Originally posted by bgmb
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Europe does it.
South America does it.
Australia does it.
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Um... The US does it.
Europe does it.
South America does it.
Australia does it. -
https://www.country-guide.ca/2014/06/25/the-canadian-made-bottleneck/44191/ https://www.country-guide.ca/2014/06/25/the-canadian-made-bottleneck/44191/
Old article, and I bet we're more like 15% now because of increased production.
Commercial storage
Closer analysis of the four systems highlights a major pressure point in the Canadian system. The combined commercial elevator capacity in Canada (including port and inland) can store barely 20 per cent of our average annual production.
The U.S., by contrast, can store over 50 per cent of the crop in commercial storage, Brazil has 114 per cent storage capacity, and Australia has storage for 175 per cent of an average crop.
Instead of a system where most of the grain is in port and available for export at all times, as it is in Australia or Brazil, or even in the U.S. where half of the harvest is in commercial storage, Canada relies on just-in-time delivery from farm to port to meet export demand.
This system works only if buyers and sellers know exactly what is in on-farm bins, and if there is a co-ordinated effort to move the exact grain and grade from farm to port only when needed. Unfortunately, this pull system is exactly opposite of the push system that many farmers desire.
Canadian farmers want a system where they are able to deliver their grain whenever they want, yet in fact the commercial Canadian grain storage system can handle only a little more than 10 per cent of an average crop at any given time.
In other words, it is physically impossible in Canada for all farmers to move all their grain at harvest or in the fall period even if there was the customer demand for the multitude of grains and grades grown in any given year.
Transportation system
Even if Canadian farmers decided to deliver only to match sales, we would still be left to face the restrictions of our transportation system.
Prairie farmers cannot deliver to port other than by rail. Our limited port facilities are not designed for receiving grain by truck. So we rely on a duopoly of two private, non-competing rail lines to move all of the grain destined for export.
There really are no viable alternatives, which means in turn that there are no competitive forces to control freight costs. As a result, a revenue cap was imposed to protect farmers from excessive rail freight rates.
The U.S. by contrast has four major rail lines, so there is more competitive pricing for rail movement of grain. More importantly, there are three major river systems bisecting the major grain-growing regions in the U.S., and the publicly supported river system also controls freight costs. Furthermore, U.S. port terminals are able to handle truck traffic.
As a result, even though the distances from farm to salt water are roughly similar, the U.S. system is much more efficient and cost effective than the Canadian system.
Brazil also must move grain over long distances, but freight costs are minimized by the competition between truckers. This is not to say there are not problems. Harvest-time truck lineups at port facilities have occasionally been reported up to 80 kms long. Still, Brazil manages to move almost three times as much by truck in eight months compared to what Canadian rail moves in a year.
Australia, with a much shorter haul than any of the other three nations, is in the best position, with both truck and rail capacity for moving grain from farm to port as well as having storage capacity for almost two years of harvests.
Investment
One of the most troubling comparisons may be the lack of investment going into the Canadian grain system. We are not seeing the investment in Canada that is happening in other grain-exporting countries.
For example, while CN and CP have invested roughly $2 billion a year in track upgrades, expansion, and maintenance, U.S. railroads companies invest $7 billion a year, and in Brazil, the government has pledged $30 billion over the next six years for building more storage capacity to handle the ever-increasing production in this country.
This quick comparison identifies a host of bottlenecks in the Canadian grain system other than simply a rail problem. An apt analogy of the existing Canadian system and the government’s attempt to address the problem might be a farmer who runs a class 10 combine but only has one three-ton truck hauling the grain a long distance on washed-out dirt roads to a six-inch auger filling a 1,350-bushel bin, and then blaming the lack of harvest efficiency entirely on having one truck.
Legislating more rail cars will move more grain but only until other bottlenecks in our constricted grain-handling system override this quick fix.
As farmers, we need to ask why our system has so many constraints compared to our competitors. We need to look at the Canadian grain export system in its entirety and address all the bottlenecks if we are to successfully compete in the world grain game. We need to ask not only what the government can do, but what we as farmers need to do and what we expect industry to do. It has to be a collaborative effort between all players.Last edited by Klause; Mar 7, 2018, 10:31.Comment
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Originally posted by tmyrfield View Post
Let me get this straight.
Farmers in Canada have it right. Everybody else is wrong.
That's why Canadian producers have the highest debt load of anywhere in the world.
And loose export markets and keep dropping in world rankings... And why our farmland that's "expensive" is still the cheapest in the world.
There's a $3 spread between port price and farm price on wheat.
That $4.25 "feed" malt to China is going for $7.90 a bushel
We get paid almost 100/MT less for canola than most other markets and we have the crushers to "add value".
It's not a matter of having to sell at harvest. It's a matter of being able to. Why not move a bunch of grain to Port position in summer... When shipping is cheaper and easier instead of pushing hard in winter.
Some of you guys really should go on those ag exchange tours and see how everyone else does it.Comment
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