Elevator Companies Try to Impede Producer Cars

by Paul Beingessner

The Western Grain Elevators Association (WGEA), which represents major grain companies in western Canada, has come under significant criticism lately from farmers and farm groups. The organization has long taken stands that many farmers find offensive. For example, during the peak of its battle last year with the Canadian Wheat Board over tendering and car awards, the WGEA members threatened they would refuse to ship the Board grains they had in stock if the CWB implemented its car awards system. Farmers were not impressed that the grain companies would use grain that was not their own as a threat to the CWB. If carried through, that move would hurt Canada's reputation as a supplier and affect farmers' returns.

Producer cars are the latest battleground for the WGEA. Since the grain companies have abandoned the branch line network, farmers have taken to loading producer cars in ever-increasing numbers. Grain companies rightfully see this as a threat to the infrastructure they have spend millions on over the last two decades. Their response has been to demand that facilities loading producer cars be licensed as primary elevators. The Canadian Grain Commission has been quick to see the grain companies' point.

An analysis of the grain companies' arguments shows them to be superficial and self-serving. Those arguments were elucidated recently in an editorial in the Western Producer. One of the weakest of these is the claim that producer cars were originally designed "for a few rail cars to be used by one or two producers". Clearly, those expounding that opinion were not there when the right to load producer cars was enshrined in legislation at the beginning of the last century. A bit presumptuous, then, to claim to know the minds of those early legislators.

The second argument is that the legislation must protect the investment of the grain companies since this investment generates efficiencies and benefits all farmers.

The simple fact is that farmers who choose to use producer cars do not perceive a benefit in using the new concrete elevators. They correctly perceive that grain companies would like to charge them $11 or more per tonne for something they are quite able to do for themselves. For these farmers' purposes, the investment in concrete was not an investment in efficiency. It was a mistake. An overbuilt, outdated concept which the grain companies now want to force them to pay for by planting barriers in the way of producer cars.

The grain companies also say they only want a level playing field to compete for farmers' grain. They argue that by avoiding licensing, producer car loading facilities have an unfair advantage.

But farmers who load producer cars, whether through facilities built for that purpose or through their own grain augers are not competing with the grain companies. Some producer car advocates have used the rhetoric of competition to make a point, but it is misused. As a farmer, I do not have to compete with anyone for my grain. It is mine. I merely want to exercise my right to consign that grain directly to my marketing agent, the CWB. If I get a producer car loading facility or the hired man to load that rail car, it does not change the reality that I am simply choosing what I will do with my grain. I am not competing with anyone and the grain companies claim of a tilted playing field is nonsense. If the field is tilted, it is the weight of all that concrete that is sinking their end.

The Western Producer editorial also hinted that CGC regulations should be used to limit the number of producer cars that can be shipped. This does not fit at all the self-stated mandate of the CGC, which is quality assurance and producer protection. Producer cars are primarily used for CWB grains. The CWB has, and should have, the right to decide how it will procure farmers' grain to provide the greatest benefit to farmers. That must be its primary mandate. Producer cars provide greater benefits to farmers than does grain shipped through elevators. The CWB should use its power over allocation to ensure that farmers continue to reap these financial benefits.

This, quite frankly, is none of the business of the grain companies or the CGC. It is between farmers and the CWB, their marketing agent. The railways too, should be neutral in this discussion. They can work out their allocation mechanisms with the CWB, as they do now.

Still, it is possible to see the grain companies' side of it. After all, they built the wrong system. Their choice is to force farmers to pay for it or undergo massive restructuring. Farmers can't blame them for trying to take the easy way out. They can only do their best to stop them.

Copyright © 2002, Paul Beingessner

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