How Is the Production Supply Chain for Lentils in Canada Formed?

Supply chains in Canada mainly operate a ‘pull’ delivery system where grain is moved from a farm to a receival site and then to a port, ‘just in time’ as ships arrive. Canada’s grain supply chain is particularly exposed to the pricing and efficiency of rail freight provided by two dominant private rail companies. Unit trains in Canada are larger and deliver at least 10,000 tonnes per train to the port. Canadian wagons take up to two weeks to cycle. Grain in Canada is mainly produced in the warm summer months over a four to the five-month growing season. Almost all grain in Canada is stored on the farm immediately after harvest, with less than 10% delivered to a receival site directly from the paddock. Canadian farmers present grain samples stored in farm bins to receival sites and negotiate prices and grades. Farmers’ sales are primarily restricted to their local receival sites, which compete for grain through their price and contract offers.

75% of grain exported from Canada travels long distances by rail from the prairie provinces to two main west coast ports. Journeys of 1300 to 1800 km are commonplace. Oil and mineral fields in Canada are close to agricultural areas, so both industries share the rail network. Two rail companies dominate the provision of rail freight in Canada. There is limited inter-switching between the networks, so they operate primarily as regional monopolies, owning both above and below-rail assets.

Consequently, Canada’s grain supply chains are particularly exposed to the pricing and efficiency of rail freight provided by these two dominant companies. Canada’s main export port, Vancouver, has six-grain export terminals. Three companies in Canada: Richardsons, Viterra, and Cargill, own most of the port infrastructure and account for about 75% of the annual grain exports.