Back-to-back announcements that Red Deer County will soon have its first-ever super-sized grain terminals are giving farmers multiple reasons to celebrate.
“It’s more good news when it comes to choice for marketing — not that we ever want to see an overbuild situation — but I’m sure these folks have all done their homework,” said Alberta Barley chair Mike Ammeter.
“They will have an influence on the market, with more delivery options and, hopefully with it, more competition and better prices for farmers.”
On Feb. 16, the county approved a development permit for GrainsConnect Canada, a newcomer in the western Canadian grain scene, to build a 10-tower facility along Highway 2A at Niobe, just outside Innisfail. The facility, expected to cost $30 million to $40 million, will be able to process up to 35,000 tonnes of grain in 10 hours thanks to a 2,652-metre loop rail track that can hold up to 135 cars.
“We feel we already have a good presence with the local community and the growers in that community,” said Warren Stow, president of GrainsConnect Canada, whose company currently owns the two wooden grain elevators at Niobe operating under the Canada Malting Co. banner.
“There is a strong production base. We felt it was a strong location for us.”
News of GrainsConnect’s plan was followed 13 days later by Paterson Grain’s announcement that it’s building an even bigger and faster facility 15 kilometres to the south, just outside Bowden. This $25-million terminal will have storage capacity of more than 55,000 tonnes with a 3,955-metre track loop able to load up to 150 cars in seven hours, with plans to expand if the market warrants it.
“The last couple of years have been very productive years for agriculture in Canada — we want to be part of that growth and continue our business serving the farmers of Alberta,” said Shane Paterson, corporate development officer for Paterson Grain.
“This is part of our long-term growth plan. We’re looking to grow our footprint in Alberta, and we thought Bowden would be a nice fit. It will add capacity to an area that sometimes has issues with capacity.”
Bowden is currently served by one other elevator, a 1,200-tonne-capacity site operated by grain handler and pulse processor W.A. Grain.
Both terminals are expected to be ready to accept grain next year and will compete against established terminals in Olds, Lacombe, Joffre, or farther east at Equity and Trochu.
They will not only mean more competition, but also shorter hauls for some.
Ammeter has hauled most of his grain 65 kilometres to the Richardson Pioneer terminal in Olds. The run to Niobe is just half that, and he estimates he’ll shave 20 per cent off his annual transportation bill, which can run as high as $40,000.
“It is not insignificant, for sure,” said Ammeter, who farms 2,000 acres just south of Sylvan.
Alberta Wheat board director Trevor Petersen, who farms 1,200 acres just south of Red Deer, figures he’ll shorten his haul from an hour to just 20 minutes.
“It’s become a detriment for guys who have to haul farther,” he said. “It’s either hire it out or expand and buy a tractor-trailer unit so they can haul it themselves.
“Anything that’s close by is always better than further away, in my estimation.”
Paterson Grain and GrainsConnect (a joint venture between Australian-based GrainCorp and Japanese-based Zen-Noh Grain), which is planning on announcing a second Alberta terminal site in early spring, are new players in the central Alberta market.
But Ammeter sees that as a positive development.
Producers will welcome any “aggressive” pricing move by the newcomers to attract area farmers, particularly at a time when crop prices are down and margins tight, he said.
“I would expect once these plants get up and running, they have to attract a lot of business,” said Ammeter. “You can put out some premiums real quick to get the ball rolling and get some guys moving.
“If it meant another 20 cents (per bushel) in my pocket, I would be happy with that (but) that is a really tough call at this point. I am sure we will all hear about how they intend to keep these facilities full.”
Increased competition is “a good thing any time,” added Trevor Petersen.
“It will certainly affect a farmer’s bottom line if there’s more companies vying for their grain,” he said.
But the success of the new terminals is also dependent on the efficiency of railways to move grain to port, noted Alberta Barley vice-chair Jason Lenz, who farms north of Sylvan Lake.
The grain gridlock that followed the record harvest of 2013 hurt a lot of farmers, he said.
“Most producers lost money on not being able to ship their grain when they wanted to,” said Lenz.
The “cutting-edge” loop track technology at the two new terminals could be a game changer, he predicted.
Loop track systems allow terminals to pull a full unit train off the main line without disconnecting any cars.
“It decreases our loading times significantly,” said Shane Paterson, whose company has its own construction arm and began using the technology more than a decade ago.
“We went from facilities where it might take 24 to 48 hours to load a unit train, and with this loop track design and other innovations, we’ve got it down to about eight hours.”
It remains to be seen whether the loop track design will get grain moving faster — most backlogs came from a lack of rail cars, not slow loading — but this will be a “huge boost” to central Alberta grain producers regardless.
“I have talked to a few different grain producers in our area, and they all have smiles on their faces for sure because it just gives us more flexibility and more options to get a good price for our grain,” said Lenz.