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New Short Line Hits The Rail

Ken Eshpeter and 150 of his farming friends and colleagues are now in the railway business.

They still farm in central Alberta — seed, harvest and market a wide range of crops — but now they’ve added a final link in the process. They created a company and bought the rail line near their communities in an effort to get crops to market in an efficient and timely manner.

Eshpeter, who farms at Daysland (southeast of Edmonton) is chairman of the Battle River Railway (BRR). It’s a new generation co-op that as of late last year began operating an 80 kilometre stretch of former CN rail line between the communities of Alliance and Camrose, Alta.

These farmers, along with a number of other individuals, businesses and municipal governments ventured into the short line railway business not only for grain shipping economics, but also to support six small communities along the line.

“For the farmers involved in this railway, we see this an extension of our farms,” says Eshpeter. “The line runs through our communities, through our farms, and for any one who lives in rural areas they know that different aspects of their infrastructure are disappearing on a daily basis. And for us as producers this was one important part of our infrastructure we didn’t want to see lost.

“We felt it was better to keep the line open, because contrary to what so many ag companies like to tell us, Super B trucks do not run free. They might be a nice status symbol but they are expensive. So we felt there was an opportunity here to keep this line open and viable which is not only good for producers but the communities they live in.”

A NEW GENERAT ION CO-OP

CN Rail had raised the flag on the Battle River Rail line in 2003 saying due to declining volume it was at risk of being closed. At that time the company and farmers formed a loose partnership to use the line for producer car shipments. That arrangement worked reasonably well until 2008 when CN Rail said 650 producer cars per year just wasn’t viable and the line would be discontinued. Eshpeter, and several other producers who had been involved in the producer car shipments looked into the option of buying the $5-million salvage-value assets of the line.

They formed the new generation co-op in May 2009, began selling shares, and by March 2010 had raised $3.5 million in various levels of share offerings, and borrowed the remaining $1.5 million from Alberta Financial Services Corporation. They took ownership of the line in June 2010 and began pulling rail cars this fall. Along with the 80 kilometres of rail line, in a separate deal they also bought a 3,000 horsepower SD40 railway engine #5353 to move empty and loaded cars from various points along the line to Camrose where they are picked up by CN Rail and hauled to the export terminal at Prince Rupert, B.C.

The company has hired a full time marketing manager, Rob McDonald, and since the company isn’t moving cars continuously they hire an engineer and other train crew on an hourly basis as needed.

POTE NTIAL TO DOUBLE CAPACITY

BRR expects to handle 800 producers cars in 2011 — that is their breakeven figure. And they hope to increase handling by 200 cars per year towards a potential goal of about 1,500 cars. BRR shareholders are the primary users now, but they hope to attract grain from non-members who will be able to load producer cars for a fee.

There is no established grain handling facilities left along the line that begins at Alliance in the southeast, and passes through Galahad, Forestburg, Heisler, Rosalind and Kelsey before reaching the active CN line at Camrose. There are six sidings and BRR has already been working to expand and improve grain handling facilities at each siding.

This year BRR will have seven bins at the Alliance siding, seven at Galahad, seven bins and an older grain elevator now owned by one of the shareholders at Forestburg, five bins at Heisler, 11 bins at Rosalind and two bins at Kelsey. Each bin has capacity to fill a rail car.

“There is opportunity to expand producer car use of the line,” says Eshpeter. “Particularly south and east of Alliance there is a large area there we hope to draw grain from but we need to increase both the capacity and convenience of grain handling at each siding to attract the business.”

For now BRR only handles Canadian Wheat Board grains — wheat and export barley — but they hope to expand their producer car service to include other crops such as canola and peas. The whole process of establishing a short line railway has been a learning experience, Eshpeter says with government regulations and the politics of private grain companies causing some frustration. He hopes to have plans for shipping producer cars of non-board grains figured out over the next few months.

With the Camrose siding only about 90 minutes from a 1.5 million population base in and around Edmonton, future plans may also include developing a BRR tourist business, offering day trips along the line which also borders the scenic Battle River.

“Continuing to operate this line is good for producers and also good for these smaller communities,” says Eshpeter. “But one of the other important aspects of this project is that it has brought 150 farmers together. We all realized we had to work together to make this happen.”

LeeHartisafieldeditorforGrainewsin Calgary.Contacthimat403-592-1964orby emailat [email protected]

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Field Editor

Lee Hart

Lee Hart is editor of Cattleman’s Corner based in Calgary.

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