RED DEER — Alberta farmers want the federal government to order the major railways to allocate 20 percent of its cars to producer car shippers and short-line railway operators.
A resolution that passed unanimously at a recent Alberta Federation of Agriculture meeting said such a move would allow small grain industry players to compete.
Reg Enright, vice-president of the Battle River Railway short line that runs from Alliance to Camrose, said short-line railways are having a tough time getting enough grain cars.
“This issue is affecting us in an enormous way. Short lines and producer cars have to be a way of holding the system to account,” said Enright.
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“I have been loading producer cars for 30 years. There was a time when the first 10 percent of allocation went to producer car users. That situation has reversed now. Producer cars and short line railways are on the bottom of allocation. CP Rail has gone to a system (that gives) cars to those with 112 car spots along the line. After they get looked after, (they) don’t have any cars for (other) players in the game, hardly.”
Enright said he hopes the resolution will encourage the federal government to develop a guaranteed car allocation system for small players in the industry.
“We do have a monopolistic situation. The only answer is regulation. There is no way we’re going to get cars on our short line without somebody forcing them to. If something isn’t done, producer cars and short line rails are really going to be in a bad way.”
Ken Eshpeter, chair of Battle River Railway, said producers took a chance and bought the branch line from Canadian National Railway in 2010 as a way to preserve strong rural communities and give local farmers another way to haul their grain.
“We put our money where our mouths were thinking we could make it work,” said Eshpeter
Battle River Railway moved 2,100 cars of grain last year and could have moved 3,000 if more cars were available.
“Farmers are getting enough confidence of moving grain on the Battle River Railway that I think within two years we could be moving 6,000 cars of grain,” he said.
“Where are these 6,000 cars going to come from in the confines of this system that has just about all allocation tied to big grain and big rail.… How is the Battle River Railway going to grow its legitimate business to 6,000 cars if the total allocation of producer cars is only 10,000 cars?”
Todd Lewis, vice-president of the Agricultural Producers Association of Saskatchewan, said a lack of short line and producer car allocation is a growing problem in southern Saskatchewan, where 13 short-line rail companies operate.
“APAS believes producer cars are (a) great way to level the playing field when basis gets too wide. It keeps everybody honest. The small shippers are part of this business, too,” said Lewis.
“It’s a big issue and certainly in Saskatchewan it is probably a bigger issue than it is here in Alberta.”
Eshpeter said guaranteeing short lines and producers cars a certain number of grain cars is one more way farmers are assured of receiving the best price for their grain.
“We have to understand, in a system that has given complete control of grain … to big grain, (we’ve) got to have a referee once in a while, and short lines and smaller grain companies act as those referees, but life is getting harder and harder for them to accomplish that.”
Eshpeter hopes to meet with members of the Canada Transportation Act review committee to present his company’s case. The federal government launched the review of transportation issues after last year’s difficulty hauling grain from the Prairies.
Mark Hemmes, president of Quorum Corp., a grain handling and monitoring company, said he doesn’t believe mandatory car allocations are the way to deal with grain car shortfalls and doubts the government would be interested in setting aside a set number of grain cars for producer cars and short lines.
“The way it is set up right now, if you give more to one side, you have to take away from somebody else,” Hemmes said.
“You don’t want to end up pushing the railways back where they aren’t making money any more. You want to have them financially healthy.”
Hemmes said he believes a solution will likely come from the Canadian Transportation Agency through regulation or legislative change.
“The right solution is going to come through the collaborative solution that will come out of the CTA review as opposed to coming down and hitting them over the head with a stick,” he said.
Hemmes said legislative changes must allow transparency in the grain system to stop anti-competitive behaviour.
“What’s going to make the grain economy grow? Big sticks don’t make that happen, but you have to have some kind of regulatory influence, and they don’t have that either. We’re in a void.”
mary.macarthur@producer.com
