To be clear, these are proposals at this stage. Nothing has been implemented by the CGC nor is there a timeline for the commission to enact such changes. Instead, the commission has asked for public input and is in the process of evaluating what it’s heard. (For the original proposal, its specifications and goals, check the grainscanada.gc.ca website.)

There is an incorrect perception that this is a western Canadian issue, based on the notion that visual characteristics and the proposed changes will mainly affect the export market for Canadian grains. Added to that is the reality that the CGC is not involved in purchasing grain for domestic use, which is the common destination for eastern cereals. Yet depending on if or how these changes are implemented, they could encompass both eastern and western cereal production under the banner of traceability or sustainability.

Part of what makes these proposed changes such a challenge is the number of organizations, business and interests that would be affected. The ultimate impact would be on the quality of finished products, but there are three specific concerns for farmers and for many in the trade. They include the accuracy of tests, the time taken for testing, and, of course, who pays. Several stakeholders have characterized the concept as “just another excuse” for downgrading grains and decreasing payments to farmers.

Country Guide approached a number of organizations, including the Cereals Canada, Canadian Grain Commission, Western Canadian Wheat Growers and Western Grain Elevators Association. Three individuals representing the groups responded.

The CGC opted against participating.

Cam Dahl

Cereals Canada

The accuracy of tests, the time it takes to carry out a test, the infrastructure required and the cost involved are foremost questions for Cam Dahl. As president of Cereals Canada, he believes shippers and farmers share the goal of objective grading versus a reliance on visual factors. However, this goal can only be achieved if the new procedures are accurate and cost-effective and can be carried out in country facilities.

“The more you can move to objective measures, the more accurate the grading system,” says Dahl. “I think everybody would like to see that as much as possible, but the trade-off on the other side comes in three key questions, one of which is accuracy — because these kinds of tests have a margin of error surrounding them.

The second is time, where if it’s a laboratory test, it could take significant amounts of time. And the third is the cost. That cost can be subdivided under equipment, allotting space inside of facilities and the value of time taken: if producers could have the test done while they wait to unload, it’d be better and more time-efficient than waiting for results from the lab.

“It can be done on-site, but again, you’re making sure the grain is ground properly, and it’s that accuracy of the process,” says Dahl, noting the same concerns exist for testing DON. “DON is the issue — not the fusarium itself but the toxin. Yet some of the strip tests and the accuracy of those tests are sometimes in question.”

There is also some discrepancy in the claims by the CGC, specifically that falling number can be linked to sprouting and that DON can be linked to fusarium. There is a relation between the factors but it’s not a straight line. Falling number measures the alpha-amylase activity that reflects sprouting but it’s not a visual “tell.” The same applies to lab results indicating DON concentrations and the physical manifestation of kernel visual distinguishability (KVD).

“There’s a direct link to the functionality on the other side — what kind of bread will come out of that, where flour made from sprouted grain has very different functional qualities compared to flour made from grain that has not begun to sprout,” says Dahl.

On the DON side of the equation he adds that there is a relationship between the different species of the fungus and the toxin it produces. In the past, there was only one major species of fusarium in wheat, but recently, more species have been identified, with different species producing different levels of DON. Although there’s a relationship between fusarium and DON levels, the increase in forms of the fungus makes a visual determination much harder than 10 or 15 years ago.

One aspect that Dahl highlights is that this is more of an issue for both Eastern and Western Canada. He points to the DON situation in Ontario corn in late 2018 and a fusarium head blight infection which ruined the P.E.I. wheat crop in 2010. In spite of the proposal to add falling number and DON seemingly affecting only exports, Dahl has asked for clarification from the CGC.

“Some of my questions to the Grain Commission are, “how does this apply to Eastern Canada?” he says. “How does it apply to corn? Have those kinds of questions been considered when this was being put together?”

Jim Wickett

Western Canadian Wheat Growers

Working with proposed changes to grading factors can translate into a lot of speculation, and that’s troubling for Jim Wickett, chair of the Western Canadian Wheat Growers (WCWG). His primary concerns focus on including falling number and DON levels because they’re parameters that growers don’t deal with, and determining who will pay for the implementation and operation for such testing.

“There’s a lot of suspicion that this will be one more reason to downgrade, instead of trying to achieve the value that it’s really worth,” says Wickett, who also farms near Rosetown, Sask. “I don’t know where they’re headed with this — the entire grading process really needs to be examined.”

That’s a contention based on the current version of the Canada Grain Act and its visual grading parameters, which predate the invention of the automobile, according to Wickett. Compared to the technology that’s already in use on most farms, the grading methods need to be upgraded to the 20th century, if not the 21st.

