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The war in Ukraine and extreme weather have caused massive disruptions to global food supplies. Canada’s grain crop may be poised for a record year – if congested rail networks can keep up

Near the end of September, under a warm midday Saskatchewan sun, Lesley Kelly watched as combines chewed through the last stretches of wheat on her family’s 7,000-acre farm near Watrous, southeast of Saskatoon.

It marked the end of a critical growing season, both for the family and for a world struggling with massive disruptions to food supplies.

“2021 was quite a hard year,” Ms. Kelly said. Not only did her father die that summer, but a severe drought left her family with a crop just half the size they’d planned for. “We needed this year to help us recover from that, and it did. The yields were great. The quality was great.”

The results have been similar on grain farms across Western Canada, even as drought and war in other parts of the world continue to feed into concerns about wheat supplies.

Russia’s invasion of Ukraine, one of the world’s largest exporters of wheat, has slashed Ukraine’s shipments of the crop by nearly half. Meanwhile wheat outflows from Russia are stalled at last year’s levels, despite a record harvest this year. The war sent global wheat prices soaring to a 14-year high, and while prices subsequently fell to preinvasion levels, they remain roughly 70 per cent above the 10-year prepandemic average.

Early in the Ukraine conflict, attention turned to whether other major wheat producers, such as Canada, could make up for any shortfalls that emerged. The answer to that question is coming into focus. With roughly three-quarters of the spring wheat crop in the Prairies harvested as of last week, Canada’s wheat production is expected to be roughly 13 per cent larger than the average crop from the past five years.

“There is a need for our wheat when it comes to food security around the world,” said Dean Dias, chief executive of Cereals Canada, a Winnipeg-based industry association that represents the grain sector. “The production we have this year is not going to solve all the demand that is out there, but it is going to help.”

The 2022 growing season couldn’t have started more differently than last year’s. Canada’s grain harvest in 2021 was struck by severe drought across the Prairies, which wiped out close to 40 per cent of Western Canada’s wheat output.

This season started instead with an excess of rain that delayed planting and left large parts of wheat fields, like this one west of Brandon, Man., underwater as of mid-June. Photo: Standing water in a field of seeded wheat west of Brandon, Man. in mid-June.

Despite an uncertain start, warm weather over the summer helped growing conditions improve. That was good news for those Canadian farmers who had responded to higher wheat prices by planting more of the crop.

According to Statistics Canada, farmers seeded 25.6 million acres of wheat this year, a 9.4-per-cent jump over 2021 and the second highest level in nearly two decades. Photo: Standing water in a field west of Brandon reflects the last light of the day in late June.

Even with higher prices for wheat this year, many farmers were unable to capitalize, because they had already locked in their crop plans well ahead of time.

Jack Hofer, a member of the Deerboine Hutterite Colony who farms a variety of grains northwest of Brandon – including the wheat in this field, as well as canola and barley – said he ignored events overseas and commodity markets, and instead stuck to his regular rotation of crops to reduce the spread of disease that can come with planting the same thing in the same location two years in a row.

“I don’t even look at the prices,” he said. “I’ve already made my plans for next year.” Photo: A crop of wheat grows in the Assiniboine River valley at the Deerboine Hutterite Colony in late June.

It wasn’t a strong year only for wheat production. Rivers Air, an aerial spray company based in Rivers, Man. struggled to keep pace with demand, according to Cassandra Lepp, who along with her sister Stefanie scrambled in mid-July to help their father John refuel their Air Tractor AT-802F at a former air force base near Wheatland, Man.

“It was like the Nascar pits out there,” she said. By her estimate, business was up 25 per cent this year. Photo: Stefanie and Cassandra Lepp with Rivers Air reload and refill their father John Lepp's Air Tractor AT-802F between aerial spray runs.

Because of the muddy fields early in the season, there was a surge in calls for the company’s fungicide spraying service for all types of crops, including wheat and canola. Rivers Air had to contend with a surge in fuel prices, forcing the company to add a 15-per-cent fuel surcharge. Photo: Stefanie and Cassandra Lepp plot out aerial spray runs.

In addition to their spraying business, the Lepp family farms soybeans, malt barley and canola. They faced their own higher costs for things like fertilizer. “When people hear about high prices for wheat it sounds like farmers are making lots of money, but our inputs have gone up so much at the same time,” Cassandra said. Photo: John Lepp sprays fungicide on a wheat crop in western Manitoba.

As the harvest got underway across Western Canada in August, optimism was high. Based on satellite imagery and climate data, Statistics Canada forecast a near-record crop for this year. The agency said Canada was expected to produce 34.7 million tonnes of wheat, just shy of the 2020 harvest and the third highest level of production since 1908. Photo: A combine driven by Deerboine Hutterite Colony member Mel Hofer spits out chaff while harvesting wheat on August 29.

The strong crop could set up Canada for a record windfall. Despite 2021 being a difficult year because of drought, higher wheat prices meant the total amount of money farmers received for their crop jumped 17 per cent over the previous year to $9.2-billion, according to Statscan.

While wheat prices have been very volatile since Russia’s invasion of Ukraine, at the end of September Western Canadian prices for the crop were more than 20 per cent higher than during the same period last year, according to Saskatchewan government data. Photo: Wheat ready to be harvested at V R Farms, north of Brandon, on a hot September evening.

Not every farm has seen a big boost in wheat output. On the Deerboine Hutterite Colony’s wheat fields, where a combine driven by Mel Hofer spat out chaff while harvesting in the late evening light in August, Jack Hofer said 2022 had shaped up to be an average year for his own crop. He has been more concerned with a delayed barley harvest owing to flooding at the start of the season. He watches overnight temperatures for signs of frost.

