Canada government approves hopper cars transfer to farmer coalition

Canada government approves hopper cars transfer to farmer coalition    The government of Canada has agreed to a five-year lease of approximately 12,000 grain hopper cars to the Farmer Rail Car Coalition.
   The decision marks the end of three years due diligence to review the FRCC’s October 2002 proposal to acquire the cars.
   Under terms of the agreement the fleet will transfer permanently to the FRCC after the five-year lease period, for a total C$205 million ($176 million). The transfer price comprises lease payments totaling C$65 million ($56 million), a credit of C$35 million ($30 million) for car refurbishment work to be done by the coalition, and a final payment of C$105 million ($90 million) over a further eight-year period.
   The FRCC, which includes members from western grain producer groups, agricultural associations and rural government organizations, said it will spend about C$20 million ($17 million) per year in maintaining the hopper car fleet and C$35 million ($30 million) in the first five years to refurbish the fleet.
   “This lease-purchase arrangement effectively balances the interests of producers with those of industry and taxpayers,” said Jean-C. Lapierre, Canada’s Transport Minister.
   The lease-purchase agreement will be finalized next year, following confirmation that the FRCC has agreements in place with Canadian National Railway and Canadian Pacific Railway for the use of the cars.
   In a related development, the Canadian Wheat Board said it intends to exercise its options to purchase the 1,660 used rail grain hopper cars it currently leases. The purchase, when concluded, will increase the CWB’s owned fleet of cars to 3,510.
   “The main benefit comes from earning a return for farmers on their investment in these cars,” said Ward Weisensel, the CWB’s chief operating officer. “Owning these cars also gives farmers, through the CWB, the opportunity to exercise more control over car supply. It could also help us in negotiating rates and service with the railways.”
   Commenting on the FRCC deal and the CWB’s planned purchase, CWB board chair Ken Ritter said: “These initiatives help empower farmers by giving them a bit more control over grain transportation, which is so crucial to their bottom line.”