As farm costs rise and commodity prices remain relatively low (even as corn, soybean and wheat prices begin to climb in 2019), it’s unreasonable for consumers to insist that associated costs for traceability and sustainability be borne by the farmer, he says.

There can be no sustainability (and the same should be true for traceability) without profitability for the farmer.

“That’s an issue that a lot of farmers have, where a regulator sets its own rates and benefits from the regulations that it puts out to make things mandatory to suit their own budget,” says Wickett. “In the U.S., once they have enough operating money saved up, they stop charging. But we’re still charging and we’re still accumulating a surplus, but we have bureaucrats and other groups looking at $130 million and asking, ‘How can we spend that?’ And that’s not right: we should simply cut the fees and move on.”

Another point Wickett makes refers to the difference between Western Canada, where there isn’t the relationship between farmers and the mills, and Eastern Canada. This, he adds, is definitely an export-related issue which makes it more of a challenge for western Canadian growers. Yet the piece-meal approach of just adding more parameters to an outdated process will not make Canadian grains more competitive.

What’s more frustrating for Wickett and others is that the Grain Commission had technology which made a so-called “driveway test” economically feasible. It was eight to 10 years ago that the commission tested the Read-Rite machine and although it was shelved, the blueprint for it exists, with the potential for augmenting the system with sensors now available.

Instead, the CGC is proposing to add two factors to the grading system without justifying costs or the process of conducting the tests. There’s also no guarantee that any two tests conducted with the same methods or equipment will yield the same results.

“In my time on the Western Standards Committee six or seven years ago, they were testing those Read-Rite machines and we talked about DON and falling numbers,” recalls Wickett. “One of the scientists for the commission kept mentioning that if two different people are testing the same sample of wheat, they can get a different number. If there’s a different source of water than the elevator down the road, you can get a different number. There are all kinds of variables.”

Wade Sobkowich

Western Grain Elevator Association

The concept behind adding falling number and DON levels is a noble goal, improving and ensuring grain quality, says Wade Sobkowich of the Western Grain Elevator Association (WGEA), but it’s not a practical approach. Any failing in that chase can be costly to those who can least afford it.

There is an “order of operations,” Sobkowich adds, that needs to be respected when considering the introduction of new factors.

“This includes the determination that the technology exists to produce repeatable, accurate, timely and cost-effective test results upon delivery to an elevator,” says Sobkowich. “To date, we are not aware of technology that would meet an acceptable threshold in each of these categories.”

The WGEA response to the CGC proposal is a seven-page write-up including several clarifications on statements made by the commission in its outline, as well as the association’s position opposing changes without due consideration.

Sobkowich emphasizes that added costs to the system to support DON and falling number factors would likely be borne by growers. He also cites the impact of something like the basis and the effects of tying-in falling number and DON tests, with “Company A” involved in grain exporting and investing in an on-site laboratory, while “Company B” sends the sample to a lab for testing. The on-site sampling would provide results at the time of delivery with added costs; the off-site testing would result in lower added costs but a better price to the farmer than the other company.

“Since it’s a competitive environment, Company A will only be able to pass as much of their costs to the farmer as the producers will bear before they make the decision that the risk of deferred settlement is acceptable for a potentially greater return,” says Sobkowich. At that point, they’ll choose to do business with Company B. “Company A still needs the grain, so they’ll have to narrow their basis and absorb a portion of these costs to attract the grain.”

Also part of the WGEA’s opposition is the fact that wheat buyers from outside Canada already purchase wheat based on the specifications they require.

If they already need certain minimum falling numbers and DON levels, those would be specified in the sales contract. As a result, Sobkowich says making falling number and DON part of the grade will have no impact on sales contracts, nor will it help increase wheat exports from Canada — and it would be invisible to the customer.

“Most customers want to know the class of wheat, like is it CWRS, the grade — number one or two — plus a number of other quality specifications such as protein, falling number and DON,” says Sobkowich. “The move is to try to reflect how customers already buy back to the farm level. However, we cannot accurately, reliably and cost-effectively measure falling number and DON in a timely way.”

The post Guess who’s paying for new grain grading? appeared first on Country Guide.

The answer could be yes in both cases, sometimes, in cases that might be better determined if grain was graded by a scientific test rather than visual inspection.

Some farm groups, suspecting that elevator companies are reselling farmers’ grain at a premium over official grades, are asking for technical tests to be part of the grading system. But elevator companies say the cost of the equipment and the need to add extra bin space may not make the change worthwhile.

