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other tasks that have to be finished in a
very short timeframe.
“Once the grain is safely in storage,
then we start the process of getting it
sold,” explained Leroux. “Just like any-
thing else, we have to shop it around to
the different buyers. However we sell it,
we have to get it to a so-called delivery
point, usually an elevator in our case.”
The elevators to which Leroux refers
are no longer those quaint and distinctive
structures that once dotted the Prairie
landscape. Today, elevators are better
described as inland terminals. These
terminals only collect grain of the correct
type and quality to match the sales the
company owning the elevator has made
and is shipping at that time. These are not
storage facilities. Instead, they are designed
for maximum throughput—to receive,
grade and elevate the grain in the facility
with the sole intent of getting it out into a
110-car grain train in less than one week.
“We have three semi-trucks that we
own and operate on our farm,” said Ler-
oux. “Two we use on the road for hauling
grain, the third is an older unit that we
use primarily around the farm. These
units are busy year round doing our own
hauling. In today’s farming landscape,
with elevators pretty far apart, a semi is
an essential piece of equipment.”
What’s a typical semi-truck price tag
these days? If you were to purchase a new
Peterbilt or Kenworth, you’d be looking
at $200,000 or more. Used vehicles can
be significantly cheaper, but this is still
a large cost of doing business. “It’s a big
investment, yes,” said Leroux. “However,
when you are freighting 6,000 tonnes of
grain at $12 per tonne, it doesn’t take long
to figure out that it’s actually cheaper to
do it ourselves with our own equipment.”
Jonathon Driedger is an agricultural
professional who works directly with
farmers. As a senior market analyst
with FarmLink Marketing Solutions, he
provides analysis and strategy to farmers
marketing, or selling, their crops. “The
raw commodity—be it canola for canola
oil manufacturing, or wheat for milling
and baking, or malting barley that is malt-
ed and sold on to the brewing industry—
has to get from the farm to the end user in
what really is an expensive and complex
process,” said Driedger.
Not only do farmers have to be con-
cerned with managing their farming
operation, they also have to have one eye
on what is happening with Australia’s
wheat crop or Europe’s barley crop, or
down in the U.S. with corn, or lower yet
in South America with soybeans. “The
market is the market,” said Driedger. “We
have little influence as individuals on how
that fluctuates, yet farmers have to sell all,
or at least a very good chunk, of their crop
every year in an orderly way to pay the
bills that are going to come due.”
Driedger explained that, very roughly,
canola might average a yield of 40 bushels
per acre, which would be an average to
good crop, depending on where you farm
and what the weather threw at you. “The
cost to grow that crop—equipment, ferti-
lizer, seed, fuel and so on—is about $300
per acre. So that farmer who harvests 40
bushels, if he got $10 per bushel, would
have to market about three-quarters of his
crop just to pay the bills to grow the crop.”
Driedger said that volatility in crop
markets means farmers’ financials in any
given year are a moving target. “Margins
fluctuate enormously for farmers,” he said.
“They can range from excellent to break-
even or worse, and the farmer has little
to no ability to influence it. With even a
modest swing in yield or price, the outlook
can go from positive to grim very quickly.”
And no matter how much the market
is compensating the farmer for his crop,
he still has to bear the cost of getting his
grain to a marketable position.
The cost of rail transportation is also
borne by farmers. Not directly, but indi-
rectly in the price they receive for their
grain. For example, while wheat might be
worth $220 per tonne in position at the
Port of Vancouver, the price the farmer
receives at the elevator is $220 minus the
cost of the rail freight to get it to Vancou-
ver. That can range from $35 per tonne
to perhaps $45 per tonne, depending on
where the farm is in relation to the port.
Theoretically, if Leroux were to ship
three-quarters of his 6,000 tonnes of
production to port, the cost of his rail
freight would be more than $155,000. The
numbers are staggering.
Add it all together and it becomes a
large number to go from seed to bin to
market every year. And reports of bumper
crops often represent an opportunity for
farmers to upgrade or replace machinery,
grow the farm or pay off land or other
debt—it’s rarely pure profit.
Farming is not for the faint of heart.
By the same token, Driedger said farm-
ers don’t go in “eyes closed, naked, every
year.” They can buy into crop insurance
programs that will help in the case of crop
failure or events like hailstorms, which
can damage the crop and cause yield and
quality losses. Following a solid marketing
plan and hedging with futures and options
are additional ways farmers can navigate
market volatility, according to Driedger.
The Food Issue
2016
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