Railway delays hobble feed mill industry
Since early December, John Krahn has been watching in frustration as rail cars full of grain sit idle at terminals in the Prairies for weeks. The Abbotsford feed mill manager is overseeing a dwindling supply of the grains he needs to produce feed for local poultry and hog farmers.
"We're just going day by day. For instance today (Monday), we're already out of one product, so we're shut down until tomorrow morning when our (rail) car arrives," said Krahn, who works for Paragon Feeds Corp.
Feed mills in the Fraser Valley are facing grain shortages as rail companies experience unusual delays shipping grain west.
Rossdown Feed Mill in Abbotsford needs up to nine rail cars of various grains – corn, wheat, soya, barley, canola – per week. It usually takes the cars 7-10 days to arrive from the Prairies and the U.S., but is now taking as much as 30.
"We can't run our customers out of feed, because it puts birds' and cows' lives in danger if they're not eating, so it really comes down to rationing," said Rossdown mill manager Lance Pass, who has also had to shut the mill early on some days to deal with the shortages.
With their bins full, mills can run for about two weeks without getting any new product, according to Bob Dornan, the secretary manager of the Animal Nutrition Association of Canada, B.C. division. ANEC represents most feed mills in the Fraser Valley, including Ritchie Smith Feeds and Clearbrook Grain & Milling in Abbotsford, and Hi-Pro Feeds in Chilliwack.
"If the rail cars are two weeks later then they should be, they (feed mills) start to run out of grain," said Dornan, who also owns Chilliwack's Valley Protein feed mill. "We've had service issues in the past. We end up having glitches in the service – there's a strike, a weather issue. This particular year seems worse than normal."
To cope, mills have been sharing supplies.
"We've been working with other mills in sourcing product. We've been swapping product back and forth," said Krahn. "We're all in the same boat but we're just helping each other out just to get through this."
So far, local feed mills have managed to keep farmers supplied with feed. But they were nearly out of grain in mid-December, according to Dornan.
Mills and farmers rely heavily on grain shipments because only a small portion of the grain they need to feed Fraser Valley livestock is grown locally. With rail proving unreliable, mills are paying for the much more expensive option of trucking grain in. But they are not set up to handle a large amount of truck deliveries, and trucks are in short supply right now anyway.
"At the end of the day, the livestock and poultry industry in the Fraser Valley is very dependent on rail service. And if we don't get it, then the industry in this area is at risk," said Dornan.
Neither feed mills nor their suppliers know the reason for the delay or when it will be resolved.
Rail companies say the cause is a record bumper crop in the Prairies.
"CP has moved more grain in Canada over the last four months of the heavy harvest period in 2013 than ever before for the same period," said Canadian Pacific's media relations manager Kevin Hrysak by email.
However, some feed mills and grain suppliers say that rail companies are prioritizing shipping grain for export – sending cars straight to the ports and bypassing the Valley – and prioritizing shipping crude oil over grain.
"Some of the bigger grain companies have decided that there's more money in export grain and they really don't want to deal with the domestic trade anymore," said Dornan. "If they're not going to ship us the grain, it doesn't matter if the railway has a rail car or not, we still can't get grain."
Dornan has heard that there are over a dozen ships waiting in Vancouver to be loaded with grain, which is costly and puts pressure on rail companies to prioritize grain to the ports.
The Fraser Valley needs 125 to 150 rail cars of grain per week, according to Dornan, and he wants rail companies to reserve that many cars for local grain.
"We need a commitment from the railways and the grain companies that they see value in keeping the domestic feed industry alive," said Dornan. "If we can't get a service commitment from the railways, then we have to go to the next step, and that may involve getting the government involved."
Dornan says he has not received a direct reply from the rail companies and politicians he has contacted in the last month.
CP wouldn't comment on how much longer the delays would last.
"With this record crop, it is an ongoing, week-to-week process with CP officials working directly with shippers to provide the necessary resources as quickly and as efficiently as possible," replied Hrysak.