Saskatchewan’s newest short-line railway company had a successful year in 2016, but there were a few potholes along the way.
Northern Lights Railway, based at Kinistino, Sask., moved nearly 600 cars of grain in the past 12 months, mostly oats and peas, said NLR president Wayne Bacon.
However, moving wheat has been a challenge, he added.
As well, a recent decision by the Saskatchewan government to eliminate the short-line railway sustain-ability program couldn’t have come at a worse time.
“Northern Lights Railway has been doing fairly well,” Bacon said.
“From April to April, we’ve moved just under 600 cars, mostly oats going to Quaker Oats, but we moved some peas to the West Coast as well.
“We also moved some wheat for G3, going down to Mission Terminal (at Thunder Bay), but that’s one of the areas where we’ve struggled is finding someone we can work with on wheat.”
Northern Lights acquired 59 kilometres of track from Canadian National Railway in 2015.
The deal was financed partly by a $550,000 interest free loan from the Saskatchewan government.
The NLR employs three people and uses one locomotive to serve grain growers from Birch Hills, Kinistino, Beatty and surrounding areas.
Its grain cars are transferred onto CN’s system at Melfort, Sask.
The company leases a fleet of 50 hopper cars and has an arrangement with CN that ensures 25 empty car spots every two weeks.
Bacon said CN has been a reliable partner, providing good service and valuable advice.
“They’ve been excellent to deal with,” he said.
NLR organizers initially reckoned they would need to move 400 grain cars a year to break even.
However, the elimination of the provincial short-line maintenance grant program has forced the company to revisit its projections.
Without the grant, NLR will need to move 500 cars to meet its financial and maintenance targets, Bacon said.
Convincing farmers to ship wheat in producer cars has been a challenge, he added.
Large grain companies have been competing aggressively for locally produced grain.
“The biggest challenge with wheat is that all of the port terminals are owned by the big grain companies so they want to push everything through their own country elevator system. They don’t really want to deal with producer cars,” Bacon said.
“The smaller companies would like to do business except they have to work with one of the (competing terminal owners)….. That means they get charged a little bit more, so it puts them at a bit of a disadvantage.”
Concrete elevators in Melfort, Warman, Saskatoon, Aberdeen and other nearby communities have been successful in attracting wheat that is grown in NLR’s backyard.
Grain that is trucked long distances on the provincial highway system could be shipped more efficiently — over a shorter distance — on the locally owned short line.
Elevator companies have more flexibility when they buy grain because they handle larger volumes. They can offer an average grade for everything that’s delivered when buying large volumes of wheat from a grower, as opposed to establishing a grade on every load. The grain is then blended to meet required specifications.
By comparison, producer cars are sampled and graded individually, Bacon said.
Car-by-car grading can add another layer of complexity to the marketing process, which some growers are reluctant to deal with.
The unexpected closure of the grain export terminal at the Port of Churchill has also affected NLR’s operations.
Northern Lights had a deal in place to move grain for a farmer-owned grain company in Alberta.
Grain sourced in north-central Saskatchewan was supposed to be loaded and transported by NLR and shipped through Churchill.
That deal ran into trouble when OmniTrax Canada unexpectedly closed the port last year and suspended grain shipments through the northern terminal.
About 30,000 tonnes of grain are still sitting at the terminal, according to Canada’s Grain Monitoring Program.
Bacon, who is also a member of the Hudson Bay Route Association, said the Port of Churchill would have been an ideal export route for grain produced in the NLR draw area.