The Western Grain Elevator Association (WGEA) says it is gun-shy when it comes to placing their faith in the rail companies’ ability to meet the demand of grain shipments needed this fall and in to the busy winter shipping season.
The WGEA handles approximately 90 per cent, or more, of western Canada’s bulk grain exports, and Wade Sobkowich, executive director of the WGEA, says although it is early on in harvest, due to their experience in the recent past, they are skeptical on shipment capacity as the season moves forward.
Using the 2021-2022 season as an example where, due to the drought, crop production fell from 70 to 80 million tonnes to 49 million tonnes. Even with the reduced production, end-users were still not able to get grain in a timely manner. Sobkowich says that the flooding that happened in the Fraser Valley in November bears some of the responsibility for the poor performance, however those delays did create some hesitancy within the market.
“Come January, February, we were expecting to really go gangbusters and and that didn’t happen. We were only getting a fraction of our demand during that period of time in January, February, March. It really called into the question the resiliency of the railways, and their ability to recover from from disasters like that, and their ability to rebound from from from low points of shipping,” says Sobkowich.
He further explains that in February, according to the rail’s grain plan, they were set to provide 5000 rail cars per week, albeit, because of crop size, the demand from WGEA’s end was only 2,000 cars per week, in which they only received 500 to 800 rail cars per week. This, according to Sobkowich, raised further red flags as to the railways’ ability to stay in line with their own grain plan.
Although grain is exported year-round, Sobkowich says there is a sweet spot for export — now until December — as competing crops from Australia come off and are shipped in December and January. With farmers holding onto their grain a little bit longer, which was a good idea last year due to the drought and prices, Sobkowich says, may not be in the same best interest this year, this as we’ve seen a recent decline in prices.
“I think that there’s an expectation that those prices are going to go back up. But we think that the prices where they are is probably pretty close to the where they’re going to be throughout this period of time, because we didn’t have a drought. Last year, the prices were high in Canada, but they didn’t increase that way on the global stage. And it had to do with lack of supply here. So last year, every time the farmer held on to their grain longer, it was the right decision this year, it might not be the case,” says Sobkowich.
He says there are numerous factors that go in to the apprehensions surrounding the railway’s capacity to meet shipping obligations. Now that the world is seemingly ‘opening back up’ other industries are requiring railcars for shipping which can eat into the available cars for grain. Further, Sobkowich says there are other unknowns on the railways’ side of operations including staffing and/or crew numbers, this as they released crew members from employment last year due to the reduced need for shipments.