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The real grain story

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THUNDER BAY, ON   ----  October 12, 2010  -----   The funding announcement ignored totally, the Tom Hamilton problems and low employment levels that these employees are experiencing largely because of the grain distribution practices employed by a legal monopoly…the Canadian Wheat Board. It is true that CWB practice does bestow health on Mission Terminals but it is coming close to destroying the traditional base of Thunder Bay grain handling.

Thunder Bay’s municipal, provincial and federal politicians need to ask how monopolistic practices can be allowed to exist in a capitalist economy and if they are allowed to continue, how can they be monitored and controlled so that any collateral damage to Thunder Bay companies can be limited?

The photo caption reads, “The Algonorth loads at the Agricore United Elevator.” This item and the item on funding for expansion at Mission Terminal (front page, Oct. 2 The Chronicle JOurnal) illustrate a problem that we, as employees of the other four grain companies that make up the traditional base of Thunder Bay’s grain trade, see daily — i.e., diminishing work hours and job numbers in Thunder Bay’s grain business.


What opportunities does the CWB give to other companies? Are there any factors that would lead the CWB to prefer one company above all others for the foreseeable future?
   The photo and caption either ignored or was unaware of a number of facts.
Agricore United ceased to exist in 2007. The pictured elevator has not handled any grain in three years. The Thunder Bay Port Authority now owns that plant. Eight employees remain on the books as workers but have not worked for close to a year at the grain company that now employs them. They are part of a group of 25 per cent of production employees at Thunder Bay’s two largest grain companies who have had no work, or sporadic part-time work, since 2008, largely because of the Canadian Wheat Board’s practice of shipping, on a preferred basis, through Mission Terminals.
  
The vessel pictured is not loading grain. The Algonorth hasn’t had any grain loaded into it for close to two years and is simply moored, awaiting its fate.
  
It seems that we pay far too little attention to the facts and conditions that affect some businesses and industries in Thunder Bay and to the people employed by them. I think it is a good time for us to be proactive as a community, as citizens, as media and as politicians, and begin to peer out around us and see just what is happening in Thunder Bay, not just what we want to see.
                           
Tom Hamilton,
President-USW Lodge 650
Thunder Bay Grainhandlers


Here is some background information

Following are some points concerning the Thunder Bay grain elevators. The facilities in question consist of 5 terminal elevator complexes operated by 4 unionized companies ( Cargill Grain, Parrish & Heimbecker, Richardson’s, Viterra) and one (1) non union terminal complex, known as Mission Terminal International. This letter does not deal with two other facilities: Canada Malting and Western Grain.
  
The recent announcement of funding for a capacity increase of 16,000 metric tonne and the possible creation of 6 new jobs at the Mission facility appeared like a reason to celebrate a success story in Thunder Bay especially in light of the poor economic news since the fall of 2008.
   
Taken on its own there is reason to celebrate. Here is a small facility, formerly known as Saskatchewan Wheat Pool # 15, that had been closed down, briefly operated as a non grain related business and closed again only to be opened once more, around ten years ago, on the model of Lac Superior Grain operating in Trois Riviere ,QC. It would be managed by a local person( Paul Kennedy) and be named Mission terminals, employing local workers many of whom had been displaced by the downsizing of the traditional grain companies in the late 1980s and 1990s. To those workers it was a new lease on life.
    
This new facility offered competition to the traditional grain companies. It was small enough not to be a threat but with its partner companies eg. Upper Lakes Shipping, it could offer fast turnover of its product on a 24/7 basis. Initially this facility was not going to handle Board grain. (Board grain is any of the cereal grains that the Canadian Wheat Board has the exclusive right to market and direct to export position.) Only producer grain not controlled by the CWB would go through this facility. At this point even some of the traditional companies sent non-board grain through the Mission Terminal facility.
   
Soon enough the CWB saw that Mission Terminals could offer a real cost and efficiency option to the existing traditional companies and provide the CWB with leverage in its dealings with those companies. Mission began to be guaranteed a percentage of the board grain arriving in Thunder Bay. Over the years the percentage rose from 0% to 15% on up to 25% and now is heading up to 30% -38%.
  
In the late 1990s and early 2,000s there were some consolidations in the operations of the traditional Thunder Bay grain operators. Alberta Pool combined with Manitoba Pool to create Agricore and the result saw the closing of the Manitoba Pool 3 facility. Shortly after that ,United Grain Growers merged with Agricore, creating Agricore/United with the resulting closure of UGG “M”.  In 2007 we saw Saskatchewan Wheat Pool acquire AgricoreUnited to create “Viterra” which resulted in the closure of the last remaining Agricore terminal… Manitoba Pool 1. Another plant, AgricoreUnited terminal “A” is very near closure for various reasons related to grain tonnage coming to Thunder Bay.
  