The two main factors in question are falling number and fusarium damage. Sprouting can trigger an enzyme called alpha amylase, which reduces the ability of bread dough to hold gas and rise. The current grading system uses visual sprout damage as an indicator of alpha amylase level. However, it can be tested by mixing a slurry of water and flour in a tube and timing how long it takes a plunger to fall in the tube — hence the term “falling number.”

The other factor is the level of deoxynivalenol (DON), a toxic substance which can be triggered by fusarium head blight. If FHB can be seen in the sample, it’s assumed to have DON, though it may not.

In 2005, the Canadian Wheat Board proposed falling number become an official grading factor instead of sprout damage, and more recently the Western Canadian Wheat Growers and Alberta Wheat Commission have called for grades to be based on technical rather than visual specifications.

“We’re making the case that we would like to see a system that more accurately reflects what the grain is worth,” says AWC general manager Tom Steve. “Sometimes the market evolves faster than the regulators. In this case, we’ve got grain companies that are doing falling number tests in the country, and that’s gotten out ahead of the grading system.”

Western Grain Elevator Association executive director Wade Sobkowich says that some companies have elevators equipped to test for falling number and DON, strategically placing them, depending on the prevalence of problems in the region and on the year and harvest quality. While some facilities tested last year, there is little or no testing of this year’s high-quality crop.

“However, it is important to note that in the places where the capability exists, the elevator does not perform DON or FN testing on direct grain deliveries from growers in the vast majority of cases. In other words, they don’t run FN and DON ‘driveway tests’ on inbound product unless something is very much out of the ordinary,” Sobkowich said in an email.

“Last year, elevators with this capability would typically test full bin composite samples. Elevator companies still buy according to established grade specifications.”

Steve says that since the end of the Canadian Wheat Board monopoly, what makes wheat a No. 1 or No. 2 has become more variable, dependent on what the customer wants on a given day.

However, Dustin Gabor, owner of Grain Shark, a market advisory service, says that for CWRS wheat, the reference grade is still considered No. 1, 13.5 per cent, and the premiums and discounts come after grade has been determined.

Kostal Ag Consulting owner Greg Kostal adds that most elevator buying still emphasizes the Canadian Grain Commission’s numbers-based grading system, but he notes the industry is moving to a hybrid where users seek specific attributes within that CGC grade.

“It depends on the commodity, Prairie location and user,” Kostal says.

Review underway

The CGC has announced a major review of the grain grading system, a move that was welcomed by the Western Canadian Wheat Growers Association, which called for the system to include specifications.

“If the eventual grain buyer is paying based on specifications, why shouldn’t farmers get paid based on the same specifications?” Western Canadian Wheat Growers Association director Daryl Fransoo said in a release.

AWC’s Steve said there were cases last year when elevators bought feed wheat at a minimum falling number, which he believes revealed their intention to sell it to end-users as milling quality.

“What we’re saying to farmers is you need to know all of the factors in your sample of wheat to know what it’s worth. And the number-based grading system doesn’t always tell you what that value is,” Steve says, comparing grading methodology to umpires’ strike zones. “I know of many farmers who will take the same sample to multiple companies and get different grades, and that’s because the inspectors all have a different view.”

Falling number was a more important issue for the 2016 crop, much of which was hit with moisture at harvest. This year’s better quality is likely to be blended with remnants of last year’s crop.

“Blending is prevalent, but farmers still need to know what they have and how to extract and maximize attributes in context of how it is being bought,” Kostal says.

This year’s crop came with its own challenges given depressed yields and low protein.

Errol Anderson, president of ProMarket Communications, says a global surplus of wheat supplies has moved the market toward a protein-led pricing system. That’s good for farmers with 13.5 to 15 per cent protein, but those with 11.5 or lower are receiving heavy discounts, he says.

Gabor agrees, saying a farmer with No. 1 CWRS, 12.0 protein had been seeing up to $1.50 per bushel discounts from reference grade this year, a difference of over $1 per bushel from last year.

Single standard

Steve says that while hoping for a change, the AWC supports a third-party grading standard.

“Farmers need an independent regulatory agency to ensure that the standards are being consistently applied. The more accuracy we can have in how that wheat is evaluated, the better,” he says.

“I don’t think this process is talking about eliminating the grading system in Canada altogether, but it’s talking about evolving it to more of a technologically driven, objective analysis.”

Whatever the basis, there’s strong support for a independent third-party grading system, which would not only underpin Canada’s good reputation with customers, but allow efficiency in the bulk-handling system.

