February 28, 2020

 

Canadian swine and grain supply chains affected by rail blockades

 

Swine and grain producers in Canada are losing US$63 million weekly as rail blockades have pushed storage capacity to the limit and squeezed feed and propone flow to farms, reported Canada National Post.

 

Mark Hemmes, Quorum Corp president said random blockades constructed by activists for environmental and Indigenous rights to protest against the construction of a $6.6 billion Coastal GasLink project by TC Energy Corp has resulted in a 1.2 million tonnes drop in grain shipments this year.

 

Quorum Corp is an Alberta-based company that monitors grain movements in Canada for the federal government.

 

In February 2020, grain deliveries dropped 560,000 tonnes as Canada's rail system gradually works through backlogs first caused by a Canadian National Railway strike back in November last year.

 

The Western Grain Elevator Association estimates the $63 million weekly loses are made up of penalties to existing contracts, demurrage costs, and capacity losses.

 

Mary Robinson, Canadian Federation of Agriculture president said ships waiting at ports in Vancouver and Prince Rupert for grain shipments charge daily fees, further affecting the industry.

 

She said the costs are borne by farmers that need to prepare for the upcoming crop year.

 

Hemmes said grain elevators located in western Canada have hit 90% capacity, and farmers aren't paid when the grains cannot be delivered.

 

Gary Stordy, Canadian Pork Councildirector of government and corporate affairs said similar to grain farmers, pork producers in Canada also rely on rail containers to transport meat to storage facilities and ports located in Halifax and Vancouver.

 

He said normally, 1,000 refrigerated containers are filled weekly, but the blockage means only trucks can be used to transport containers, leaving storage facilities overrun. Costs to transport meat via trucks is three times more.

 

Olymel LP, one of Canada's biggest exporters for pork is currently assessing the effects of the blockade.

 

Richard Vigneault, Olymel spokesperson said there will be losses as the transportation costs have increased and products are forced to be frozen.

 

These challenges for the Canadian meat and grain industry have come as pork producers expected a surge in exports due to increased demand from China. China lifted a four-month suspension on meat from Canada in November 2019.

 

-      Canada National Post