BANFF, Alta. – Farmers owning a fleet of rail cars will not guarantee that service would improve on the grain lines.
That’s not news for Sinclair Harrison but the farmer coalition he represents still wants to put in a bid on the 13,000 government-owned grain cars up for sale.
“Ownership of the cars guarantees us nothing but if you go into a poker game you want to arm yourself with a few aces,” he said.
Harrison was part of a panel discussing the feasibility of car ownership at the recent Western Barley Growers Association convention here.
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CP Rail, Alberta Wheat Pool and the Western Canadian Wheat Growers representatives said the coalition is alone in its desire for a farmer-owned fleet. The coalition is supported by Manitoba’s Keystone Agriculture Producers, Wild Rose Agriculture Producers in Alberta, the Canadian Wheat Board Advisory Committee and several rural support groups in Saskatchewan.
Farmers serious
Harrison, president of the Saskatchewan Association of Rural Municipalities, argued that farmers already have an investment of $70 billion in Western Canada and they want their bid to be taken seriously.
So far their efforts have been stymied because the coalition isn’t allowed to see the operating agreement for the cars. The railways have an agreement that gives them first refusal when the cars are sold.
The coalition has checked business models and believes it can cut costs by tendering out maintenance contracts. CP said maintenance averages about $5,000 per car. It is a cost any new owner will have to consider because the cars are becoming obsolete and need more repairs as they age.
However Harrison said a grain car is not a sophisticated piece of equipment. It’s basically a steel bin on wheels.
“Anybody who can maintain a tractor or a combine can maintain a rail car,” he said. “There’s nothing magical in maintaining cars.”
Rick Sallee of CP Rail said besides maintenance there are expenses like the costs incurred when the cars are idle. Car demand fluctuates with low requests in summer and peak demand in October.
“Who is going to hire those cars when there is no demand,” said Sallee.
CP is looking at a $1 billion price tag for replacing cars and locomotives. The plan is to replace about 1,000 cars annually.
New cars offer 5,100 cubic feet of space which gives 15 percent more carrying capacity on the railway compared to CP’s and CN Rail’s older cars that have about 4,400 cubic feet.
Efficient service wanted
CP favors a common fleet rather than a number of owners. Sallee said his company doesn’t need to own the cars but the sale must be handled on a commercial basis to provide efficient, acceptable and competitive service.
Paul Earl, a policy adviser for the Western Canadian Wheat Growers, said owning cars is not a workable idea. Ownership won’t add more to the system. A car shortage is more often due to allocation problems.
Gordon Cummings, chief executive officer of Alberta Wheat Pool, agreed. He said a contract program signed among all participants moving grain would make the system more accountable. If there were problems, everyone who signed the contract would be culpable, instead of the farmer absorbing demurrage costs at the coast when trains don’t arrive on time.
