Stoppage would halt US spring wheat shipments to west coast
21 August 2024
4 minute learn
A looming stoppage of freight railway operations throughout Canada would disrupt North America’s agricultural provide chain, snarling shipments of all the things from wheat to fertiliser and meat, reported Reuters.
Except last-minute labour agreements are reached, each Canadian Nationwide Railway and Canadian Pacific Kansas Metropolis, an efficient duopoly, will shut practically all freight rail providers in Canada for the primary time at midnight on Thursday.
Canada is the world’s prime exporter of canola, utilized in meals and biofuel, and of potash fertilizer, in addition to the No. 3 wheat exporter. Whereas a lockout or strike would straight contain 10,000 Canadian staff of the railroads, not these within the US, it will have knock-on results on the U.S. financial system because of the nations’ criss-crossing rail strains.
Almost three dozen North American agriculture teams, in a joint letter to the US and Canadian governments on Monday, urged motion to keep away from a stoppage.
“The influence of a strike can be notably extreme on bulk commodity exporters in each Canada and the USA as trucking just isn’t a viable possibility for a lot of agricultural shippers,” the letter mentioned, citing giant volumes and huge distances.
The rail operators have mentioned lockouts will start on Thursday. The Teamsters union, which is demanding higher wages, advantages, and crew scheduling, has issued a Thursday strike discover to CPKC.
The stoppage will halt shipments of US spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export, mentioned Max Fisher, chief economist on the Nationwide Grain and Feed Affiliation.
CPKC ships grain from the Dakotas and Minnesota to west-coast export terminals by way of Canada, in line with the US authorities.
US farmers nonetheless have practically two-thirds of the spring-wheat crop to reap, the US Division of Agriculture mentioned on Monday. Soy, corn and canola harvests are nonetheless a couple of weeks away in North America.
Canada’s prairie elevator community would run out of storage capability inside 10 days of a stoppage, mentioned Mark Hemmes, head of Quorum Corp, which displays Canadian grain dealing with and transportation.
Shippers are additionally involved about US corn merchandise heading to Canada. In 2023, Canada was the highest vacation spot for US ethanol exports, and nearly three-quarters traveled by rail, in line with USDA.
“We simply cannot have the railroads not working,” Fisher mentioned.
The US exported $28.2 billion of agricultural merchandise final yr to Canada, its third-largest vacation spot for agricultural exports behind China and Mexico, USDA mentioned.
The US imported $40.1 billion of Canadian agricultural merchandise final yr, making Canada the second-largest origin of US agricultural imports behind Mexico, the company mentioned.
About 85% of the 13 million metric tons of US potash imports final yr got here from Canada, practically all of which crossed by rail, in line with USDA.
‘No good time’
US corn farmers apply fertilisers in fall and spring, however potash imports from Canada are constant all year long, mentioned Krista Swanson, chief economist for the Nationwide Corn Growers Affiliation.
“Given fixed commerce flows and the significance of the commerce relationship between the 2 nations, there is no such thing as a good time for this to happen,” Swanson mentioned.
The railways transfer a mean of 69,000 tons of fertilizer product per day, equal to 4 to 5 trains, mentioned Fertilizer Canada spokesperson Kayla FitzPatrick. Disruptions will price the business C$55 million ($40.34 million) to C$63 million per day in misplaced income, not together with logistical and operational prices, she mentioned.
Canadian meat producers warned {that a} rail stoppage would end in thousands and thousands of {dollars} in losses and waste.
The Canadian Meat Council and Canadian Pork Council mentioned some processing vegetation count on to lose as much as C$3 million per week, and famous these services can be compelled to close down inside seven to 10 days of a rail stoppage. As soon as the railways resume service, it will take two to 5 weeks for vegetation to return to regular capability.
There’s concern that the motion of Ontario soybeans to export markets, primarily Japan, will utterly cease simply earlier than the harvest, mentioned Crosby Devitt, CEO of Grain Farmers of Ontario.
With crop-shipment delays lasting past per week, corporations should pay contract penalties and demurrage for ships ready for grain to reach, piling important price onto the business, mentioned Wade Sobkowich, govt director of the Western Grain Elevator Affiliation.
“We’ll be taking part in catch-up for the remainder of the harvest yr, until subsequent July,” he mentioned.
($1 = 1.3634 Canadian {dollars})
