Low harvest year promises sold-out silos in Canada's grain belt
Canada's massive grain harvest is ``pretty near all off'' the fields -- and, just as important, it will be completely sold by the end of the crop year next summer. ``We are the only ones who are sold out,'' says R. L. Kristjanson, assistant chief commissioner of the Canadian Wheat Board. He expects grain stocks next July to be even below this year, the lowest since 1952.
That's far different from the United States, where expensive grain stockpiles have been building up.
One reason for Canada's low stocks is poor crops. This year, says Dr. Kristjanson, wheat, oats, barley, rye, flax, and rapeseed will be about 37 million metric tons. A normal crop would be about 43 million tons.
``This is the worst harvest weather I can recall since coming here 25 years ago,'' the commissioner says. In addition to the wet harvest season, there was drought in the southern Canadian prairies and excess rainfall in the north during the growing season. So the quality of the crop is relatively poor. ``We are going to have a lot of feed wheat and the lowest grade of milling wheat.''
Last year's crop was poor, too. But Kristjanson believes other factors are also responsible for Canada's success in selling grain.
One of these is the Wheat Board itself. It has a monopoly in buying and selling all western wheat, barley, and oats for export and for human consumption in Canada. The board and the private grain trade buy and sell wheat, oats, and barley for animal feed in Canada. Other grains and oilseeds are in the private trade.
Because of its monopoly, the Wheat Board is in the same league as the big trading companies in the US, led by Cargill Inc. and Continental Grain Company. These control a far larger crop.
The main buyers of grain in the world are huge, too. Government agencies in the Soviet Union, China, Brazil, and Japan import all grain. ``All the major buyers of wheat in the world would fit into my office here,'' says Kristjanson, indicating his spacious quarters in the Wheat Board Building on Winnipeg's Main Street.
Kristjanson defends the restricted number of grain traders. If many private companies were competing to sell grain to the handful of buyers, he says, they would be more likely to try to get grain from farmers cheaper.
Another reason for Canada's export success, Kristjanson notes, is international politics. Canada did not impose a grain embargo on the Soviet Union, as President Carter did when the Soviets invaded Afghanistan. And Canada recognized communist China many years before the United States did.
``The United States is a superpower,'' Kristjanson says. ``It has larger foreign-policy obligations.''
Although the Soviet Union has not completely fulfilled its multiyear contract for grain purchases from the US, it has exceeded purchases under a five-year deal with the Wheat Board. ``We have absolutely no problem in doing business with them,'' Kristjanson says.
Many Canadian farmers face financial trouble because of low grain prices and poor crops, but they are not faring as poorly as those in the US. One reason is that land prices never soared in Canada as in the US. Thus most Canadian farmers are not as deeply in debt.
Canada's subsidies for the farmers are about one-third of those in the US. Moreover, the Canadian subsidies go mostly to reducing transportation costs, so they are less likely to push up farmland prices, as more direct subsidies do in the US.
Canada exports a larger share of its crop than the US. It consumes about 150 million bushels of grain and exports 800 million to 1 billion bushels a year. US consumption runs 600 to 650 million bushels, leaving some 1.2 billion bushels for export.
The US has the Mississippi to help transport grain from the Midwest. Canada must ship its crop by rail across the Rockies to ports in British Columbia or, for a short period when Hudson Bay is ice free, to Churchill. Grain also goes to Thunder Bay, on Lake Superior, and then through the St. Lawrence Seaway. A small proportion of the crop goes by rail to Atlantic ports.
The seaway was out of operation for some weeks during this crucial harvest shipping period after the wall of a lock collapsed. It was due to go back into service yesterday. ``Fortunately,'' Dr. Kristjanson says, ``shipments were a bit ahead of schedule. So we will be able to wiggle through.''