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This article was published 26/11/2013 (942 days ago), so information in it may no longer be current.
Western Canada's record grain harvest has completely plugged the country elevator system, forcing some companies to store mountains of grain outdoors and putting international grain sales at risk.
Farmers have a glut of grain to sell from this year's record crop, estimated at 59 million tonnes but could be as large as 70 million tonnes, say some industry analysts. The previous record was 54.34 million tonnes set in 2008.
Grain elevators across the Prairies are 92 per cent full, which is virtually 100 per cent capacity because there are different classes of grain that can't be mixed.
The backlog has resulted in some companies, such as Winnipeg-based Paterson Grain, storing crop outside under tarps. A Paterson elevator site at the juncture of Highway 6 and the Perimeter Highway has 40,000 tonnes of winter wheat piled outside.
"That's really unprecedented, where a company has used outside storage like that," said Doug Chorney, president of Keystone Agricultural Producers.
Farmers are also reported to be storing grain outside, or in machine sheds, or any building with convertible space. Deterioration to the crop could result, lowering the grade and subsequently the price to the producer.
One of those who has run out of storage space is the Oatway farm just north of Winnipeg. The Oatways are storing their sunflowers in bags and have a large pile of corn outside. "We've had as high a yield as we've ever had in most of our crops," said Kent Oatway. The Oatways grew corn, sunflowers, barley, wheat, canola and soybeans this year.
There's more grain on the ground in Saskatchewan than here, said Chorney. Long white tubes, normally used to store hay, are being stuffed with grain instead.
Meanwhile, more than 20 vessels were waiting last week to load grain at the Port of Vancouver. The penalty for keeping ships waiting, called demurrage, is $7,000 per day. That's charged to grain companies, but it inevitably comes off the prices companies pay farmers, Chorney said.
The KAP president is calling for greater federal oversight of grain movement. A federal bill passed last fall, called the Fair Rail Freight Service Act, was intended to do that but is not working, he said.
Much of the blame is being levelled at the country's two national railways. Farmers have the grain, grain companies have the sales, but the railways don't have the rail cars to move grain into port position fast enough, said Wade Sobkowich, Western Grain Elevators Association executive director.
The companies want CN Rail and CP Rail to provide at least 6,000 cars each per week, instead of the current 5,000 each per week.
"We've been complaining about rail-car capacity over the last five years. We would like to see rail companies take into account the demand for rail-car capacity," said Sobkowich.
Neither is the grain glut likely to be a one-off phenomenon, he said. The Harper government's deregulation of the grain sector now permits production of high-yielding, lower-grade wheat varieties from the United States, which were previously prohibited in Western Canada.
The backlog is also lowering farmers' prices, because companies "put out prices that signal they don't want product right now," Sobkowich said.
"It definitely has impact on the sales program. You'd love to go out and sell more in peak price periods or just to clean out the system, but you don't have confidence that you'll be able to move that grain, so you pull back on sales a bit or significantly."
CP Rail responded in a statement it is already moving grain at a record pace.
"CP has moved more grain in Canada in both September and October of this year than any other September and October on record for our railway," it said in an email to the Free Press.
"We have hit back-to-back record loadings in Canadian grain the past two months. CP's grain loadings are 22 per cent higher than our five-year average and we have delivered sustained performance to the West Coast, with Vancouver volumes up 16 per cent versus a year ago."