The Prairie Alliance for the Future is ready to start hauling grain on rail lines leased from Canadian National Railway.
But it’s not going to happen unless the Saskatchewan government kicks in an unspecified amount of money.
“Financially they have to come to the table,” said PAFF chair Kyle Korneychuk, who described provincial funding as a linchpin to the project’s success.
The alliance, a coalition of farmers, community groups and railways workers, has signed a deal with CN to take over operations on 1,600 kilometres of prairie branch lines in Saskatchewan and Manitoba beginning in January.
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It says its rail-based grain collection and transportation system will mean fewer grain trucks on the road, saving the province an estimated $8.3 million in road maintenance costs.
“We feel it’s only fair that we receive a portion of those maintenance costs … that they won’t have if this system is implemented,” said Korneychuk.
The alliance has asked the province for a specific amount of money but Korneychuk declined to reveal it.
An official with the provincial government said the province is not ready to make a financial commitment to the PAFF project.
“In our last communication with them, we asked for further information on their business plan,” said Trish Alcorn of the government’s rural revitalization office. “We are waiting for this information before any decision is made.”
Once that information is received, she said, the province will make it a “priority” to respond to PAFF’s request.
The agreement with CN closes on Dec. 1, so the question of provincial funding must be settled within weeks.
Korneychuk said it shouldn’t take long for the province to make a decision on the funding because it has been kept fully informed during PAFF’s negotiations with CN.
The alliance has also discussed the issue with the Manitoba government, although Korneychuk said the amount of track being leased in that province is small, so the issue of financial support is not as important.
PAFF was created last year in a bid to preserve rail service on a network of lines in north-central Saskatchewan and northwestern Manitoba.
Its goal is to set up a not-for-profit, locally controlled grain collection and transportation and marketing system on lines leased from CN and operated and maintained by PAFF using employees contracted from CN.
Last week’s announcement that the alliance and CN had signed a “term sheet” represented the culmination of months of complex negotiations between the two sides.
The term sheet sets out the specific commercial conditions of the long-term lease under which the alliance will assume responsibility for all operating costs associated with the lines, including safety and maintenance, future capital investment and train operations.
The alliance will take over operations on three CN branch lines network on a staggered basis:
- On Jan. 3, 2002 it will take over the Mantario-Conquest network, consisting of 480 km in west-central Saskatchewan and home to the West Central Road and Rail Ltd., a farmer-run producer car shipping company.
- On Feb. 1, it will take over the 340 km Robinhood-Turtleford network in northwestern Saskatchewan. There is now no rail service on the line.
- On Sept. 1 it will take over the 816 km Tisdale-Turnberry network in northeastern Saskatchewan and western Manitoba.
Korneychuk said PAFF will provide Manitoba and Saskatchewan grain producers with a much-needed alternative to the existing grain handling and transportation system.
And he said it represents the first time farmers will be able to directly capture savings generated by improved system efficiencies.
“It’s an option which will provide greater economic return by allowing the farmers the opportunity to increase their own income through efficiency and transportation planning,” he said.
A provincial government study indicated that an alternate grain handling and transportation system such as the one proposed by PAFF could provide savings of $10 a tonne.
“I’m quite sure we can hit that number but we’re going to aim for something higher,” said Korneychuk.
Under the proposal, grain will be collected in a variety of ways, including high throughput elevators and traditional wooden elevators already in place, and yet-to-be-built producer car loading sites.
PAFF will be responsible for getting the grain to interchange points with CN, after which the national railway will take over. For the most part, PAFF will contract crews and equipment from CN, although it may buy a couple of locomotives for the Tisdale-Turnberry network, where it will also have an independent PAFF management team.
Francois Hebert, vice-president of corporate development for CN, said the PAFF project is unique in the North American railway industry because it involves not just transportation but also a system for gathering the commodity, in this case grain.
“I’m pretty convinced this does not exist anywhere else,” he said. “This is new ground. It’s not just another short line.”