Western Canadian wheat farmers buy ships
The farmer-owned Canadian Wheat Board on Tuesday said it will purchase two new vessels to move wheat across the Great Lakes.
The vessels, which will be ready for service in 2013, are part of a larger purchase by shipping companies Algoma Central Corp. and Upper Lakes Group.
The board said farmers would benefit from contributions that are expected to average at least $10 million per year to the CWB pools when the ships are in operation. They will also benefit from more efficient grain movement through a renewed fleet.
“As ship owners, we are moving forward to strengthen farmers’ position in our grain supply chain,” said CWB Chairman Allen Oberg, a farmer from Forestburg, Alberta, in a statement.
“This historic step puts us at the helm,' he said. 'Through the CWB, farmers will share in the control and the profits of Great Lakes grain shipping. This is a value-added investment with significant net benefits for prairie producers.”
Oberg said the purchase agreement would not have been possible without the Canadian government's removal of a 25 percent tariff on imported vessels last fall, making the renewal of the Canadian domestic fleet and this purchase economically feasible.
The new vessels will be Equinox class bulk carriers to be operated and managed by Seaway Marine Transport, which is a partnership of Algoma and Upper Lakes.
CWB said the cost for the two ships is $65 million, equal to about $1 per ton paid over the next four crop years. Prairie farmers also own a fleet of 3,400 rail hopper cars that move wheat and barley to ports and domestic customers.
Lake freight is a key element of prairie grain producers’ supply chain, stretching from farm to overseas customer. CWB-chartered lake freight to eastern Canadian ports has increased by about 1 million tons over the past 10 years, hitting 3.8 million tons in 2009. CWB projects the export flow of wheat to increase over the next few years as demand strengthens in Europe, Africa and Latin America — destinations served through eastern Canadian ports.
Controlled by western Canadian farmers, CWB is the world's largest wheat and barley marketer. One of Canada’s biggest exporters, the Winnipeg-based organization sells grain to more than 70 countries.