In an earlier interview with the Manitoba Co-operator, the WGEA’s Sobkowich said the system also helps farmers.

“We like the grading system because it allows us to buy in an organized way. It allows us to give the farmer a grade at the time of delivery. And it allows us to keep various quality parameters segregated in a bulk-handling system. So that works for us. But we’re open minded about the future of the grading system.”

Changes to grading won’t result in a net gain in farmer revenue, he added.

“This is a zero-sum game,” Sobkowich said.

The post Better than meets the eye? appeared first on Country Guide.

When listed grains (wheat, oats, barley, rye, flax, canola, rapeseed) are delivered for payment at a licensed elevator, an elevator operator can issue either a cash purchase ticket or a deferred cash purchase ticket, payable in the year following the year in which the grain is delivered.

Under current tax law, a farmer who opts for a deferred cash purchase ticket is then able to include the amount of the ticket in taxable income in that following year.

The tax treatment of deferred cash purchase tickets “is a departure from the general rule with respect to taxpayers (including other farmers),” the government said after unexpectedly announcing in the March 2017 budget that the measure was under review.

The talk of eliminating the option alarmed many in the grain industry, including KAP members who debated the policy a month later at an advisory council meeting April 20.

“It’s not avoiding taxes (by being able to defer grain sale payments into the next tax year),” said Foxwarren farmer George Graham at the time, who moved the resolution. “It’s just a way to balance out taxes.”

“We all know how tough marketing is and… if you’re going to start timing grain sales because of when you need the income, it’s just going to cause problems,” Starbuck farmer Reg Dyck said while debating the resolution.

Others in the grain industry added their voices to the chorus calling for retaining the system.

Deferred cash purchase tickets help farmers and grain companies, Western Grain Elevator Association executive director Wade Sobkowich, said April 11 on the sidelines of the Canadian Global Crops Symposium in Calgary.

“We’ll be required to pay farmers (who can’t defer payment) sooner than we do today, all things being equal, and therefore the cost of financing will go up (for grain buyers),” Sobkowich said.

“Farmers who defer delivery until the next tax year means we are altering delivery patterns and we may not be taking advantage of peak price periods. Grain companies will have less control as to when they call the grain forward and that can impact their ability to extract revenue from the marketplace. So it can complicate delivery patterns and it can increase the cost of financing to grain companies and all of those costs get shared by the industry.”

Given ups and downs in grain production and grain prices, farmers need tools to even out their income, he added.

The government quietly made the announcement yesterday as part of a larger announcement titled “Additional Tax Support for Canadian Farmers.”

In that document the government also committed to “providing tax relief” for livestock producers who received compensation for having to destroy their herds in the 2016-2017 bovine tuberculosis outbreak in Saskatchewan and Alberta.

Livestock producers in areas where farmers qualified for a livestock tax deferral to rebuild their herds following flood or drought will now also be able to defer a portion of their 2017 proceeds from the sale of breeding stock into 2018.

The post Cash ticket deferral option to remain unchanged appeared first on Country Guide.

It’s why dropping in to say a friendly hello every few months is no longer enough. Today’s elevator relationships take a lot more finessing.

If that sounds like something you don’t want to do, just be forewarned that your neighbours are already several miles down this road.

“As farmers become bigger and bigger, they’re spending more time on marketing, and definitely spending a lot more time on building relationships with end-users and various grain companies throughout the province,” agrees Richard Smibert, president of Ontario’s London Agricultural Commodities Inc.

The competition is fierce across the country. On the Prairies, says Wynard, Sask. producer Norm Hall, the days of a grain elevator every few miles, or multiple elevators in an average community are long gone. Also consigned to the past are over 100,000 small operations in his province. There were just fewer than 37,000 farms in Saskatchewan in 2011, but their scale is now immense.

“Instead of the 1,500-acre farmer versus the 500, it’s now the 15,000-acre versus the 5,000,” says Hall.

The grain trade is still built on a handshake and a lot of trust. In fact, with such tight margins in the industry, many elevators have more riding on trust today than ever before.

It’s why they want to do business with farmers they know, and why they’re looking for forthright operators who will provide a good sample and deliver exactly what they’ve said they will.

“If you say you’ve got this quality and you deliver something else, you’re not going to be on that list,” says Hall. “Once is a mistake, but two or three times in a row and you quickly go off that preferred list.”

Elevators are looking for sound farm management practices. They want producers who grow good clean crops that are high quality and contamination-free, Smibert says.

In return, farmers who come through stand to benefit.

