ADRIAN, N.D. – This winter, as Canadians speculate and debate the pros and cons of government plans to deregulate the rail industry, Darwin Bossert has some advice.
For many small prairie elevators and the farmers who own them, rail deregulation will be bad news, said the manager of a struggling elevator in this small North Dakota town.
Given more freedom to price and to decide who gets cars, railways will favor main lines and large-volume, high-turnover elevators.
Many smaller, out-of-the-way elevators will be bypassed or will lose their lines, predicted Bossert.
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“For Canadians who depend on smaller elevators, I can’t see any good coming out of this,” he said. “It is the railway’s nature to feed the big and to let the small die.”
Bossert figures he speaks from experience.
For 31 years, he has managed the Adrian Equity Elevator in this small town southwest of Fargo in east-central North Dakota.
For the past 15 years, he and the grain industry have been living with the after-effects of rail deregulation in the United States.
For Bossert and many other smaller elevators not lucky enough to be on main lines or in other high-volume grain handling areas, the news has been mainly bad.
Adrian lost its rail service and now must truck its grain to larger mainline elevators 60 or 80 kilometres away. It means grain prices paid to farmers who deliver to the Adrian elevator are lower and many younger farmers are driving past the elevator these days, looking for better prices at larger centres.
It is a familiar story across this Great Plains state.
Capacity is the key
Under rail deregulation, the elevator and rail systems have shrunk and the only elevators with a guaranteed future seem to be those with enough track and loading capacity to handle 26, 52, 75 or even 100-car unit trains.
Since 1979, the North Dakota elevator system has shrunk 18 percent to 484 licensed sites. Many of those are smaller units that have been swallowed by larger sites to become feeder “satellite” elevators.
During the first 12 years of deregulation, more than 1,600 kilometres of rail were abandoned – more than 13 percent of the system – and the North Dakota Public Service Commission is predicting a new rush of abandonment applications soon.
It has been a period of system consolidation, centralization and concentration. North Dakota grain system players who have lived through it say it is inevitable deregulation will bring the same trends to Canada.
“I would expect a lot of rail lines will be abandoned, there will be longer truck hauls and a consolidation of the system in Canada,” said John Bitzan, a transportation economist at the Fargo-based Upper Great Plains Transportation Institute.
“There can be a debate about whether the efficiencies that flow from that are good or bad overall, but I think that is what you will see in Canada, inevitably.”
