of the Canadian Grain Export Flows
Bi-Weekly bulletin May 22, 1966
& Gary Warkentine,
Policy Branch of Agriculture and Agri-Food Canada
The Canadian grain industry is export dependent and its nature is largely determined by geography and climate. Canada has roughly 40 million hectares of cultivated land, with the bulk of it located in Western Canada and, to a lesser extent, Central Canada. Compared to Western Canada, only a small amount of land is cultivated in Eastern Canada.
In Western Canada, wheat accounts for about 60% of total crop production. Of the total wheat production in Western Canada, over two-thirds is nominally exported. The most active ports are the West and East coasts and, to a smaller extent Churchill and directly into the U.S. In Western Canada, high-protein spring wheat dominate production and exports.
The main class of wheat produced in the Prairie region is Canada Western Red Spring (CWRS), occupying almost 80% of total wheat production. The CWRS class can range from high-quality, high protein to low-protein to Canada Feed wheat, depending on growing and harvesting conditions. The second most important class is Canada Western Amber Durum (CWAD). In Central and Eastern Canada, winter wheat dominates production, with the main class being Soft White Winter.
In Western Canada, the Canadian Wheat Board (CWB) is the sole marketing agency for wheat and barley destined for export or domestic food consumption. For these commodities, the CWB manages producer access to the grain-handling channel, due to limited primary elevator, railway and terminal capacities. The CWB uses a contracting system to get the appropriate grain to be delivered to meet sales commitments. Producers under contract may be called upon to deliver all or a portion of their contract, or the delivery call may be based on contracted plantings. Western Canadian wheat and barley for feed use can be marketed domestically through the CWB or private grain companies. The private trade does virtually all of the feed grain business.
In Ontario, all wheat sold by producers must be sold through the Ontario Wheat Producers' Marketing Board (OWPMB) with the only exception being wheat sold farm to farm for feed or seed use. The majority of wheat is delivered to the OWPMB after harvest. East of Ontario, a multiple seller environment exists for all grains including wheat. Production is primarily consumed domestically for feed and food.
The first step in the movement of wheat from Western Canada to export position involves the primary elevator system. Wheat is delivered by truck to one of 1,340 primary elevators at 887 shipping points. The primary elevator system has a total licensed storage capacity of about 6.6 million tonnes (Mt). The average elevator capacity is 4,700 tonnes with an average turnover of four to six times.
Primary elevators establish the grade of the grain, give financial settlement to producers, store and blend grain grades, load rail cars and sell agricultural supplies. Small amounts of wheat are also delivered directly to 22 processing elevators and 14 transfer elevators on the East Coast.
The number of primary elevators has declined significantly from a peak of 5,758 in 1934, while the average size and turnover have increased dramatically. There is an increasing movement towards elevator consolidation and inland terminals. New elevators have enhanced handling, cleaning and storage capabilities with the ability to handle unit trains and other volume arrangements. Some are even capable of cleaning grain to export standards.
Most of the Canadian primary elevators are owned by eight grain companies, which are either co-operatives or private companies. For all agricultural commodities, except wheat and barley destined for export or domestic human consumption, they are free to buy and sell in the marketplace. In the case of CWB grains, primary elevators act as handling agents for the Board, and do not assume ownership of the grain.
Due to the large distances involved, wheat is primarily transported to port via two trans-continental railways; Canadian Pacific (CP Rail), a shareholder-owned company and a newly privatized Canadian National Railway (ON Rail). CP rail lines generally dominate the southern Prairies and ON dominates the northern portion of the Prairies. Small quantities of grain are also moved by three regional railways, the British Columbia Railway, Central Western Railway and Southern Rails Cooperative.
In the Prairie region, there are approximately 25,000 kilometers (km) of rail line, and rail movement is the dominant mode of transport from the primary elevator to export position. Movement by truck past the primary elevator system accounts for a minimal share, and only in close proximity to domestic users. The average distance from the primary elevator to the West Coast or Thunder Bay, Ontario is approximately 1,500 km and cycle times for railcars averages about 18 days to all ports. ON Rail operates approximately 55% of the total rail line and CP Rail the bulk of the remainder.