“We do some contracting of food grade soybeans here in the province, and we have certain growers that we call first because we know they do a good job — they grow good-quality grain,” says Smibert. “Well-managed farms and the producers that take the extra steps to do a really good job likely receive higher yields and higher premiums for their product.”

You’re only as good as your reputation, and a high standing can put a farmer up the list of people the elevator calls, giving them a better chance of moving their crop even in tough years.

“I need your help here, but I can help you out somewhere else down the way,” explains Dan Mazier, who farms near Brandon, Man. “That elevator company’s got to fill up a train, and if you’re the guy that has that grain and quality, you might get your contract in. But you helped them out on one side and usually they do remember you.”

If a company has a shipment that needs to be made and orders to fill, they’ll text and email producers. If they’re in desperate need, they’ll put on a special price, and those first in line will get it.

“But if there’s a real special on, you will get a phone call. And that’s the preferential treatment,” says Hall. “Once you have that relationship, then they will work with you on maybe a better price.”

That’s especially true if you have what they need.

“In a low protein year, if you have high protein, and you’re on their list, you’ll get the phone call,” says Hall. “There’s times when other qualities don’t matter. If you’ve got a No. 2 high-protein (wheat), and they’re shipping a train load of No. 1 and they need to bump that protein up in the grain they already have, it doesn’t matter if yours is a No. 2, you’ll get a No. 1 and high protein (price) for it.”

It’s never a bad idea to keep in touch with the elevators.

“We get calls from producers at different times telling us what they have, what they see for grades and quality in the bin. And if there are markets that we’re looking for something specifically, we’ll know who to call right away,” says Smibert.

Mazier says there’s a lot of fishing done by farmers and elevators throughout the year.

“It’s not too bad an idea to every couple weeks talk to your grain buyer, see what’s going on with the markets. Even though you’re reading the emails, etc., you can’t beat the conversation, hear what’s coming up. And they’re always probing too, how the crops are growing. They’re tapping our shoulders to make sure they’re in touch with us too, because they’re trying to plan out for the next 365 days right now,” Mazier says.

There’s more communication between producers and elevators than ever in the past, in no small part due to technology.

“With the Internet, documents can be sent back and forth very easily; with text messages, you can shoot messages out to the producer when he’s in the field with his smartphone,” Smibert says.

“There’s definitely more coming from the elevators because if you’ve got an email or text, they’re shooting out messages every day,” Hall notes. “And if you’re dealing with a few like I am, your phone’s ringing all the time.”

What can you ask for?

Grain companies are also taking more time and investing more in the effort to cultivate relationships with the farmers they want to deal with.

“Many have teams dedicated to this and they spend a lot of time working with their country staff to ensure as consistent and as customer-responsive an approach as they can,” says Wade Sobkowich, executive director of the Western Grain Elevator Association. “The grain companies operate in a competitive environment, and to do otherwise would be to risk losing that producer to a competitor.”

“I think it’s probably more important now than ever,” adds Smibert. “You definitely have to be out talking to those producers on a regular basis and making sure they’re aware of what’s going on in the marketplace and letting them know what’s available.

“If you don’t get out there and talk to producers, there’s a good chance one of your competitors is. There’s a chance they will get the business if you don’t do it,” says Smibert.

While farmers will shop around for the best price, elevators can offer myriad other benefits to attract their business, Sobkowich says. That can include contract options and ways to mitigate risk, and they can also include financing, plus more efficient ways of doing business, with e-services becoming increasingly important, Sobkowich points out.

Ancillary services such as trucking are also getting included in the value calculation that grain companies will offer.

“I’ve gotten calls over the years that they’re short, they know I have the grain in the bin, and ‘can you bring it over or can we send a truck over to finish it up?’” says Mazier.

Of course, relationship building can cut both ways, and this is a particularly bad time for an elevator to have a bad rep.

When farmers feel burned by an elevator, they’ll hesitate to have further dealings with them, Hall says. Conversely, a farmer with a good relationship with a particular elevator is more likely to want to sign more deals.

“If that means going a few more miles, you’re compensated for the other side because it’s just a better place to deal with,” Mazier says. “It’s no different than if you want to go to your local Superstore or you want to go across town to Costco: It’s wherever you see the value you feel good with.”

“For many producers it comes down to the relationship and trust with the local elevator manager/agent, all other things being equal,” Sobkowich says. “The relationship both ways is important. Companies tend to go the extra mile for those that can deliver on a moment’s notice, deliver in all conditions, and consistently deliver the quality that was contracted.”

