Saskatchewan Wheat Pool can’t afford to take special measures to help locally owned short-line railways survive, says a pool official.
The pool has been criticized for unexpectedly closing elevators along several short lines, putting the future of those community-owned ventures in jeopardy.
One group has even raised the possibility of going to court to argue that the elevator closures violate its working agreement with the pool.
But Richard Wansbutter, the pool’s vice-president of transportation and logistics, said the pool has lived up to its legal obligations.
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Any notion that the company has a responsibility to local farmers or communities to keep elevators open no longer applies in today’s competitive grain handling environment, he said.
The new freight rate structure also makes it difficult to be competitive shipping from small elevators on branch lines.
“It’s no secret that in order to remain competitive, we’ve had to reduce our cost structure, and that has meant closing those elevators.”
Wansbutter said the company has been up front about its strategy of creating a network of high throughput elevators that can load 50 and 100 car trains.
The hard reality is that the smaller wooden elevators on short lines don’t fit into that plan.
He said the pool can work with those groups by signing agreements to handle grain they ship in producer cars at pool export terminals.
As for the prospect of a legal dispute, Wansbutter said the pool always lives up to its contractual obligations. He said working agreements with short lines contain a proviso that elevators will remain open as long as certain minimum grain volumes are shipped.
If tonnages fall below that level, economics dictate that the pool can’t be expected to keep those elevators open.
An official with Red Coat Road and Rail has said that while the two pool elevators on the line fell short of the volumes specified in its agreement with the pool, that was due largely to actions taken by the pool. That includes allocating insufficient rail cars and trucking grain out of the area to high throughput facilities at locations like Weyburn.
Wansbutter acknowledged the pool has some control over how much grain moves through a particular elevator, but said the company is sometimes forced to move grain to larger elevators for marketing reasons.
To participate in a special Canadian Wheat Board program to ship high quality wheat to the United States, the pool has to move grain to Weyburn.
“So in one sense, yes we most definitely have control over car allocation,” he said.
“But on the other hand, if I have to access grain for U.S. movement and do it through Weyburn, that’s what the marketplace dictates.”
