It was September 2013, and Richard Gray watched wheat flood into the combine hopper at a farm near Indian Head, Sask.
"We realized within 20 minutes it was actually yielding far better than it looked," recalled Gray: a head-turning 15 bushels an acre more than they were expecting.
Gray owns the farm with his son and is its head marketing guy. He is also a professor in the Department of Agricultural and Resource Economics at the University of Saskatchewan. It was his academic side that saw clouds looming that would soon slip billions of dollars from farmers' pockets.
"All the reports (from across the Prairies) were that crops were looking very good," Gray said. "I knew if they turned out to be bumper crops, it was going to tax the transportation system to the limit. There was no way they would be able to move it all in a year."
Gray had to make the call: haul now, or wait.
"We decided to deliver most of our wheat crop directly to the elevator," he said. "Within a month or less, all the elevators were pretty full."
Normally, "selling off the combine" means taking less, as prices are usually lowest at harvest. But this record- smashing 94-million-tonne behemoth was not normal. Bins quickly filled, and the excess went into grain bags or was simply piled on the ground and covered with tarps.
A harsh winter made things worse. In extreme cold, trains must be shorter and travel more slowly. Soon dozens of empty grain freighters were anchored on the West Coast, awaiting delivery. Farmers howled in protest, demanding Ottawa force CN and CP Rail to move more grain. Their ire may have been partly misplaced.
So while farmers focused on railways, Gray followed the money, specifically something called basis. This is what farmers pay grain companies to handle and transport grain to port.
"My colleagues and I started hearing some numbers about port price and elevator price, and there was a huge gap," he said. "Farmers were selling grain well below port prices and it was costing them an awful lot of money."
Gray did not know exactly how much, so he and his colleagues hastily organized a symposium to have a look. Meanwhile, the federal government issued an order-in-council requiring the railways to each move 500,000 tonnes of grain weekly or face fines of $100,000 per day. But Gray said the "much broader issue" was being ignored.
"This went well beyond what the railways were doing. These basis levels were not a few cents or few dollars a tonne higher than normal—they were $50 to $100 higher. That's an awfully big number."
Multiply those per-tonne costs by 103 million tonnes sold during the two years it took to export that record crop and you get $6.5 billion. Gray said that is the conservative estimate—it could easily have been a couple of billion higher.
Cue more farmer outrage? Actually, reaction was mixed.
"For a lot of producers, it was like, ‘Well, there's nothing I can do about it,'" Gray said. "Some said, ‘Surely, there's something wrong with your calculations,' but others said, ‘We need to push on this.'"
And push is what they did. SaskWheat, which commissioned Gray's report, made the lost billions its top federal election issue. The Producer Shipper Coalition (made up of several leading provincial farm groups) made it the centrepiece of its presentation last year to a blue-chip independent federal panel reviewing rail transportation.
"Farmers are very good problem solvers," Gray said. "If they're made aware of issues and have the right information, they can be a big part of the solution. To bring about changes, you need producers who are informed."
Gray advocates boosting capacity—everything from more railcars and longer sidings to faster unloading and more grain storage at ports. He has made the case for an independent body able to co-ordinate grain movement when the next mammoth crop comes along, and it will.
Bad years now produce bigger harvests than the "bin busters" of a generation ago. Without more capacity and a referee to prevent grain gridlock, "the wheels will fall off very quickly," Gray said. But it will take time.
"Typically, there's a slow change in people's perceptions and then those perceptions become more widely held beliefs, and then slowly there's change after that," he said.
But when change does happen, no one throws a parade for the economist who brought the issue to light. Groups cite the big payback from research, often using figures from Gray's extensive work in this area.
"I've seen (my) numbers show up a lot of times, but it's not like breeding a new variety of wheat, where you can say, ‘That's mine, I did that,'" he said.
But it is all about "framing the debate" so people are thinking and talking about the issues that matter.
"Accounting isn't an end in itself. It's useful to draw attention to the issues so you can actually find solutions. That was the focus right from the start."
