Are you Affected by the Grain Backlog?

Grain backlog has become a problem for many Manitoba farmers because grain companies are unable to accept grain they can’t move. This has led to lower elevator bids, leaving farmers with the choices of either accepting lower prices or storing their grain. 

When faced with challenging situations, farmers are encouraged to tighten up their business management practices. To help you deal with this challenge, MAFRD’s team of farm business development specialists are available to discuss:

      • cash flow planning
      • marketing plan development
      • risk management.

 

When marketing options are scarce and cash flows are becoming tight, always remember:

      • Communication is the key.
          • Always stay in touch with your team of trusted advisors and lenders. 
          • If you’re unsure about how a new development will affect the rest of your business operations, don’t hesitate to ask for advice. 
      • Know your costs of production.
          • While it’s not a good management practice to sell under cost, there are times when your cash flow situation requires you to accept current market prices to meet short-term commitments.
          • Another way to help ease cash flow issues is by taking out a cash advance on your stored grain. This will allow you to wait until market prices improve.
      • Store and protect your surplus crop. 
          • Prevent losses from insects, mites and moulds by storing grain, oilseed and pulse crops properly. Preventing infestations is safer and less expensive than trying to control them later on.
          • Go to the Canadian Grain Commission website at www.grainscanada.gc.ca/storage-entrepose/guides-eng.htm for excellent guides on managing stored grain.

 

Marketing your grain outside Manitoba

      • If you decide to try marketing your grain in the United States (U.S.) and other provinces, be aware of how it will affect your operation financially. For instance, in the U.S., there are differences in grain specifications, currency exchange and costs of transporting the grain.
      • Know the logistical requirements and rules for transporting grain out of province and/or to the U.S.
          • Manitoba producer trucks going into other provinces or the U.S.  must be registered under the International Fuel Tax Agreement (IFTA), and have the appropriate IFTA stickers attached to their vehicles.  For more information on IFTA, go to the Manitoba Taxation Division at www.gov.mb.ca/finance/taxation/motor.html.
          • Producers carrying their own grain across the U.S. border do NOT need specialized licensing. Farm license plates are allowed. 
          • If you are not carrying your own grain, the Canadian producer trucks carrying your grain into the U.S. must be registered with the U.S. Department of Transportation (DOT).
          • Canadian producer trucks are not allowed to burn purple gas in the U.S.  You must fill your tank with clear diesel before crossing the U.S border.
          • The regulations for trucks entering the U.S. from Manitoba can be found on the U.S. Department of Transportation’s (DOT’s) website at www.fmcsa.dot.gov/intl-programs/canada/states/manitoba.htm.


Developing a commodity marketing plan 

If nothing else, this current grain backlog emphasizes the importance of developing a commodity marketing plan. As new technologies, varieties and advances in agriculture continue to occur, the potential of higher production from year to year becomes a higher probability.  If this continues to be a normal trend from year to year, it will become even more important to have a solid market plan in place and use the tools available to market this extra production. As you find yourself reflecting on the past year, and planning for this year’s crops, remember the importance of:

      • the type of crops grown
      • the marketing tools available
      • how and when to establish price targets
      • how to determine if your marketing plan will be profitable. 

 

You may be considering making different planting decisions for the next crop year, such as starting to grow more acres of specialty crops, or forward-marketing more of your crops with pricing mechanisms backed by delivery agreements.  Typically, when there is little grain movement, companies will honour existing grain contracts before taking spot deliveries. 

For further information or to discuss farm business management topics, such as financial managent, marketing plan development, and risk management principles, contact a MAFRD Farm Business Management - Business Development Specialist, or visit our website for resources and upcoming events that could assist you.