Anti-pipeline blockades are creating a “perfect storm” for Canadian farmers still recovering from a winter of rail disruptions that snarled ports and stalled the movement of goods to market.
Canadian National Railway Co. on Tuesday said it would be forced to shut down “significant” portions of its network due to demonstrations in solidarity with the five hereditary chiefs opposing the Coastal GasLink project that crosses the traditional territory of the Wet’suwet’en First Nation in British Columbia.
The stoppages are threatening shipments of many things, including food, construction materials, lumber, aluminum, coal and propane, the rail shipper said.
They are also adding to the burden facing farmers following an eight-day strike by CN workers in November.
“That really put us behind and when you get behind it’s very hard to catch up,” said Tom Steve, Alberta Wheat Commission’s general manager. “There’s no excess capacity in the system so it takes weeks or months to recover. It’s really starting to look like a perfect storm for us.”
Efforts to make up lost shipping time due to the CN strike are also being slowed by a government order to lower speed limits for trains carrying dangerous goods, which was issued after a Canadian Pacific Railway Ltd. freight train carrying crude oil derailed in rural Saskatchewan last week.
A 10-day cold spell in January shortened the length of trains that can move safely on the rails, adding further delays, Steve said.
This week, a backlog of 39 grain ships were still waiting to be loaded in the Port of Vancouver as farmers struggled to move their products out of the Prairies. That backlog, which is 95 per cent higher than last year, is expected to grow if the blockades continue.
A further eight ships were waiting at Prince Rupert, B.C.’s port, which is no longer receiving trains due to the protests.
“A normal lineup of ships might be a third of those levels and we were already behind, so this is significant,” Steve said.
In Ontario, home to more than half of Canada’s annual soybean harvest of six million tonnes, the rail protests have come at a particularly inopportune time. Soybeans are harvested in October and November and then typically shipped to market in January and February.
Farmers rely entirely on rail to move beans west to Vancouver, where they are loaded on ships bound for Asia, Canada’s largest soybean market. Trains also carry containers of the soybeans east to the Port of Halifax, where they are shipped to Europe, Canada’s second biggest market.
“The exporters here have sales commitments to meet and when they don’t meet them, it has a negative impact on their reputations,” said Ron Davidson, executive director at Soy Canada, an industry association. “Reputation is important and it’s even more important when we’ve been shut out of our main market, China.”
Soybeans have been by far the most affected by all this trouble with China and now this,
Sales of Canadian soybeans to China have slowed to a trickle since December 2018, when Huawei Technologies Co. Ltd. executive Meng Wanzhou was arrested in Vancouver on a United States extradition warrant. China has detained two Canadian citizens in retaliation and halted all purchases of Canadian canola. Purchases of other commodities, including soybeans, have also all but stopped.
Canada shipped just 55,000 tonnes of the oilseed to China in 2019 compared to two million tonnes in an average year, Davidson said.
“Soybeans have been by far the most affected by all this trouble with China and now this,” he said, referring to the blockades.
The CN strike last fall also halted the flow of propane out of the Western provinces, creating challenges for farmers who rely on the fuel to heat their barns and dry wet crops. The crop-drying season is now over and a milder winter has eased demand for heating fuel, said Nathalie St-Pierre, chief executive of the Canadian Propane Association.
Still, propane supplies are dwindling in certain areas east of Sarnia, Ont., she said, and the government order to lower speed limits for trains carrying the fuel could create further impacts.
“We were just about to evaluate that when the blockades began,” St-Pierre said. “What we know is without trains, there’s no certainty at all where the next shipments are coming from.”
Financial Post
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