The grain industry can enhance its reputation when it steps in during a crisis, like when Triffid was found in flax, or a frost wipes out a crop, Mazier says.

A late May frost last year wiped out canola in a wide swath of southern Manitoba, and the industry reacted immediately.

“There was a million acres gone in Manitoba alone for canola. And the seed companies, their input suppliers stepped up. They were out going to Alberta picking up seed the next morning after the frost… In two days they had the seed in Manitoba; within a week it was already sown,” Mazier says.

“Whether you’re dealing with the chem dealer, fuel dealer or whoever, it’s all about the cultivated relationship that you have,” Hall adds.

It’s when expectations aren’t met that Mazier, as president of Keystone Agricultural Producers, gets a lot of calls, either from farmers or elevators.

And when the system breaks down because not everyone was involved in the decision-making — like the western rail transportation woes of 2013-14, or this year’s sudden closure of the Port of Churchill — that trust is tested and bad feelings emerge, Mazier says.

The post It’s buyer’s choice when it comes to your grain appeared first on Country Guide.

There is a very real possibility we will lose sales and maybe even important markets this winter due to Canadian shipments of grain exceeding the maximum residue limits (MRL) of importing countries.

The registration of Clever (quinclorac) and Manipulator (chlormequat) for use in Canada means MLRs are once again a major issue for both farmers and grain companies. Even though it is legal for farmers in Canada to apply these products, our primary export markets have severe restrictions on any residues in grains and oilseeds and even in processed products derived from those crops.

As a result, grain companies are reluctant to handle any crops treated with these products due to the risk of a shipment being refused because of residues.

“This is a very difficult situation,” says Wade Sobkowich, executive director, Western Grain Elevator Association. “We understand this problem is not caused by farmers. Farmers are caught between a rock and a hard place.”

Sobkowich explains that the United States has no MRL for chlormequat. As a result, crops treated with chlormequat simply cannot be exported to the U.S. Likewise, a number of the countries which import canola and canola products from Canada, including Japan, have not established MRLs for quinclorac, closing the door on crops where quinclorac was applied.

As a result, some grain-handling and processing facilities are outright refusing to accept any grains and oilseeds which had chlormequat or quinclorac applied. The Louis Dreyfus Commodities website states: “The U.S. export markets have minimal tolerance for quinclorac, the active ingredient in “Clever Dry Flow Herbicide.” Therefore Louis Dreyfus at Yorkton will not accept any canola deliveries that have been treated with this product for the 2015-16 crop year.”

In a June 26 online news release, Cargill stated: “Cargill’s purchase contracts include a warranty by growers that in growing the commodity sold to Cargill, the grower has only used pesticides that are approved for use on crops in major Canadian export markets (including U.S., Mexico, Japan, EU and China). As a result, any deliveries of canola treated with quinclorac will be rejected by Cargill.”

Sobkowich points out the cost of segregating canola is very high and it would not pay for companies to accept canola if their primary sales program is to countries which do not accept quinclorac residues. However, he says there are other facilities which export to other markets which will take delivery of quinclorac-treated canola, or cereals to which chlormequat has been applied.

“Farmers are advised to work with the grain companies,” Sobkowich says. “If one facility will not accept the crop, it is recommended you go to other locations. It should not be too difficult to find somewhere to deliver, depending on the area.”

The trade response is evolving, however. When asked if his company was accepting quinclorac-treated canola, Aaron Anderson, assistant vice-president for western grains at Richardson Pioneer, told Country Guide, “All RP facilities have the ability to receive and handle Clever-treated canola. We will be assessing the needs of our grower customers and working with them to collect and market quinclorac-treated canola, where we can limit risk and maintain Canada’s reputation as a supplier of quality, food-safe grains and oilseeds to the world.”

Remember Triffid flax?

This is not a new phenomenon. Globally there are cases every year when shipments of grains and foodstuffs are rejected because the phytosanitary regulations of the importing country are more stringent than the regulations in the country in which the crops are grown. Ignoring the rules of importing countries not only puts current sales at risk, but future sales as well, and it can result in significant economic losses for the growers in the country of origin.

Triffid flax is an example of what can happen when an importer’s regulations are not adhered to. Just on the suspicion that flax exports from Canada contained a very low level of an unlicensed GMO variety of flax, Canadian flax prices dropped by a third. When those rumours were confirmed with the findings of Triffid in a flax shipment to Japan, 35 countries closed their borders to our flax exports, including 28 in the EU which accounts for 60 per cent of our flax export market.