Rail rates are set by the railroad companies based on distance, per tonne or by block allocation, and are subject to federal regulation by the National Transportation Agency (NTA). The NTA sets the maximum rail rates for prairie grain destined to Thunder Bay or for export to the West Coast and Churchill. On August 1, 1995, direct subsidies for prairie grain movement to export position paid to the railways were eliminated (Western Grain Transportation Act). After coal, grain is the most important commodity transported by Canadian railways and represents about 2% of the total rail transportation. In addition, 40% of the rail lines are there solely because of grain movement.
Total rail cars designated for grain service range between 24,000 to 29,000, depending on demand. Of the total, 12,945 are owned by the federal government and are currently being sold within the grain industry. Other cars are owned as follows: 2,000 by the CWB, 1,000 by the Alberta Government, 1,000 by the Saskatchewan Government, and 2,000 leased by the federal government and administered by the CWB. The remainder is supplied by the rail companies.
The bulk of the rail cars carrying grain are hopper cars, which are loaded and emptied by gravity. There are also about 500 box cars in the fleet serving light density branch lines. The Churchill elevator makes use of the box cars, due to permafrost problems in the rail subgrade, as well as specialized aluminum hopper cars. Most hopper cars are made of steel with a capacity of about 90 tonnes, but some 2,500 hopper cars are made of aluminium with a capacity of 70 tonnes. In comparison, box cars have a capacity of about 55 tonnes and are more costly to load and unload.
Wheat is shipped to export position where it is received by one of 18 terminal elevators located as follows: on the West Coast-five in Vancouver and one in Prince Rupert, on the East Coast-nine in Thunder Bay, up North-one in Churchill, and two inland terminals in Saskatoon and Moose Jaw.
Total storage capacity is about 3.0 Mt: 0.93 Mt in Vancouver, 0.21 Mt in Prince Rupert, 0.14 Mt in Churchill, and 1.72 Mt in Thunder Bay. A new direct hit terminal facility is being constructed on the West Coast at Roberts Bank, which could increase the West Coast handling capability from about 20 Mt to 25 Mt.
One of the most distinct features of Canadian terminal elevators is their cleaning capacity. Terminal elevators have the ability to clean large quantities of grain to meet Canada's Certificate Final". This is a guarantee that grain meets the Canadian Grain Commission (CGC) grade standard or the buyer's specifications.
On the West coast, grain arrives by rail car, is unloaded, cleaned, dried if needed, graded and stored. Rail cars are unloaded at an average of 1,200-1,400 tonnes per hour. The Pacific high throughput facilities turnover 20-25 times per year.
Wheat exported through the East Coast is cleaned to export standards at the terminal elevators in Thunder Bay. It is then transported on laker freight carriers (lakers) through the Great Lakes and St. Lawrence Seaway. Grain is unloaded into transfer elevators on the St. Lawrence River where it is then reloaded onto ocean going vessels. There are 14 transfer elevators containing 2.4 Mt of storage capacity located in Central and Eastern Canada, seven in Ontario, six in Quebec, and one in the Maritime. These elevators also handle U.S. grains. Only the Quebec transfer elevator can clean grain to export standard. During the close of the St. Lawrence Seaway from January to March, rail movement occurs either from Thunder Bay or direct from the Prairies to the Quebec City transfer elevator.
Laker vessels are limited to about 25,000-29,000 tonnes of grain due to the size of the St. Lawrence Seaway and are dominated by so-called gearless bulkers or bulk carriers and to a lesser extent self-unloaders. Bulker vessels have been designed to achieve the maximum capacity of loading grain on the Seaway. They are a captive fleet, relying almost completely on grain as a main haul and iron ore as a backhaul. In 1994, there were 43 bulk carriers, and 28 self-unloaders registered to operate on the Great Lakes/St. Lawrence Seaway system.
There are 20 locks between Thunder Bay/Duluth and the St. Lawrence River elevating vessels about 595 feet above sea level. There are five locks connecting Lake Superior to lake Huron, eight along the Welland Canal, and seven on Lake Ontario. Of the total locks, thirteen are Canadian and six are American.
The distance from Thunder Bay to the Montreal transfer elevators on the St. Lawrence River is about 3700 km. The Atlantic ports have an average turnover of roughly five times per year. This is much lower than on the Pacific Coast because of lower volumes and a limited operating season due to ice.
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Revised: January 09, 2005