Editor’s note: the Federal Government’s Crop Logistics Working Group is to plan for the removal of the single desk Wheat Board’s role in transportation. Here is an edited observation from a member of the Battle River Railway, a new generation cooperative in Alberta about that process.
By: Reg Enright
The Producer Car Shippers in their report to the Sub Committee of the Crop Logistics Working Group identified four factors affecting the future of producer cars under the new system:
1. Access to ports
2. Timely access to railcars
3. Marketing partners and
4. Multicar incentives
These are all hugely important. However, there is another point that was briefly mentioned and is the most important point going forward with the new marketing system.
The issue of elevation is the lifeblood of producer cars. Currently each shipper of a board producer car realizes a saving of $14 per tonne or $1,300 a producer car. This saving is transparent and real. With the new system this elevation becomes non-transparent and not real. The companies that own the port terminals, the same companies that own prairie elevators and want grain elevated, have no interest in paying producer car shippers their savings in elevation. Under the new system the $1,300 elevation savings will not be realized by the producer car shipper. How do we know this? Because under the current system canola is a non board grain as wheat will be after August 1, 2012. The terminals currently do not pay canola producer car shippers their elevation savings.
After August 1, 2012 when terminal operators do not pay producer car shippers elevation, the lifeblood of producer cars will cease to exist. The Battle River Railway in 2010-2011 shipped 731 cars. Their members or customers received $1,300 per car or $950,000 from saved elevation. That is real money, extra to what these farmers would have received delivering to a country elevator. If this money cannot be realized after August 1, 2012 why will farmers use producer cars?
When the CWB was in charge it was a simple transparent calculation. If an elevator elevated a farmers grain $14 a tonne was deducted at the elevator. If the grain was loaded in a producer car $14 was not deducted and the farmer received $14 per tonne more when the grain was unloaded at the coast terminals.
After August 1, 2012 a procedure must be in place to ensure producer car shippers can realize their savings when not using inland elevation. If no procedure is found to make the savings real the lifeblood of producer cars is gone and producer cars are dead. If producer cars are dead grain dependent shortline railways are also dead.
The only way producer car shippers can be sustained is by ensuring they capture their elevation savings. That can only be done with regulation. There is no other way. Producer car shippers have no tools in their toolbox to force terminal operators to forward the savings from elevation. When terminal operators keep the elevation savings it is the same as a person washing their car in their backyard and having a commercial car wash company charge that person for a car wash.
It is the official position of the Battle River Railway to ask, implore, and plead to the Federal government of Canada to create a playing field where producer car shippers can realize their rightful elevation savings. The future of producer cars and the future of grain dependent shortline railways depend on positive action by the federal government.
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