver to learn firsthand about export terminals and the railways and trucks that moved their wheat, barley and durum to Asia. As members of what was then the Palliser Wheat Growers Association (Mow Western Canadian Wheat Growers Association), the farmers were opposed to single desk selling, were demanding changes to the Crows Nest Pass Freight Rate that made moving grain a money-losing proposition for the railways and demanded major changes to the grain handling and transportation system in Western Canada.
The trips to Vancouver also included short side journeys to the Port of Seattle to see a U.S. grain export terminal, the Pier 86 complex, at work and attend face-to-face Vancouver meetings with terminal, port and railway executives.
The general consensus among the group at the time was that the road and rail transportation network serving Canada’s Pacific grain terminals was inefficient, the terminals – because they cleaned and blended grain before shipping, unlike the Seattle terminal – were overstaffed, the Canadian Wheat Board often delivered the wrong grain to terminals and the rail system in the country, with its hundreds of small, wooden elevators and scarcely used branch lines, was sluggish.
Today, most of those problems have been addressed and others are in the process of being tackled. It’s been a 45-year-struggle since those tours took place, but looking at the size of the task, the number of players involved and the political and attitudinal barriers that had to be overcome, it’s actually happened quickly.
With government and industry inputs to the Asia Pacific Corridor initiative and various other projects, the shape of the transportation system that once existed in Vancouver – referred to as “a plate of spaghetti” by the visiting farm groups in the 1970s – has changed dramatically.
The rail lines, roads and bridges accessing the grain export terminals surrounding Burrard Inlet have undergone major improvements to increase their accessibility by truck and rail.
A new high speed export terminal at Port Metro Vancouver is being considered by G3 Corp., the firm that recently purchased the former Canadian Wheat Board. When completed, the terminal will have a system of loop tracks that will allow for the storage or holding of up to three, 135-railcar unit trains and their return to the rail system without breaking up the train. And, two other major terminals on the waterfront, owned by Regina, Saskatchewan-based Viterra and Winnipeg, Manitoba-based Richardson, are also undergoing major alterations to increase productivity and velocity.
“What we know, with absolute confidence, is that our gateway is continuing to grow and requires not only the investments we’ve made in (improving) capacity, but further investments,” Peter Xotta, vice-president, planning and operations with Port Metro Vancouver, said in an interview with World Grain. “One of the port’s key strategies has been supply chain performance and transparency. It’s kind of baked into our philosophy that, as a gateway, we need to continue to perform.
“If you’re looking for evidence that the investment is continuing to pay dividends, it’s in the fact that our gateway continues to grow. This, in spite of the ups and downs in the economy over the past number of years, is an increasingly competitive gateway in North America”
Wheat export opportunities
In the 2013-14 crop year, Canada exported 17.3228 million tonnes of wheat, putting it among the top seven producers in the world, according to the Canadian Grain Commission.
However, there are opportunities to further increase these exports. There are several global drivers creating demand for Canadian wheat such as worldwide economic development, population growth and food security concerns. Indonesia and Bangladesh are two economies among several that are opening their doors to wheat exports, primarily because of dietary changes toward wheat-based products and animal protein such as chickens where one of the primary feeds is wheat.
To meet these challenges, the industry has made major changes. In the provinces of British Columbia (Peace River area), Alberta, Saskatchewan and Manitoba small, wooden elevators have been largely replaced by more efficient concrete inland terminals with room for 100-150 grain cars.
For example, in 1961, the Province of Alberta had 1,642 functioning primary elevators. Fifty years later, there are a mere 79 elevators in this style left in operation, with the rest being abandoned or removed. Saskatchewan, the largest wheat-producing jurisdiction on the continent, had 3,030 primary elevators in 1950 and 2,750 in 1970. By 2004, that number had dropped a mere 194.
Consequently, the distance farmers now have to move grain to a shipping point has increased.
Many of the inefficient branch lines have also been removed by the railways or sold to short line operators and the Crowsnest Freight Rate has been revised to reflect railway costs in moving grain, meaning many communities have lost their rail line and transportation costs have increased.
Crops being grown in the Canadian West have also changed from primarily wheat and barley to wheat, canola, barley, field peas, lentils, flax and a dozen other specialty crops, including early maturing corn, resulting in a more diversified industry.
As well, like other industries, the grain marketing, transportation and advisory industries have benefited from the Internet and the ability to transfer information electronically. Farmers can now follow markets through established grain companies, advisors or, since Nov. 29, 2011, future contracts for milling wheat, durum wheat and barley through the Winnipeg-based Intercontinental Exchange Inc. (ICE) after approval by the Manitoba Securities Commission, another result of Ottawa’s “marketing freedom” legislation (Bill C-18).
Powerful farmer-owned grain co-ops that found their beginnings as part of an agrarian revolution in the West have also become relics of the past and, worst of all, young people no longer seem interested in operating the family farm.
Kyle Jeworski, Viterra’s president and CEO for North America, once said in an interview with World Grain, the goal for the handling and transportation network must not only be to improve storage capacity but to improve the “velocity” of the entire system, including the loading and unloading process.
Mark Hallman, spokesperson for CN Rail, says, “CN’s gross capital expenditures in the four Western Canada provinces between 2010 and 2014, including funds for maintaining the existing network and expanding capacity to accommodate traffic growth, totaled close to C$3 billion. These investments have benefited flows of traffic moving to and from this region
“Network capacity improvements include sections of double track and extended sidings capable of accommodating efficient and productive 12,000-foot trains.
CP rail’s expenditures on improving the velocity have most likely matched CN’s, bringing the estimated total to roughly $6 billion in four years.
Despite delays that normally occur at railways when temperatures hit 30 degrees F or below, the railways, grain companies and governments are investing heavily in the transportation system and “velocity” is improving.
Aging grain producers
However, during this sea change, farmers in the West have also grown older, from an average of years 49.9 years of age in 2001 to an average age of 54 years. Farms have grown larger, according to the 2011 census, from 1,449 acres in Saskatchewan in 2006 to 1,668 acres in 2011.
The grain grading system that was believed by Canadian farmers to be the world’s best prior to the introduction of “marketing freedom” by Ottawa is now being reviewed by the Canadian Grain Commission with input from domestic and export customers – a review that has, so far, resulted in plans to alter 25 grades of grain to meet the demands of millers and other end buyers.
But, the problem that seems to remain unresolved is the fact that Western Canadian young people are either reluctant to take over family farms or can’t afford to take on a high-risk, labor-intensive business requiring major capital inputs.
And, so far, even though the world is supposed to be in the midst of a so-called green/organic food revolution, no practical solution seems to exist to this problem.
According to a Statistics Canada report: “The demographic composition of the Canadian agriculture industry is undergoing significant changes as many farm operators are approaching an age when they may retire. The 2011 Census of Agriculture found that farms where the oldest operator was 55 years or older represented more than half of all farms in 2011, compared to 37.7% in 1991. In addition, less than one out of 10 farms had the oldest operator under 40 years old in 2011, whereas two decades earlier it was about 1 in 4. These two trends were found in farms of different types and sizes in all provinces.
“The trends of fewer operators, fewer young operators and fewer farms showed no signs of reversing and may indicate more consolidation and significant turnover in farm assets in the future.”
Based in Vancouver, British Columbia, Canada, Leo Quigley writes for a variety of national and international publications specializing in agriculture and transportation. He can be reached at Quigley@dccnet.com.
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