THUNDER BAY FINDS LIFE AFTER WHEAT

THUNDER BAY FINDS LIFE AFTER WHEAT

Thunder Bay, which saw its dominance as Canada's major export center for wheat and grain diminish with a shift to Pacific Coast ports, has found new life supplying specialty grains to European markets.

With specialty exports to Europe picking up, shippers said the Great Lakes port, which traces its origin to 1870s silver rushes, is in the middle of a rebirth."We have been moving a lot more canola to Europe through Thunder Bay," said Carl Pauls, vice president and general manager in the Winnipeg, Manitoba, office of Alfred C. Toepfer Canada Ltd., an exporter of Canadian grain.

A decade ago, when Thunder Bay handled half of Canada's grain exports, it boasted 22 grain-handling terminals. Today there are only 10, and the port handles just 27 percent of the country's grain exports.

"I remember when we had 18 million tons (of grain exports) in the early '70s. This year, we barely have 5 (million)," said Herb Daniher, head of the Grain Handlers Union at Thunder Bay. The loss in business has lopped off two-thirds of the port's unionized work force, bringing the number to 600 from 1,800, he said.

But the Ontario port, which operates between April and December, is surviving. It has even boosted volume by serving as a launching point for exports of specialty grains like canola, flax, lentils and peas.

These have been the saving grace for Thunder Bay, which sits on the northwest shore of Lake Superior, 186 miles northeast of Duluth.

With so many terminals shuttered in recent years, the port has the capacity to store specialty grains, which may be warehoused for two to three weeks before being shipped, said Dan O'Connor, general manager at the Lake Shippers Clearance Association. Other ports lack space for long-term storage, he said.

"Thunder Bay handled a lot of canola in the '70s. Now in the last couple of years, there's been a lot of canola moving through Thunder Bay and the terminals have reacted to the change," said Murdoch MacKay, managing director of terminal services at United Grain Growers Ltd. in Winnipeg.

This year, Thunder Bay exported 1.1 million tons of canola alone, mostly to Europe, said Peter Kuzyk, a statistician at the Canadian Grain Commission. Exports of flax to Western Europe came close to 575,000 tons, he added.

"There's been a fairly sharp turnaround in those two grains. It seems we've regained some Western European markets," he said

Mr. Kuzyk said there have also been significant increases in the amount of oats moving through Thunder Bay as a result of new markets in the United States. These shipments have supplanted oats from Scandinavia, and the rise in volume may just be temporary depending on pricing, he said.

But the growth in business marks a dramatic change in the fortunes of the port. Starting in the late 1970s, Thunder Bay registered a steady decline in grain volume until managing a turnaround four years ago.

From highs of 17 million tons in the late 1970s, volume fell to a low of 709,000 tons in 1990-91, the grain commission said. Volumes have steadily climbed since then, with 3.22 million tons recorded in 1994-95.

While industry observers said Thunder Bay will likely keep the specialty- grains traffic, its wheat volume is probably lost because of a basic shift in markets.

As demand for Canadian wheat rose in the Pacific Rim, there was a shift in grain exports from Thunder Bay to West Coast ports such as Prince Rupert, British Columbia, said Don Bower, a spokesman for CP Rail System in Vancouver.

This shift can be traced to three factors, said Gerry Skoura, president of the Lakehead Terminal Operators Association, which operates grain-handling terminals at Thunder Bay.

First, more wheat is being grown in Europe, making the continent a net grain exporter instead of an importer. Second, grain customers in Africa and elsewhere in the Third World are too poor to pay for Canadian grain, he said.

And third, continuous exposure to Western culture has led to a change in the diet of millions of Asians who have developed a taste for wheat instead of the customary fish and rice. "You could see this starting with the (1988) Seoul Olympics," Mr. Skoura said. "Not everyone there (Asia) likes to eat sushi or rice all the time now."