Canadian farmers stuck with last harvest scramble to plant next

Tue Apr 29, 2014 7:16am EDT
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Western Canadian farmers still stuck with last year's harvest are turning to the government for credit help in record numbers, and insiders fear problems could cascade through the agricultural economy as the new planting season gets under way.

A record-breaking harvest and harsh winter last year overwhelmed Canada's two big railways, backing up the flow of grain from western elevators to ports and leaving farmers with few buyers. Up to C$20 billion ($18.1 billion) worth of crops was stuck in storage as of late March, according to the Canadian government.

Dealers and lenders are softening terms for farmers caught in the unusually severe cash crunch, but some fear it won't be enough to stop a drop in fertilizer and machinery purchases that in turn could limit crop yields and weigh on land prices.

Under government order in March, Canadian National Railway Co and Canadian Pacific Railway Ltd have doubled weekly grain traffic, but that's not enough to end a massive glut by the time the next harvest arrives in the world's sixth-biggest wheat-growing country.

"You'll likely see some lasting impact of this transportation crisis," said J.P. Gervais, an economist at Farm Credit Canada (FCC), the country's biggest ag lender. "We're going to feel that into next year and the years after it."

Farmers face an unpalatable choice between deploying debt and savings to fund spring planting on the usual scale, or cutting costs on seed and fertilizer, thus risking smaller returns.

Will Dodd, who farms with his father near Lanigan, Saskatchewan, ran out of storage after being unable to sell or move nearly 90 percent of last year's harvest.

Until recently, Dodd had 20,000 bushels of barley piled on the ground, rising some 30 feet above the prairie.   Continued...

Farmers check out used equipment during a farm auction near Fannystelle, Manitoba, April 24, 2014.REUTERS/Fred Greenslade