World Grain - July 2018 - 6
FROM THE EDITOR
Turning point for Canadian
ecessity is often the mother of invention. Put another way, it's amazing
how creative solutions can be found
Canada's grain transportation debacle of
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of tonnes of grain that were scheduled to
move late last fall and early this winter sat
The nation's two major rail companies -
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struggled with capacity constraints amid growing demand to ship Western Canadian grain.
Angry farmers were unable to sell as much of
the 2017 crop as they wanted, crimping cash
ÀRZ DKHDG RI SODQWLQJ LQ WKH ZRUOG¶V ODUJest canola-exporting country, which is also a
major exporter of wheat and barley. As of late
February, CN had met only 17% of hopper car
orders while CP had supplied 50%.
had failed the Canadian grain industry. In
2014, following a record grain harvest the
preceding fall, more than 60,000 grain cars
worth of orders were canceled, and it took
nearly all of 2014 to ship out the 2013 grain
that was designated for export.
weather and the larger-than-expected grain
crop for the delay that year. Four years later, with crop production only slightly larger
than what was expected and a winter that
was harsh but not a major deviation from the
norm, the grain industry wasn't in the mood
for excuse-making. They wanted solutions.
With some nudging from the Canadian
government, which in May passed the
Transportation Modernization Act that incentivizes CN and CP to improve their grain
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companies are determined to put their grain
transportation failures - and the negative
publicity that accompanied them - in the
rearview mirror. A key provision in the new
law is that the maximum revenue entitlement
system - which placed a ceiling on the total
revenue to be earned from moving grain by
rail in any crop year - has been eliminated,
giving CN and CP more incentive than ever
to add railcars dedicated to grain shipment.
In recent weeks, both CN and CP have unveiled strategies that they say will enable them
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years. CP announced that it will invest more
than C$500 million to purchase new highcapacity grain hopper cars over the next four
years, with 500 expected to come into service
before the end of 2018. Meanwhile, CN has
ordered 1,000 high-cube grain hopper cars to
replace aging equipment and accommodate
the increasing Canadian grain yields.
While the rail companies and government
deserve credit for effectively addressing the
crisis in the short term, it remains to be seen
whether the long-term solutions are in place.
For the sake of Western Canadian grain producers, let's hope so.
From a broader view, Canada is not the
only major grain-producing country facing
transportation challenges. In Brazil, where
grain and oilseed production has skyrocketed in recent years, many grain transport
roads are still unpaved and very few railways
are available. A ray of hope in that situation
is China's announcement that it will contribute three dollars for every dollar invested by
Brazil for the China-Brazil $20 billion fund
for infrastructure projects. As the leading
consumer of Brazilian soybeans, China has a
vested interest in the success of this project.
Such news is encouraging, because
while massive investments have been
made around the world in recent years to
increase crop yield and produce more hightech planting and harvesting equipment, not
nearly enough has been
earmarked for logistical improvements to the
roads, railways and waterways that must carry
that larger volume of
grain. Until it is, unfortunate situations like the
one that occurred in Canada this past winter
will continue to arise.
Morton I. Sosland
Digital Media Associate Editor Holly Demaree
International Sales Manager Adam Ungashick
Audience Development Manager Kay Hudspeth
Audience Development Specialist Molly Brown
Director of Digital Media
Digital Advertising Manager
Advertising Assistant Manager
Design Services Manager Sadowna Conarroe
Chairman and CEO
Chief Financial and
Director of Operations
L. Joshua Sosland
WORLD GRAIN (ISSN 0745-8991) Volume 36, issue 7,
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