Rail strike sheds light on weak link in the grain value chain: GFO

In just a few days, Ontario’s corn harvest ground to a halt. Not because of Mother Nature’s wrath this time, but because of an abrupt end of the supply of propane that fuels dryers to dry the corn to a safe level.

Barry Senft, CEO of Grain Farmers of Ontario, says that the rail strike that caused the propane shortage is a stark reminder of just how vulnerable value chains can be.

“It’s too bad that (the strike) went as long as it did, the damage that it’s caused … is significant,” Senft says. Beyond grain not moving to port, and ships waiting to be filled, Ontario’s already late, and very wet, corn harvest was just starting to roll in earnest at the time of the strike.

Senft says that the eight-day strike perhaps serves as a warning: does the grain industry need to sit down and look at an emergency measures type of process to identify weak links and vulnerable aspects of the value chain? Threats to an industry are usually though of in the form of pests, weather, or market disruptions, but logistics and supply of goods necessary to complete the harvest could potentially be deemed an essential service, as some groups are suggesting railway service should be.

Beyond just the cost of storage and demurrage, producer groups also brought attention to the damage these kinds of logistics breakdowns can have on trade relationships, too. Senft says that in our world of just-in-time delivery, some customers have only three to five  days worth of a commodity in store. The reliability of Canada’s supply matters to our global customers, Senft says.

“We have enough trade disruptions as we speak without having a further issue, like with logistics. Is a week the end of the world? No — but it shows our customers that it can happen.”

Listen to the full interview with GFO’s Berry Senft and RealAgriculture’s Shaun Haney below:

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