“I think we’ll still be able to feed the city folks, for another year anyway,” he said with a laugh. Photo: Another view of the wheat harvest at the Deerboine Hutterite Colony.

For Stefanie and Cassandra Lepp, who paused from the harvest of their family’s barley crop in early September for a meal prepared by their mother, a successful season was by no means certain at the start.

In mid-May, with heavy rains delaying the start of seeding, the Lepp sisters and other young farmers from the area gathered for dinner and drinks to console each other. “We got together for moral support because it was really scary,” Cassandra said. “I’ve farmed for 15 years and never started as late as we did this year.” In the end, the family got 70 per cent of the barley crop they had wanted, which Cassandra said she was happy about, considering the rough start. Photo: Cassandra Lepp eats dinner with her dog Piper during a brief pause in the family's harvest on an early September evening.

Meanwhile, the wheat harvest continued at a quick pace for many farmers. Ron VanHeyst, with V R Farms, used a combine to harvest wheat north of Brandon on a hot September evening. The farm had 1,100 acres of wheat to harvest this season. Photo: Ron VanHeyst, with V R Farms, combines a crop of wheat north of Brandon in September.

The war in Ukraine is just one of several factors weighing on global wheat supplies. Exceptionally hot and dry conditions across much of Europe – including droughts in major wheat exporting nations, such as France and Italy – have hammered crops there. Photo: Mel Hofer combines a crop of wheat near the Deerboine Hutterite Colony.

Even so, Canada isn’t the only country to see a surge in wheat output. Warm weather in Russia has given the country’s wheat harvest a major lift, boosting estimated production in 2022 to a record 91 million metric tonnes, nearly 20 per cent higher than its five-year average. Photo: Combines driven by members of the Deerboine Hutterite Colony harvest wheat.

The bumper crop in Russia has brought the global supply of wheat more in line with demand, but global supplies are still expected to be relatively tight this year, according to Stuart Bergman, chief economist at Export Development Canada. “Farmers who get a good crop should be able to capitalize on still-strong demand conditions, notwithstanding that supply-demand imbalances have eased a bit at the global level,” he said. Video: Ron VanHeyst, with V R Farms, combines a crop of wheat north of Brandon in September.

One reason for that is the particular role Canadian wheat plays in meeting the food security needs of other countries. Canadian Western Red Spring, the most common type of wheat grown in Western Canada, has higher protein levels than other varieties, and many countries blend Canadian wheat with wheat they buy elsewhere. Photo: A combine spits wheat into a grain cart during the Deerboine Hutterite Colony's harvest.

What isn’t clear yet is whether Canadian grain operators can navigate the country’s congested rail networks to deliver this year’s larger harvest to customers in a timely manner, so that farmers can get premium prices for their crops.

It’s an issue Ms. Kelly in Saskatchewan is watching closely. “One of the stresses is whether bottlenecks in the transportation system threaten wheat movement for us,” she said. Photo: David van den Ham, with van den Ham Farms, north of Brandon, loads wheat from one of his bins into a grain truck to take to the Richardson Pioneer terminal in Kemnay, Man. on Oct. 5. The farm had harvested the wheat about one month earlier.

There’s reason for concern, according to Wade Sobkowich, executive director of the Western Grain Elevator Association, which represents companies that handle 90 per cent of Western Canada’s bulk grain exports.

He pointed to last year’s crop as a case in point. Even though Canada’s total crop production fell to less than 49 million tonnes from a typical 70 to 80 million tonnes, Canada’s railways were unable to provide enough capacity to meet even that reduced demand. Photo: Sunset at the Richardson Pioneer terminal in Kemnay on Oct. 3. The terminal was completely full over the weekend while it waited to load wheat and other grains onto rail cars.

While Mr. Sobkowich said floods and wildfires that disrupted shipments last year were beyond the railways’ control, he added that their slow recovery showed a “lack of resiliency” in the rail transportation system.

“Now we're looking at a crop size that's back up to 75 million tonnes, so if railways didn't have the ability to move 49 million last year, what makes us think they're going to move 75 million this year?” he said. Photo: David van den Ham signs paperwork for the load of wheat he delivered to the terminal.

Both Canadian National Railway and Canadian Pacific Railway have said in their annual grain shipment plans that they will have sufficient capacity to move grain over the course of the 2022-23 crop year. But Mr. Sobkowich pointed out that those grain plans came with warnings that demand would exceed capacity during certain weeks. He worries that could lead Canada to miss windows for meeting customer orders abroad. Photo: Location assistant Brett King walks on grain cars filled with wheat at the Richardson Pioneer terminal on Oct. 4.

If the past few years have taught Canada anything, it’s that more investment is needed in overstretched railway and port networks, EDC’s Mr. Bergman said.

“As a small, open-trade economy, if we’re going to boost Canadian wealth, we need to be investing more in our capacity to keep up with international demand,” he said. “I think the situation today makes this abundantly clear.” Photo: Brett King closes hatches on a grain car that had been filled with wheat moments earlier.

And with a resolution to the Ukraine crisis seemingly a long way off, not to mention the growing threat to crops from extreme weather events, the need for Canada’s agriculture sector to be able to access global markets seamlessly will only grow more pressing.

In the meantime, Canada’s reputation as a top wheat supplier is on the line, Mr. Sobkowich said. He added that grain businesses lost international customers in 2021 after they were unable to fill orders. Photo: Location assistant Derek Sobkow holds cleaned wheat at the Richardson Pioneer terminal.

"This harvest is probably the most important harvest we've had in a generation,” he said. “So we need to make sure we're doing everything in our power to move this product when we need to move it."

David van den Ham loads wheat from one of his bins into a grain truck to take to the Richardson Pioneer terminal.

With files from David Parkinson and Reuters

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