Portfolio Samples

Buyers are time-sensitive

By Lorne McClinton

Growers look forward to improving shipping methods.

Lentils and Chick Peas provided a rare bright spot for western Canadian grain farmers in 2000. They were two of the few commodities that put money back into farmer’s pockets this past growing season. Returns could have been even greater in both 1999 and 2000 but strikes and shipping problems disrupted specialty crop movement in the fall and cut prices.

Exporting specialty crops efficiently from prairies to port is not simple. It involves the co-ordination of farm deliveries with cleaning plant capacity while ensuring the cleaned product can move smoothly from plant to port. Product is transported by truck and train in intermodel vans from the prairie plants to stuffing facillities in Montreal or Vancouver. There they are re-loaded into containers for ocean going vessels. All movement has to be coordinated so containers arrive at the docks to make bookings on specific vessels with specific sailing times.

"We clean and then bag lentils and chickpeas in 100 pound bags," says Blair Stewart owner of Fillmore Seeds in Fillmore, Sk. "Six hundred bags are then put them into an intermodel van and shipped to a stuffing facility in Montreal. Stuffers there take out 450 bags and load them into a container for shipment overseas. A strike by 60 truckers in Montreal was able to shut down the entire system by preventing containers from being delivered from the stuffers to the boat yard."

Exporters, like Marlene Boersch with Berdex Canada in Winnipeg, Mb., say strikes in October or November are particularly damaging. Disruptions during this time of year prevent shipments of lentils and chickpeas reaching Islamic countries in time for consumption during Ramadan. Missing this peak market has a major impact on sales and credibility.

"Moslems want to use chick peas and red lentils for certain dishes during Ramadan," Boersch says. "If you miss this sales window it is not something that can be shipped later, as the railway always tries to tell us. It is like trying to ship Christmas turkeys sometime in March."

Shipping in time for Ramadan is tough at the best of times. Throw in an untimely strike, say around the first of November, and the wheels fall off the system. The schedule gets tighter every year since Islam uses a lunar calendar that’s about 11 days shorter than the solar calendar used elsewhere. Islamic holidays move each year. Ramadan began on November 28 in 2000 for example and will begin on November 17 in 2001.

"These countries want their food by a certain time," says Stewart. "If you are going to capitalize on the prices you have to get it to where it can be eaten and that means shipping on time. We will never get enough equipment to do that but the smoother the transportation system runs the more you can do. One week lost to strikes disrupts three weeks shipping."

"It takes weeks to work through the lag effect," Boersch explains. "All those container vessels, that you have booked, sail only partially full and you lose those reservations. All subsequent vessels are then overbooked. Every single day that the strike continues makes the aftereffects that much worse and takes that much longer to sort out."

"My buyers overseas are just mad," Stewart says. "They say that in the US they can get product from North Dakota to Seattle in five days while here in Canada we can’t get it from Fillmore, Saskatchewan to Regina in five days. This might be slightly exaggerated but they don’t have all the hassles that we do up here. Sometimes it takes longer for me to get things to Regina than it takes them to go across the country. We are told that Australia is taking our market and the U.S. is starting to take back the market. Where does this leave the Canadian grower?"

"The strike had a devastating effect on lentils prices last year," Boersch said, "and the same thing will happen to lentils again this year. It hurts the exporting companies and it hurts the farmer too. I will drop my prices and I will not take on more product. This will make farmers very upset but they have to recognize the effects these strikes have and have to be screaming about them. Labour disputes must be dealt with in a different form so that the effects are not always put back on the shippers and the original sellers."

Labour disputes are a major headache for the pulse industry but aren’t the only shipping problems that pulse exporters face.

"CN and CP don’t have enough equipment to move specialty crops between September and November," Stewart says. "There are not enough boxcars and there are not enough intermodels to physically get the product to port in time. Processors talk about getting CP to buy more equipment but CP says why buy more equipment for a four month rush. If you are located on a mainline, like Weyburn (located on CP Rail’s Soo Line, a major rail link with the U.S.), you might get more boxcars but some processors on branch lines tell me that they only get railcars once a week."

Boersch feels that the near monopoly positions the two main railways hold across the prairies does not help.

"We have two railroads to negotiate with but they are not competing and providing services in the same area," Boersch says. "The problem is that we don’t have an alternative. We can’t go ship through the US, we don’t have a waterway system and we really cannot compete with trucks. We ship marginal amounts by trucks but it’s neither realistic nor environmentally sound to say that we could ship thousands of tonnes by truck. I have been in this industry a long time and I can’t tell you what the solution is, if I could tell you that, I would be a happy person.

Part of the problem seems to be the unique shipping needs of the specialty crop industry itself. Grains like wheat and barley are shipped in bulk railcars, like coal or potash. The drive for increased shipping efficiency has lead to the rise of the large inland terminal elevators due to their ability to load and ship these grains in 100 car unit trains. Specialty crop needs are quite different. End users generally prefer smaller quantities of bagged, tagged and identity preserved product. Boersch believes that the current trend, developing a transportation system designed to only handle unit train volumes, is wrong.

"Why are we building up a train system that only caters to big turn arounds like potash movement," Boersch questions? "There must be more that we can do than apply the 100 car unit train model to everything that comes along. I maintain that because of the growth in the special crop industry, designer grains and designer malting barleys, the 100 car unit train dream is not what will be needed in five or ten years."

Despite all its problems specialty crop movement has improved dramatically.

"I know that specialty crop acres and tonnes are going up," Stewart says. "We are far more efficient than we used to be. The container ports are bigger and CP has found some more equipment. I am doing three times more volume now because I now get trailers stacked up and loaded at night. We’ve found ways to increase our business, but the acres and the volume is increasing faster than that. Even though it doesn’t look like the industry has improved, it really has."