A University of Saskatchewan study estimated that the cost to the Canadian flax industry in the first year alone was $29 million due to demurrage, testing, and segregation costs. Furthermore, a Canadian industry study also found Triffid flax added that much or more in costs to the EU flax industry by 2011. As well, due to contamination of seed stocks, Canadian growers lost the rights to grow two flax varieties: CDC Normandy and CDC Mons.

In 2003, Japan rejected a French shipment of canola when it found residue of an unapproved insecticide. Not only did the French shipper lose a $6-million sale, it also cost the company an additional $2 million in demurrage, shipping and handling. Most importantly, Japan lost confidence in the ability of French farmers to supply canola that meets their standards, which cost French farmers millions more in lost sales.

Australian shippers lost $11 million when Japan found a shipment of canola exceeded Japan’s MRL for fenitrothion. It also resulted in increased testing of all shipments of canola from Australia.

In 2013 Japan refused two containers of buckwheat from Manitoba because they exceeded Japan’s MRL for thiamethoxam.

Earlier this year, three U.S. hay exporters were blacklisted from supplying hay to China after Roundup Ready alfalfa was found in hay shipments. Hundreds of containers of hay were turned away.

The Japanese market for Canadian canola is worth over $1 billion. Farmers simply cannot afford to put this market at risk by knowingly or inadvertently delivering quinclorac-treated canola without informing the facility quinclorac had been applied.

Not declaring the use of either quinclorac or chlormequat before delivery can not only put Canada’s grain and oilseeds industry at risk, it could bankrupt a farm business.

The Cargill news release reminded growers that the Declaration of Eligibility for Delivery Form must be signed by all producers prior to delivery. Furthermore, the news release states, “The declaration further includes an indemnity for all costs incurred in relation to any delivery that is made contrary to the representations made in such document.”

Richardson Pioneer’s Anderson says that if a grower delivers quinclorac-treated canola without declaring it as such, “It will most likely come with some serious financial/trade implications.”

Anderson says the cost of a rejected cargo of canola could be in the range of $20 million, not including future losses cost by lost sales.

To say the costs would be significant is most likely “an understatement,” Anderson adds. “Our Corporate Quality Assurance and Food Safety systems allow us to conduct full traceability of all grains and oilseeds that are delivered to each individual sale… we are able to trace grain from source of origination to final delivery.”

Yet in spite of the risk both to the farm business and our grains industry, there are still farmers complaining about having to declare their use of these products and who continue to apply pesticides to crops off label. There are likely even a few who will try to deliver crops grown with quinclorac and/or chlormequat without telling the buyer. They honestly see themselves as victims.

The blame game

Most farm anger over the MRL issue seems directed at the grain companies but these companies might be the wrong people to blame. They do seem to be trying to protect our markets by ensuring we meet all the regulations of importing nations.

Instead, Sobkowich says, “We (Canadians) need to review the entire process of registration.”

Sobkowich’s statement made me realize that while our regulatory system ensures products are safe for consumers and the environment, that approval only applies within Canada. Furthermore, it doesn’t consider the countries we market to. Why is our regulatory system approving pesticides when our major markets will not accept treated crops?

Pesticide companies also need to shoulder some of the blame. Do they really consider the end-user?

However, farmers themselves may be the biggest problem. Too many ignore the first axiom of business: the customer is always right!

Farmers need to focus so much on bigger, faster, cheaper, and easier, they may take a “let them eat cake” attitude to their customers. Are farmers so divorced from the end-user that they simply have no idea of what is needed, wanted or opposed?

That is a very dangerous attitude in a world with a current surplus of grain stocks. True businesses would focus on producing products that the customers believe in and want, not just on what the businesses decide the customer should buy.

Essential farm steps

1. Segregate on farm all production which has had an application of quinclorac or chlormequat.
2. Declare all production from fields treated with quinclorac and chlormequat.
3. Work with the grain companies to deliver when and where treated crop can be handled.
4. Ensure you follow the labels of all pesticides to ensure residues are minimized (correct rate, timing, and pre-harvest interval).
5. Do not apply any pesticide for uses not on the label.
6. Do not grow unlicensed varieties of any crops.

The post The great threat of 2015 facing farmers appeared first on Country Guide.

The Ag Transport Coalition — which so far includes eight Canadian grain-handling and crop commodity groups, working with funding from the federal/provincial Growing Forward 2 framework — released aggregate data on Monday from “more than 15” shippers showing what amounts to an 11 per cent shortfall in shipper demand for cars.

