By Ragnar Haagen

Wheat board end could be trouble for short line railroads

Oct 21, 2011 | 12:26 PM

The federal government’s decision to scrap the Canadian Wheat Board’s monopoly over western wheat and barley sales could spell trouble for short line railways in the province.

“Where it’s really going to impact us, is the wheat board assists us in car movement from various ports where we need to move the grain and they assist us in various levels of government,” said Armend Roy, president of Wheatland Railway in Cudworth, Sask.

Roy does not believe there will be much short term impact for his company because the producer car allocations are done by the Canadian Grain commission.

“But if the government moves in to make any changes to the Canadian grain commission, that could be an even more serious impact for us,” Roy said.

In grain transportation, short lines make agreements with port loading companies and have to match the grain moving off short lines to various ports so that they can access the rebates given from the port terminal companies.

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“From time to time we’ll have problems getting a certain type of grain to port, and the Wheat Board will then intervene on our behalf to make sure that does happen,” Roy said.

“If the wheat board isn’t there, we’ll have to work directly with line companies and I’m not sure they’ll be as cooperative as the wheat board is.”

Another potential problem arises from the open market concept as some farmers will choose to move their loads by truck to the bigger inland terminals.

“That was the beauty of the short lines,” Roy said.

“Producers can load their grain locally and achieve higher returns for the most part but as well we are certainly helping some of the smaller producers move their grain locally and as well we’re assisting in taking traffic off of the main roadways.”

The biggest problem short lines such as Wheatland will now face has to do with the preferential treatment that producer cars currently have in the grain transportation system.

“Under the current method, producer cars get preferential treatment in terms of car allocation¬—they come right off the top,” Roy said.

“What the government is hinting at now is that producer cars will be treated like all other car allocations in the system and if that comes to fruition, it could be devastating for short lines.”

The government tabled legislation to privatize the wheat board on Thursday with the hope that the monopoly will end by Aug. 2012.

rhaagen@panow.com