Freight Focus: Grain Hauling
by Jim Park
Truckers and farmers have a great deal in common. Both are vital to our way of life. Both are currently experiencing very poor returns on their investments. And both lack the economic clout to force the adjustments required to restore a modest level of prosperity to their businesses. In short, trucking and farming have both seen better days.
When it comes to western agricultural production, truckers and farmers are in it together, cheek to jowl. The relationships are tightly intertwined and inextricably linked. You simply can't have one without the other. But the whole system of transporting grain around the country is a bit more complicated than a farmer simply picking up the phone and booking a load with a carrier.
The grain transport system in Canada is complex to say the least. It's a system fraught with what seem to be conflicting interests, apparently working toward a common goal and all reportedly designed to yield the best return for everyone involved. This ideal frequently falls laughably short on most counts.
In the past few years grain prices have dropped to about as low as they've ever been. And at the same time, the farmers have had to absorb the massive cost increases associated with the elimination of the $600 million Crow Rate freight subsidy once paid to the railroads to cover the cost of hauling prairie grain to ocean shipping terminals. At the same time the Crow Rate freight subsidy was eliminated in July, 1995, the government-imposed maximum fees for elevation and handling at country elevators were also removed, leaving the elevator companies free to charge what they wanted.
Not only does the farmer now have to consider the bald cost of transportation; he has to speculate on what the market price of the product might be at the time he intends to sell. He's got firm up-front costs and he's selling into a soft market.
So what role does trucking play in all this?
At one time, just about every town on the prairie map had an elevator, but the Pool companies saw the strategic advantage of centralizing the distribution network and began closing elevators. This gave the railways carte blanche to abandon the short-haul rail lines that once serviced the smaller elevators. Trucks, it was said, would pick up the slack while providing added flexibility in moving grain from the farm to the larger, centrally located elevators. Few truckers, though, saw the rates going the way they did.
Here's the rub: it's seldom the individual farmer who pays the freight. It's usually the Pool, or the company that runs the elevator who sets the freight rate, and the cost is deducted from the price paid to the farmer upon delivery. And when you're dealing with a monopoly, it's hard to exert any upward pressure on the rates. Like freight, if the bid's too high, you just drop off the call list. In other words, prairie grain truckers are hurting almost as badly as the farmers.
But for all the hardship, the revamping of the distribution system has created some opportunity for truckers that previously didn't exist.
"There was a time when every farmer had a truck of his own," says James Beatty, a driver for a company called Custom Trucking Service in Saskatoon. "But those guys drove the rates down so far that even they can't afford to haul anymore."
Beatty is speaking to the practice of using the farm truck to haul for hire in order to keep up the payments on the truck in the off-season. A set of Super-B grain trailers and a reasonable tractor can easily tie up the better part of $200,000. That's a lot of money to leave sitting around for nine months out of a year.
But more and more farmers have begun to realize that it's less costly in the long run to have a for-hire grain hauler do the work. As a result, a number of small operations have started up, calling themselves custom grain haulers - a Saskatchewan-specific term meaning they work to the farmer's request. Much of the work Beatty does involves moving grain from elevator to elevator, or from the field to an elevator.
Many of the loads that are 'custom-hauled' are loaded right out of the field as they're harvested. Beatty says loading in a field can take anywhere from 90 minutes to several hours. As they load, the driver who has the advantage of an air suspension simply watches the trailer suspension air-pressure gauge to ensure he complies with the weight laws.
"It's hard to judge by watching the level of the load in the hopper," he says. "If there's a lot of moisture in the seed, it'll be heavier than a dry seed."
The changes that have occurred in grain transport recently have affected farmers in Saskatchewan differently than the farmers in Manitoba.
"They've lost a lot more short lines than we have so far," say James Hood, a company driver with Lake Country Transport of Arborg, Man. "They've got to truck their produce a lot farther than the farmers here in Manitoba have to."
Hurry Up and Wait
"Some of these processing plants run on banker's hours." says Hood. "Dominion Malting in Winnipeg closes up at 2:00 in the afternoon. If I miss that, I'm sitting for the night." Depending on the season, Hood says he's seen line-ups more than 2.5 miles long at a Canola plant across the border in Velva, ND.
But if you can put up with the waiting, grain hauling can be a reasonably good way to earn a living. Elmer Campbell, who works for Mark Brandt Trucking, says on an average day, he turns 500 to 600 miles and never leaves Manitoba.
"Two trips from western Manitoba to Winnipeg is just about all I can do in a day," he says.
With the closing of the rail lines, Campbell and Hood agree that there'll be a lot more work for drivers in the future.
"We're starting to run west more often, hauling barley out to the feed lots in Lethbridge and Brooks, Alberta," says Hood. "That's something the railroads used to do. We're even starting to develop some interesting backhauls from the west."
Typically, trucks haul fertilizer back from Alberta, but Hood says he's begun to haul coal back as well, to farmers who have coal furnaces. They say coal saves about $1000 a month over oil.
Still, with the closing of the rail lines, Campbell said still more opportunities have arisen in moving grain from one elevator to another. "The elevators get incentives to load more cars out of the larger elevators, so they'll pay us to move the grain around to where they need it. I guess the incentives more than cover the cost of the freight," Campbell says.
According to Glen Luxdal, a partner in Lakeside Processing in Dafoe, Sask, there were more than 1500 working elevators in Saskatchewan five years ago. He says there are less than 100 still in service today. "And," he adds, "they want to cut that number down to fewer than 100 in the entire country."
Because of the closure of so many elevators, private interests like his company have been able to acquire some of them. Lakeside uses its facility to clean and package such produces as lentils, flax and mustard seed into bags for furtherance to inland points for reprocessing.
There's more than enough demand for grain trucking services in the prairie provinces. Now if they could just do something about the rates...