Overall, the railways “have at no point this year been able to meet shipper demand” for rail cars, Greg Cherewyk, chief operating officer for coalition member Pulse Canada, said Monday on a conference call with media and stakeholders.

The coalition’s report, covering the first 21 weeks of this crop year, said railways through that period have “failed to supply” 11,461 hopper cars ordered. Of that shortfall, the coalition said, over 5,500 orders have been outstanding for four weeks or longer.

Boxcar shippers — mainly handling bagged commodities such as pulses, to be transferred to intermodal containers — have seen an average weekly fulfillment rate of about 60 per cent during the crop year to date, and just 50 per cent for Week 21 (Dec. 22-28, 2014) alone, the report said.

“Consistently declined”

The shortfall for both Canadian National and Canadian Pacific Railways (CN, CP) “has continued to grow weekly since the beginning of the crop year,” the coalition said in the report, prepared by Edmonton-based QGI Consulting.

Timeliness of supply in response to orders has “consistently declined throughout the course of the crop year for both railways,” the report said. “To date, the railways have supplied only 50 per cent of customer orders in the week for which cars were ordered.”

In Week 21 alone, the coalition said, CN and CP spotted 1,928 and 1,679 hopper cars respectively in the country. The total of 3,607 cars included 2,500 cars that had been ordered for prior weeks, the QGI report said.

Week 21 car spotting performance is “significantly lower than weekly average car spots of 2,481 and 2,363 for CN and CP respectively for the crop year to date,” the coalition added.

The QGI report also shows traffic destined to Western Canada’s bulk port terminals getting 30 per cent more cars than other corridors. “Non-bulk” traffic corridors, such as to the U.S. and Mexico, Vancouver transloading sites and domestic Canadian buyers, are seeing “significantly lower” fulfillment rates.

In Week 21 alone, the report said, non-bulk corridors got just 15 per cent of cars ordered for delivery. CN that week fulfilled about 30 per cent of its orders in non-bulk corridors and CP “supplied no cars.”

(QGI said its numbers are aligned on a weekly basis to account for any delays by shippers reporting the delivery of cars, such as during the Christmas period in Week 21.)

QGI partner Milt Poirier said that based on his observations, the “expressed demand” from U.S. and Mexican destinations for Canadian crop commodities has been “tempered somewhat” by the rail backlogs.

Asked whether grain growers can expect such delays to continue in the coming crop year, Wade Sobkowich of the Western Grain Elevator Association, another coalition member, said it will depend on what resources the railways are willing to put in.

Last fall’s crop was smaller than the previous year’s record harvest, but there’s still significant carryover, he noted. Weather conditions so far this winter have also been more favourable for trains to operate.

“Deteriorated”

The QGI report also pegs average “dwell times” — the time between a shipper releasing a block of loaded cars to a railway for transport, and the railway picking up said cars — at 50 hours in Week 21 and 39 hours for the crop year to date on CN lines, and 41 hours in Week 21 and 55 hours for the crop year to date on CP.

Average dwell times at destinations, before recipients take delivery of loaded cars, have “deteriorated noticeably” for both CN and CP since early last month, the report said.

For example, the report said, loaded railway dwell times in Week 21 at Thunder Bay were at 160 hours for CN, and 85 for CP.

Sobkowich said WGEA members have found the railways put on only enough resources for “100 per cent asset utilization,” a level below what shippers demand.

“We believe the railways have the ability to bring on more capacity; they just choose not to,” he said on the conference call.

The coalition’s report, he said, provides an aggregate picture of what grain shippers have been experiencing over the past 15-odd months.

Given the number and scope of the coalition shippers providing data so far, Poirier said the report’s figures represent about 65 to 70 per cent of grain industry participation.

Future reports will fold in data from more shippers as the crop year goes on, bringing the representation figure to about 90 per cent, he added.

Each week, the coalition said in a release, its reports will show rail performance across “key indicators” including rail car demand, car supply, timeliness of car supply, corridor performance and dwell times.

“If Canadian exporters are going to be seen as reliable suppliers we’ll need to see a rapid improvement week over week across the range of indicators being measured,” Pulse Canada CEO Gordon Bacon said in the coalition’s release Monday.

“We can expect that customers reading these reports will ask what is being done today to improve Canada’s logistical performance each week.”

Every individual grain shipper knows its own experience with rail car backlogs, Sobkowich said, but the coalition’s weekly reports will now allow them to compare their numbers with what’s happening across the industry.

— Dave Bedard is the daily news editor for AGCanada.com in Winnipeg.

The post Grain shippers’ data show ongoing rail supply/demand gap appeared first on Country Guide.