Agricultural industry officials in the Innisfail area and throughout Central Alberta say CP Rail shipping bottlenecks and cold weather are combining to threaten an already delicate economic climate that could impact bottom lines and force layoffs.
And with a bumper crop year behind farmers and the promise of another good crop year coming, farmers are wondering where and when their crops will be sold.
ìWe had deliveries scheduled to make to the elevators and they could not take our product,î said Doug Edgar of Edgar Family Farms. ìNow we have to work around this issue and wait for shipping. The rail issue is a problem for us with road bans coming up soon and we will have to make more trips for the same deliveries.î
Edgar added with wheat prices dropping and the basis system, the difference between farmer and port prices widening, farmers are going to get less for their wheat and experience financial pressures even worse over the long haul. ìThere is pressure for farmers to take the cash advance offered by the government but that will only be a short-term solution if product does not move fairly soon,î said Edgar.
Chris Chivilo, chief executive officer for Parkland Alberta Commodities, said there is now anxiety in the farming community after experiencing a bumper crop year with many growers now sitting on a considerable amount of product.
ìSince November, we have had a difficult time moving product as CP has limited cars for grain transport due to other situations. This has directly impacted our bottom line,î said Chivilo, whose Innisfail-based company buys and sells pulses, oilseeds and cereal grains across Alberta and Saskatchewan.
Chivilo noted over the last two weeks no cars were allocated for grain shipping out of 114 cars ordered.
ìWe have worked on shipping product through Vancouver on inland containers (seacans) that we load at an increased cost to us,î said Chivilo. ìBut we have to still get those on trains after we truck them to Calgary.î
A secondary option is using intermodal transport, as there is an excess of cars waiting to go to Ontario, added Chivilo. But he added that possibility could bring even more challenges.
ìWith two weeks of no shipments, we have tried to work with CP to book at least 100 cars per month for our product,î said Chivilo. ìIt is supposed to yield a better price and help us get at least some product out. So far, we have not heard any official response.î
Ed Greenberg, spokesperson for CP Rail, said the issue of shipping grain is a ìcomplex problemî this year made more challenging by the extreme weather across Western Canada. ìNothing moves efficiently in cold weather,î said Greenberg. ìIf we examine the numbers, we have actually shipped more grain than last year. It's just that there is more product to ship and there are other issues to deal with.î
Greenberg noted grain is the largest commodity transported by CP at 21 per cent of all shipments while crude oil constitutes only five per cent.
ìCP's success is not tied in any way to crude (oil). It's less than five per cent of our revenues, and it's one of the lowest margin businesses we haveÖî said Hunter Harrison, CP Rail chief executive officer in a recent speech.
Greenberg said there have even been problems with shipments once they get to Vancouver. ìThey just haven't been unloaded and have even sat over a weekend,î he added. ìWe can't operate at peak efficiency if the whole transportation system does not move the product as soon as possible.î
He added that meetings are ongoing at provincial and federal levels to strengthen the grain handling system and to address the current situation.
ìThe bottom line for us is that CP is working to respond as quickly and efficiently as possible to demands for commodity shipping. This is a whole supply chain issue that will not change overnight,î said Greenberg. ìGrain shipping is very important to our business and Western Canada.î
Ramifications of grain shipping problems are not limited to producers as equipment sellers like George's Farm Centre in Penhold are also affected.
ìThe CP Rail grain shipping crisis has had a major impact,î said Roy McArthur, manager of George's Farm Centre. ìOur customers cannot afford to purchase or trade in equipment if they can't sell their product. This problem will move through the system from banking to home construction until a solution is found.î
Meanwhile, Chivilo is optimistic that a solution will be found soon to alleviate the shipping bottleneck.
ìBased on present circumstances,î said Chivilo, ìwe are doing our best to ride the situation out and we are reworking our financial plan. Farmers cannot continue to store grains and peas indefinitely. One way or another, the product will move.î
