Port of Churchill and old CWB both missed
People flying into Churchill to watch polar bears find themselves in a ghost town.
Churchill was considered a good base to support Canada’s claim to sovereignty in the North. A rail line was built to bring in supplies. A city, after all, needs economic activity to be viable.
A grain terminal was built at Churchill because ocean shipment from it to our markets was cheaper. Grain movement on the rail link would help pay for the line’s operation, an added benefit.
Our old Canadian Wheat Board — let’s call it the Old CWB — was a cog in keeping the Port of Churchill alive and well.
Remember when the Old CWB was dismantled?
With wheat shipped under the Old CWB, farmers received the balance after freight costs and handling charges were subtracted from the export price.
Comparing that to what we’re getting at the elevator under the new system, we find farmers are shortchanged about $2 billion a year.
We easily could think those billions were excess profits taken by the grain companies, which camouflaged that by calling it “basis.”
This is a buyer’s cushion covering potential unexpected costs, mainly storage time, interest expense, exchange rate changes and risk of price drops.
This was already factored into the price to the farmer under the Old CWB, so the billions seem excessive.
Moreover, the Old CWB was more efficient than current shippers because its staff knew what grain would be loading in the future, letting it contact elevators that had that type of grain so it could reach port in time to be cleaned and go into the ship as soon as it arrived. That cut the amount of demurrage charges payable to ship owners kept waiting.
Current calculations show farmers will lose “only” about a billion dollars this year.
Think of it this way: This year, each “Super B” truck of wheat going to an elevator would be worth an extra $1,500 if we still had the Old CWB.
There are farmers who did not want to think they were shafted when people told them they would be better off financially if the government got rid of the Old CWB.
Back to the Old CWB and the Port of Churchill: The Old CWB had to contend with a short shipping season and the effects of permafrost on the rail line. But elevators in the northern part of the Prairies could ship to Churchill cheaper than to other ports.
The Old CWB set up a Churchill “catchment area” and farmers were paid the difference on grain going to Churchill. And to take advantage of Churchill’s short shipping season, grain had to be stored on farms. Farmers were paid a storage allowance on that grain.
The expected loss of both premiums is probably one reason why farmers set up the Hudson Bay Route Association, correctly assuming the loss of the Old CWB would mean the closure of the Port of Churchill. And close it did. Companies buying grain do not use Churchill. Why? They have their own portside facilities in other cities.
Politicians like to leave a legacy. The Port of Churchill becoming a ghost town is one of Stephen Harper’s legacies. And we should not forget that former federal agriculture minister Gerry Ritz had his hand in that as well.