September 1, 2021 PEI Grain Elevator Corporation Update
Once again for the 2021 growing and harvest season, weather conditions have played a prominent role as determinants impacting both the yield and quality parameters of crops grown by P.E.I. producers, and indeed, by all Atlantic Canadian growers. GEC currently handles significant volumes of milling and feed wheat, barley, oats, soybeans and more recently what may turn out to be higher volumes of dry corn at each of its three elevator locations. Fortunately for this year, there has been adequate moisture for crop production although heat, until its arrival later in August has been in shorter supply.
Due to high humidity levels, there was also what turned out to be minimal levels of plant diseases like fusarium and plant mould but they have been manageable by experienced growers and availability of appropriate plant protection products. Also, untimely and frequent rains created harvest and quality problems encountered by dry forage producers of livestock feed.
The good news for PEI and Atlantic Canada is that local prices have remained strong due to supply chain interruptions related to C.O.V.I.D-19 and draught which has decimated production of most crops in Western Canada. As a feed/food regional importer tighter supplies and availability mean stronger domestic prices. This coincides well for anticipated increases in local acreages for crops such as corn, soybeans and cereals.
GEC cereal purchases have increased by several thousand tonnes this year once again; primarily as spring and winter wheat. Oat production is stable. Barley production remains popular in Western PEI and the soybean acreage is expected to grow again across the Island stimulated by strong prices and demand.
Cereal crops like milling or feed wheat are favored by farmers given that it is a valued fall cover crop boosting soil heath and providing a source of income in the following year. Corn is expensive to grow but is a high yielder and can work in the potato rotation increasing organic matter and tying up nitrogen.
Pulse crops for Atlantic Canada have experienced a significant decline due to the bankruptcy of W.A. Grains located in Slemon Park P.E.I. This of course will result in farmers revising decisions on potatoes, cereals, corn and soybean crops for replacement depending on soil type and crop rotation options. The high yield/quality potential and declining heat unit requirements of modern locally available corn varieties has increased grower interest in the production of silage, high moisture and dry corn. GEC has recognized this shift and while its immediate requirement is to be in a position to handle soybeans, a market developed in response to grower interest, GEC has provided greater access to commercial drying facilities to offset growth of the sector and the need for a more timely and efficient crop handling service. This has been carried out as GEC is nearing completion of its capital expansion and handling improvement plans. The Kensington facility will be able to store crop increases of up to an additional 3000 metric tonnes.
Moreover, as a benchmark, the facility was able to unload 35 trucks in 2.5 hours so grower lineups waiting have been greatly reduced, as a result of upgrading and improved operational efficiencies. Congratulations to General Manager Neil Campbell and staff, along with Directors in planning and implementing these efficiency and additional storage volume improvements!
Decisions have yet to be made, with regard to the original facilities due for replacement as the Government of P.E.I is the owner. The GEC Board of Directors is in discussion with the Minister of Agriculture and Land as this article is being prepared. Some GEC assets are close to 50 years of age and the structural /operational aspects are under constant review and assessment in terms of long term stability and functionality
GEC is no longer in a position to export soybeans by vessel. This means that trucking and local market development remains critical. If the business can acquire sufficient quantities of food or feed grade soybeans for export by vessel via Halifax, appropriate buyers will be contacted and efforts made to scale up. In the mean time shipping opportunities to Quebec processors will continue. But the market has to deal with additional buyer competition and more local processing so the immediate need to address substantive export markets has diminished. Canola meal and soybean availability for biofuels has also increased plant protein competition and pricing although forward contracting remains available for those growers choosing to lock in a forward price in a time of market volatility and uncertainty. Global events such as China trade and animal health related concerns in several regions has led to much more market volatility in recent months. Feed barley is still an excellent crop choice to grow although it faces more buyer competition from corn as a feedstuff due to its lower energy profile. As an offset, some local growers both in P.E.I. and Atlantic Canada are having success with the growth of barley for malt. Oat volumes remain stable. Quality is decent this year but oats as a feed stuff is primarily for the horse market or, as a lower energy higher fiber feed source. High freight rates have kept P.E.I. oats out of the Ontario market for human consumption. Advances in plant breeding technology such as gene editing may offer niche cropping opportunities down the road.
It is arguable that our reliance on local feed markets is an advantage. It may immunize our region from some of the importer protectionist measures that other Canadian regions sell into as exporters. Local basis issues can partially offset the negative price impacts of global protectionism and technical trade barriers; apparent in trade agreements such as C.E.T.A. and C.P.T.P.P that have supposedly been ratified. Unfortunately we remain price takers in a world of growing protectionism and more recently climate variability. Additional challenges include rising input prices, imposition of the carbon tax, seasonal transportation weakness and higher freight charges which can distort markets even further.
In the meantime, GEC will continue its efforts to maximize grower returns through sales optimization and effective cost control. Stronger prices continue even with C.O.V.I.D -19; related to global weather trends as well as supply and demand relationships. Such trends are monitored by General Manager Neil Campbell and staff. Our unstated goal remains to be a more efficient, lower cost and higher volume handler and marketer. These objectives remain fundamental to the success of the business and our customers; both as buyers and sellers.
GEC also continues to support the collaborative efforts of the Atlantic Grains Council through its efforts to work with other programs and institutions like Living Labs and other federal provincial environmental programming, collect the research levy, and oversee projects and provision of policy support. General Manager Neil Campbell continues in his role as Vice President and sector representative for the Eastern Varietal Soybean subcommittee of the Canadian Grains Commission.
GEC is staying on top of new trends related to code of practice, public trust, and, sustainability in order to be export ready should the opportunity arise. New generation consumers are becoming much more interested in these topics along with climate change and carbon sequestration as time marches on.
Growers are reminded that quality matters for all crops in relation to servicing domestic & export markets. GEC staff is available to answer any marketing questions you may have as well as provide information and services related to risk management (futures& options trading).
The reader should contact General Manager Neil Campbell, Wade Waddell, Donald Stewart, or Joe Vandenberghe. They would be more than happy to address any issue on customers’ minds.
Here’s hoping all remain healthy and safe as together we face issues related to the “new normal” post the C.O.V.I.D-19 pandemic. The resiliency of the agriculture and agrifood sectors in terms of leading P.E.I & Canada in an economic recovery has not gone unnoticed. Neither has the role of GEC in terms of providing service to the sector deemed as essential. Good luck!