The point here is that there are various amounts of job losses throughout all these closure processes. A person could say that the consolidations and closures have brought the Terminal capacity in Thunder Bay down to a more realistic level in relation to product available and projections for future markets. The remaining companies, including Mission terminal, can offer employment to citizens of Thunder Bay, pay significant taxes, supply business for various material and equipment suppliers and maintain a relatively thriving waterfront that has room to expand its employment levels and business using existing tonnage capacity and facilities.
There is enough Board and non Board grain to allow all companies to operate ,with Board grain that is controlled by the CWB , being the backbone of terminal operations. Loss of Board grain would put most of these facilities out of business.
  
Unfortunately that is in danger of happening. Mission terminals has been accorded preferred status by the Canadian Wheat Board. The CWB has basically guaranteed Mission a minimum number of grain cars per week as long as there are cars available for Thunder Bay. I am not aware of the exact number but it works as follows: Mission is guaranteed 300 cars /week. If 1,000 cars arrive in Thunder Bay then Mission gets at least 300 and it may get more. The other 700 or less cars are distributed amongst the other terminals on the waterfront. If 400 cars are available, Mission still gets 300, at least and the other companies get 0 – 100 split between them. As you can see this is not the percentage system  illustrated earlier. You can also see the devastating impact that guaranteed numbers have as compared to a percentage of cars.
   
Using the same example of 1,000 cars with Mission having a 25% share it would then receive 250 cars with 750 cars distributed across the waterfront. If 400 cars are available Mission would get 100 with 300 being otherwise assigned. The difference in the two systems shows the great disadvantage to the other companies especially when there are lesser numbers of cars available for sharing. The guaranteed number gives Mission a varying percentage that can go from a reasonable amount to 100 % of all cars. This puts the other companies and their employees in an untenable situation where employment levels cannot be maintained.
   
The question is…how did this come about? Isn’t there competition in the system of grain allocation? Isn’t this a competitive economy?
  
The fact is that the Canadian Wheat Board is a monopoly operating in a capitalistic economy. It’s governing act gives it that power. Ostensibly the CWB is supposed to maximize profits for its farmer producers and is given direction by its board which is mainly made of farmers and a CEO appointed by the government. You would think that maximizing profits for the farmers would be best served through honest competition in the grain transportation network that handles grain going to export customers.
   
At one time a bid system was in place but the CWB basically vetoed that as they believed it only served the large grain companies well, to the detriment of small operators. They believed, that to maintain real competition there had to be a mix of large and small players. I don’t disagree with that as large companies can act as a powerful cartel to the detriment of competition and farmer’s income and profits.
  
The CWB has now gone the other way, especially where it involves Mission terminals. The system of guaranteed cars described above has taken competition out of the transportation and handling system for grain routed through Thunder Bay terminals. Our terminal operators, for whom we rely on for employment, have been largely shut out of the Board grain process. We, as employees, do not have work anymore. At the two largest companies 25% of the production employees are basically part time ( 5 months or less work) with 13% - 15% of production employees having 4-5 weeks of work at their terminals. This is after the consolidations that I talked about earlier.
 
In a business that operates in a capitalistic economy there is supposed to be competition. If there is not an ability to compete why not? The CWB was set up to manage export of Canada’s grain allowing farmers to concentrate on what they know and not have to  individually bargain for markets and price. It was not set up to eliminate competition or the ability to compete, for the companies who choose to be involved in the grain business.
    
As employees and workers in that business we think that Thunder Bay politicians at all levels of government need to examine the anti competitive practices of the CWB in relation to grain allocated to Thunder Bay and its grain terminals. Along with the questions mentioned earlier,   (How did this situation of preference for one company over all others come about? Isn’t there competition in the system of grain allocation? Isn’t this a competitive economy?) we also are asking that our politicians and media examine the perception and possibility of conflict of interest that may exist between the CWB and the current CEO of Soumat and Mission Terminals..Mr. Adrian Measner.
  
The changes to CWB allocations to Thunder Bay came under his watch. He became CEO in 2007 after a 32 year career at the CWB the last 3 of which were spent as the CEO of the Canadian Wheat Board. In 2006 Measner had been fired from his position of CEO of the CWB by the Federal Conservative government and was hired in 2007 by Upper Lakes Shipping with responsibility for Mission Terminals, now under the corporate umbrella of Soumat. It is important to remember that he was not fired by the CWB but actually could be said to have sacrificed himself protecting the rights of farmers and the mandate of the CWB.
  
It also needs to be remembered that the Conservatives were, at that point, trying to remove the CWB as the exclusive marketer of Canadian grain. The traditional grain companies in Thunder Bay are known to have been sympathetic to that change. It can be reasonably thought that there is no love lost between the CWB and the grain companies , other than Mission, in Thunder Bay . It also may be said that Measner shares this dislike and is looked at as the champion he once was, by the CWB. Why wouldn’t they prefer to deal with him?
   
Whatever the reasons, the discriminatory nature of distribution of CWB grain in Thunder Bay, needs to be uncovered. The CWB should not be using its monopoly powers to eliminate competition in the handling and transportation of CWB grain that is routed through Thunder Bay grain terminals for any reason, including any possible, perceived cozy relationship with a former CEO of the Canadian Wheat Board.
  
I hope this provides some food for thought.
Yours,
                                                     
Tom Hamilton,
President-USW Lodge 650
Thunder Bay Grainhandlers

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