Western Grain Elevators Association says government help for port and its rail line must not support unfair competition
The Western Grain Elevator Association wants assurances that any government incentives used to upgrade the rail line to Churchill, Man., and the port there are not used to support competing businesses.
Executive director Wade Sobkowich said the organization’s members are concerned that their competitors could get a leg up if improper federal subsidies are provided.
He said he understands that rail access is an important service to the community of Churchill, but clear divisions must be made on what support Ottawa will provide.
“That has to be clear, that federal funds are not going to private companies,” he said.
The WGEA represents major grain handling companies responsible for hauling about 90 percent of Western Canada’s bulk grain exports.
The Hudson Bay Route Association, a supporter of the northern rail line and the port at Churchill, doesn’t see a problem with such funding if certain conditions are followed.
Wayne Bacon, second vice-president of the HBRA, said the federal government subsidized shipments on the rail line by $9 per tonne in the days following the end of the Canadian Wheat Board.
He said with that incentive, even large shippers like Richardson International used the Churchill line.
“I don’t think it can be specific funding just for, say, two or three different companies to use, but I think if it’s open for anyone to use, I don’t see the problems,” he said.
Bacon, who also operates Northern Lights Railway and farms near Kinistino, Sask., said the reopening of the Churchill rail line and port could be a boon to local short lines through central and northern Saskatchewan and Manitoba.
He said government incentives are going to be critical in the early going to find capable people to operate the facilities.
However, Sobkowich said the situation can become complicated if subsidies are paid to an enterprise that will then compete with existing export terminals.
“If the government is propping up the rail line to get grain for export, it gets pretty messy to try and figure that out.”
He said large grain companies have excess capacity at Thunder Bay, and federal money that supports a company that will draw business to Churchill, away from existing terminals is unfair.
He said WGEA members are interested in using their own terminal spaces at Thunder Bay and the West Coast. They have no assets in Churchill.
“The future of the (Churchill) port for grain exports, the opportunities are probably limited,” he said.
However, Bacon said he thinks grain companies will take advantage of Churchill, especially if there is a freight rate subsidy. He added that he found it difficult to find space for producer cars at Thunder Bay.
Arctic Gateway, a public-private consortium, bought the rail line leading to Churchill, the Hudson Bay Port and a petroleum storage compound near Churchill. Grain and pulse processor AGT Food and Ingredients and Fairfax Financial Holdings together own 50 percent of Arctic Gateway, while Missinippi Rail Limited Partnership owns the other 50 percent.
The sale price was not disclosed.
In a news release, the president of Fairfax said Ottawa has already promised long-term assistance, although details were vague.
“The Government of Canada acknowledges the value and importance of our inclusive group and is supportive of our efforts providing a long-term support package through Western Diversification and Export Development Canada,” said Paul Rivet, president of Fairfax Financial Holdings.
The facilities were bought from U.S.-based Omnitrax after Omnitrax said it could not afford to fix the rail lines, which had been badly damaged by flooding.
Repair crews have been dispatched since the sale with hopes of getting the line operational before winter freeze-up.