SASKATOON – A deregulated, low-cost, more efficient grain handling and transportation system may not have much room for producer cars.
But that doesn’t seem to bother the people who have led the fight to preserve the right of individual farmers to load and ship their own rail car.
“The aim of our group is that hopefully we can get enough efficiency into the system that it doesn’t make any sense to use a producer car,” said Lee Erickson, a farmer from Donalda, Alta.
Erickson is a member of the Western Producer Car Group, an organization set up in 1991 by farmers who ship grain in producer cars. The group’s stated purpose is to work toward a more efficient grain handling system while protecting the rights of individual producer car shippers.
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Paul Orsak, a Binscarth, Man., farmer and chair of the WPCG, said the end of the Crow Benefit rail subsidy and the accompanying rise in freight rates on Aug. 1 won’t by itself have any short-term impact on producer car users.
He said that could change as the system evolves over the next few years. “If there’s a deregulated environment with railways offering incentive rates and grain companies being more competitive, there would be less reason for producer cars.”
The key will be whether elevators with large car spots can negotiate significant enough freight discounts from the railways, combined with any handling discounts they might want to offer, to attract producer car grain back to the elevator system.
Right now producer cars shippers save $8 to $10 a tonne by avoiding the elevation and other handling charges at country elevators. There is no difference in the freight rates for producer cars, although they are not eligible for any of the discounts on shipments of 18 cars or more.
In the 1990-91 crop year, 11 percent of prairie grain cars were spotted in blocks of one to three cars, 49 percent in blocks of four to 10 cars, 31 percent in blocks of 11 to 20 cars and nine percent in blocks of more than 20 cars.
Heather Gregory, a grain industry consultant from Winnipeg, said while the maximum rate scale will continue to protect small car spots from punitive rates, the discounts for large spots could be increased in the post-Crow environment.
“I think if you’re going to run producer cars, you’re going to have to either tack on to somebody else who’s loading quite a few cars at an elevator or you’ll have to be able to handle a lot more cars yourself,” she said.
Richard Wansbutter of Saskatchewan Wheat Pool said the issue isn’t so much the future of producer cars as the future of small car spots in the drive for more efficiency and lower costs.
“If producers could get together and load 25 cars, more power to them,” he said.
CN Rail spokesperson Jim Feeny said the railway is still working out its rate scale for 1995-96 but producer cars have not been a high priority in those deliberations.
The railway has tried to reduce some of the additional costs associated with handling one or two cars by spotting them adjacent to elevators or getting five or six producer cars together.
A recent study by the senior grain transportation committee found that the smaller the car block, the greater the cost of spotting, pick-up and administration. For example, additional fuel costs can be as much as $46 per car.
A 1993 study by the WPCG found that it cost the railways about $80 more (about 90 cents a tonne) to handle a single car than an 18-car block, a difference the group described as insignificant.
Gregory said a crucial issue for producer cars is the car allocation system. Now, producer cars are allocated off the top of each week’s car supply. If car allocation becomes more commercial, as some are proposing, an individual farmer could have trouble outbidding large grain companies for a limited supply of rail cars.
