Grain Handling and Marketing | The Canadian Encyclopedia


Grain Handling and Marketing

There are approximately 120 000 grain-producing farms in Canada. Yearly production varies substantially, depending on climatic conditions. Grain production has doubled since the 1950s, with wheat making up a large percentage of production. In 1997-98, total Canadian wheat exports were 15.
Prince Rupert, Aerial
Prince Rupert, BC harbour, aerial view (courtesy Shutter Shack).

There are approximately 120 000 grain-producing farms in Canada. Yearly production varies substantially, depending on climatic conditions. Grain production has doubled since the 1950s, with wheat making up a large percentage of production. In 1997-98, total Canadian wheat exports were 15.9 million t. Harvested in the late summer and early fall, grain is trucked from the combine to storage bins located on the farm. Storage time on the farm varies, depending upon delivery opportunities at primary grain elevators as determined by the Canadian Wheat Board. Some grain does not enter the commercial grain-handling system, but is retained as seed or consumed locally as livestock feed.

The CWB is the agricultural marketing board responsible for the marketing of western Canadian grains (wheat, oats, barley) intended for human consumption or export. Feed grains may be sold to the CWB at the farmer's discretion; however, sale of oilseeds and most feed and industrial grains is privately controlled. In addition to marketing as much grain as possible at the best possible prices, the CWB aims to provide price stability and ensure that each producer gets a fair market share each crop year. The CWB periodically issues delivery quotas, which tell farmers that the board is willing to accept a certain volume of a specified grain from each farmer at primary elevators in a defined geographic region. Quotas, based on the board's sales commitments and stocks on hand in the elevator system, are issued so as to maintain a relatively even flow of grain from farms through the primary elevator system. Before making export commitments, the board is required to ensure that the domestic market is adequately supplied for both feed and industrial uses. The board may sell directly to foreign government buying agencies (eg, the USSR, the People's Republic of China), to commercial interests in foreign countries (eg, Peru, the Philippines) or to private trading companies, which then resell to foreign buyers.

As delivery opportunities arise, the grain is moved off the farm by the farmer's own truck or that of a hired commercial trucker. Farm trucks vary in carrying capacity from 3 to 20 t, the average being about 8 t. Grain may be trucked up to 125 km, but the average distance is about 20 km. Most grain is delivered to primary or country elevators but some is taken directly to feed mills or processing plants.

The primary elevator accumulates small lots of grain (sorted by species and grade) from individual farmers until there is enough to fill railcars. The primary elevator system consists of about 1900 elevators located at 1100 railway shipping points, with a total storage capacity of 7.7 million t. During the past decade the number of primary elevators has decreased by almost 55%; the decrease in storage capacity has been nearly 20%. Primary elevators, each employing a manager, are operated by grain companies, either farmer-owned co-operatives or privately owned companies. Six companies now own over 95% of all primary elevators. The largest grain-handling company is the Saskatchewan Wheat Pool, a farmer-owned co-operative with approximately one-third of the primary elevators on the prairies.

When grain is delivered to the elevator, the manager weighs and samples it, assigns a grade and issues a negotiable cash ticket to the farmer. If the wheat, oats or barley is destined for export, it becomes the property of the CWB and the primary elevator company acts as an agent of the board. In the case of flaxseed and canola the primary elevator company assumes ownership; feed grains destined for domestic use may be sold either to the CWB or to the primary elevator company. Grain companies recover their elevator costs from the farmer through handling and storage charges. Maximum allowable charges are specified by the Canadian Grain Commission, and grain companies establish their charges within these limits.

The Canadian Grain Commission, answerable to the minister of agriculture under the Canada Grain Act, is responsible for establishing and maintaining standards of quality for Canadian grain and regulating grain handling in Canada to ensure a dependable commodity for domestic and export markets. Specific responsibilities include establishing grain grades and standards; official inspection of grain for export; licensing all types of grain elevators; supervision of treatment or fumigation of grain; setting of maximum fees chargeable by elevators for services (eg, receiving, cleaning, drying, shipping); inspection of elevators for compliance with operating procedures as detailed by the Canada Grain Act; and operation of the Grain Research Laboratory, which conducts research on the quality of cereal grains and oilseeds.

Grain is moved from the primary elevator system to port and other terminals by rail, using approximately 11,000 boxcars and 14,700 hopper cars. The capacity of a standard boxcar is about 54 t; of an average hopper car about 91 t. During peak movements, about 500 trains per week place empty cars at primary elevator points and take loaded cars to their destinations. The primary elevators are located at some 1100 points along approximately 30,000 km of rail lines, about 85% of which are branch lines with various carrying capacities. The average distance from a primary elevator to a port-terminal elevator is 1400 km; the average round-trip time is slightly under 3 weeks.

Grain moves from primary elevators to port terminals on Canada's West Coast (Vancouver and Prince Rupert), on the Great Lakes (Thunder Bay) and on the shores of Hudson Bay (CHURCHILL). The port-terminal elevators receive, store, process and ship grain. Processing includes cleaning of grain to export standards, drying, destoning and fumigating when necessary.

On the West Coast the total storage capacity is 1,212,000 t, most of which is at 5 terminals in Vancouver. West Coast terminals operate on a year-round basis. The terminal at Churchill, with a storage capacity of 140,000 t, has a very limited shipping season (less than 3 months per year).

Thunder Bay has 12 terminal elevators with a combined storage capacity of approximately 2 million t; these terminals ship grain for approximately 8 months of the year. Grain loaded onto ships at Vancouver, Prince Rupert and Churchill moves directly to export destinations. In the case of Thunder Bay, only about 10% is loaded directly onto oceangoing ships; the remainder is carried by lake vessels to transfer elevators situated along the waterway between Thunder Bay and the seaboard. There are 27 transfer elevators with a capacity of 3.4 million t.

Grain received at transfer elevators is either loaded onto oceangoing ships or is stored for future export shipment or for domestic distribution in eastern Canada. In addition to terminal and transfer elevators, there are 28 process elevators with a capacity of 468,000 t, located mostly in the prairies. Their function is to receive and store grain for direct manufacture or processing into other products.

The Winnipeg Commodity Exchange is a voluntary association of representatives of practically all firms and agencies involved in marketing western Canadian grain. Members are from private and co-operative elevator companies, shippers, millers, the CWB, banks, railways and foreign grain companies. The exchange provides facilities for trading in both cash and future contracts and establishes the conditions under which grain trading shall be conducted.

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