Glenn Cheater is the owner of High Bluff Media in Winnipeg and Edmonton.
"We realized within 20 minutes it was actually yielding far better than it looked," recalled Gray: a head-turning 15 bushels an acre more than they were expecting.
Gray owns the farm with his son and is its head marketing guy. He is also a professor in the Department of Agricultural and Resource Economics at the University of Saskatchewan. It was his academic side that saw clouds looming that would soon slip billions of dollars from farmers' pockets.
"All the reports (from across the Prairies) were that crops were looking very good," Gray said. "I knew if they turned out to be bumper crops, it was going to tax the transportation system to the limit. There was no way they would be able to move it all in a year."
Gray had to make the call: haul now, or wait.
"We decided to deliver most of our wheat crop directly to the elevator," he said. "Within a month or less, all the elevators were pretty full."
Normally, "selling off the combine" means taking less, as prices are usually lowest at harvest. But this record- smashing 94-million-tonne behemoth was not normal. Bins quickly filled, and the excess went into grain bags or was simply piled on the ground and covered with tarps.
A harsh winter made things worse. In extreme cold, trains must be shorter and travel more slowly. Soon dozens of empty grain freighters were anchored on the West Coast, awaiting delivery. Farmers howled in protest, demanding Ottawa force CN and CP Rail to move more grain. Their ire may have been partly misplaced.
So while farmers focused on railways, Gray followed the money, specifically something called basis. This is what farmers pay grain companies to handle and transport grain to port.
"My colleagues and I started hearing some numbers about port price and elevator price, and there was a huge gap," he said. "Farmers were selling grain well below port prices and it was costing them an awful lot of money."
Gray did not know exactly how much, so he and his colleagues hastily organized a symposium to have a look. Meanwhile, the federal government issued an order-in-council requiring the railways to each move 500,000 tonnes of grain weekly or face fines of $100,000 per day. But Gray said the "much broader issue" was being ignored.
"This went well beyond what the railways were doing. These basis levels were not a few cents or few dollars a tonne higher than normal—they were $50 to $100 higher. That's an awfully big number."
Multiply those per-tonne costs by 103 million tonnes sold during the two years it took to export that record crop and you get $6.5 billion. Gray said that is the conservative estimate—it could easily have been a couple of billion higher.
Cue more farmer outrage? Actually, reaction was mixed.
"For a lot of producers, it was like, ‘Well, there's nothing I can do about it,'" Gray said. "Some said, ‘Surely, there's something wrong with your calculations,' but others said, ‘We need to push on this.'"
And push is what they did. SaskWheat, which commissioned Gray's report, made the lost billions its top federal election issue. The Producer Shipper Coalition (made up of several leading provincial farm groups) made it the centrepiece of its presentation last year to a blue-chip independent federal panel reviewing rail transportation.
"Farmers are very good problem solvers," Gray said. "If they're made aware of issues and have the right information, they can be a big part of the solution. To bring about changes, you need producers who are informed."
Gray advocates boosting capacity—everything from more railcars and longer sidings to faster unloading and more grain storage at ports. He has made the case for an independent body able to co-ordinate grain movement when the next mammoth crop comes along, and it will.
Bad years now produce bigger harvests than the "bin busters" of a generation ago. Without more capacity and a referee to prevent grain gridlock, "the wheels will fall off very quickly," Gray said. But it will take time.
"Typically, there's a slow change in people's perceptions and then those perceptions become more widely held beliefs, and then slowly there's change after that," he said.
But when change does happen, no one throws a parade for the economist who brought the issue to light. Groups cite the big payback from research, often using figures from Gray's extensive work in this area.
"I've seen (my) numbers show up a lot of times, but it's not like breeding a new variety of wheat, where you can say, ‘That's mine, I did that,'" he said.
But it is all about "framing the debate" so people are thinking and talking about the issues that matter.
"Accounting isn't an end in itself. It's useful to draw attention to the issues so you can actually find solutions. That was the focus right from the start."
Glenn Cheater is the owner of High Bluff Media in Winnipeg and Edmonton.