Northern railway could benefit ag

Northern railway could benefit ag

A company proposes building a 2,570-kilometre rail network that would connect Alberta with ocean ports in Alaska

A proposed railway linking Alberta to deep water ports in Alaska will be “massive for farmers in Western Canada,” says the chair of a provincial task force studying such projects.

“This literally is a game changer for the nation for the next hundred years,” says Alberta MLA Shane Getson.

Potential benefits for farmers range from cutting Pacific transit times to Asian markets by as much as four days to establishing new agricultural industries for value-added products, he says.

If approved, the project by the Alaska-Alberta Railway Development Corp. (A2A) will be the largest such initiative undertaken in Canada in more than a century, he says. The last such project was the construction from 1906 to 1914 of the Grand Trunk Pacific, now Canadian National Railway.

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Although intrigued by A2A, president Lynn Jacobson of the Alberta Federation of Agriculture says the project is still very early in its development. Farmers have learned to be skeptical about government predictions about creating new agri-businesses, he adds.

After the federal government ended the Canadian Wheat Board’s monopoly in 2012, “all this value-added manufacturing was going to happen in the West,” he says. “Well, guess what? It didn’t happen.”

A2A involves a proposed 2,570-kilometre railway from Alaska to the oilsands region of Fort McMurray, Alta. It would ship oil and grain, but also meat, fruit, vegetables and dairy products.

The project would link Alaska’s ports and rail network to North America via the Yukon and northern Alberta, with all but about 300 kilometres of the route in Canada.

Prime Minister Justin Trudeau has said the project must first pass a review under the federal Bill C-69, although United States president Donald Trump recently issued a presidential permit to lay track across the Alaskan border into Canada.

A2A is headed by chair Sean McCoshen, who has said $100 million of the estimated US$17-billion project has already been invested in things such as engineering reports. The privately run company expects to finish construction of the railway by 2025.

Alberta Premier Jason Kenney recently appointed Getson as chair of a task force into energy utility corridors.

Getson said A2A could transform the region’s agriculture by boosting access to billions of people in Asia.

“I think this is an opportunity to start producing more specialty crops, and I also think it’s an opportunity to start adding to the value-added chain right within our own province and Western Canada, so instead of sending raw commodities all the time, we can get near finished or finished products to market.”

But selling such products isn’t simply a matter of getting to Asia, says Jacobson. It also depends on the market and who your competitors are in each country, pointing to how China prefers the whole seed for canola because processing it for oil creates Chinese jobs.

“We have to face up to the fact that a lot of countries, they want to do their own manufacturing,” he says. “They don’t have the product, but they don’t want to give up the manufacturing, either.”

However, if A2A moved up to one-and-a-half million barrels of Alberta oil per week, it would tie up its capacity to haul other goods for a total of three days, says Getson. “The remaining four days is open to whatever else is required to move,” he says.

Due to the fact Alaskan ports are closer to Asia than ports such as Vancouver, transit times across the Pacific Ocean could also be trimmed by up to four days, he says.

Alaska’s deep-water ports are suited to handling the increasingly larger vessels required by the world’s shipping industry, says Getson.

“Now you can start getting big ships moving a shorter distance, so you can move more commodities on a shorter timeline and have more certainty of deliveries, so that’s what it really starts to do,” he says.

The project could also help farmers by easing congestion on Canada’s existing rail networks, as well as offering much-needed competition to both Canadian Pacific Railway and CN, he says. The two transportation giants have “moved away from that first mile/last mile service model to basically concentrating on the long routes, and that’s where they make their money,” he says.

A2A could help sustain the smaller traffic volumes essential to short-line operators relied on by many western Canadian farmers, he says. Such operators arose after CP and CN abandoned local branch lines.

But before western Canadian products can get to Alaskan ports, they must travel the state’s railway system plus the 2,570 km from Alberta. A2A has said it will help lower the current high transportation costs in northwestern Canada, which includes the Yukon, as well as transit costs across the Pacific.

Freight costs in the existing Canadian rail network can be expensive “to a large extent, and sea transit, I mean, it varies up and down depending on the demand,” says Jacobson. “Five years ago, it was really, really cheap, and it gets more expensive as the demand increases on that, and the price goes up.”

Despite such concerns, he called A2A an interesting concept that likely must overcome several hurdles to reach approval.

“Especially for agriculture, it will help, especially when we’re just competing with other products for rail space. You know, it opens it up that much more,” he says.

As someone who grew up on a farm, Getson says Canadians need to change their mental lens from one of adding up the reasons why A2A will fail to thinking about what new horizons will become possible if it succeeds.

“And what it does is it literally changes for Western Canada the actual paradigm shift where we’re not tied into traditional ports, you don’t have to remain fixated on the south, we actually can use our position literally on the globe to become a logistics powerhouse,” he says.

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