The move to deregulate nearly the only user of the Hudson Bay port of Churchill, Man. will come with per-tonne incentives for shippers who continue to ship grain on that route.
Speaking Friday in Tisdale, Sask. to the annual meeting of the Hudson Bay Route Association, Agriculture Minister Gerry Ritz formally launched a five-year, $25 million Churchill Port Utilization Program (CPUP), to be paid out in per-tonne economic incentives against the overall cost of shipping grain.
The incentive, which for 2012 has now been set at $9 per tonne, is to apply to the cost of shipping eligible grain from its initial point to where it's loaded in Churchill on an outbound ocean-going vessel.
Commodities eligible for the incentive include barley, wheat, canola, rapeseed, corn, peas, oats, buckwheat, chickpeas, flaxseed, lentils, mixed grain, mustardseed, rye, safflower seed, solin, sunflower seed and triticale. Beans -- except for soybeans and fababeans -- are also eligible.
"This program will ensure that the Port of Churchill remains a strategic shipping option for our farmers and grain companies who want to take advantage of this world-class facility," Ritz said.
The federal government telegraphed its plans for a Churchill program in October, when it first tabled its Marketing Freedom for Grain Growers Act to deregulate the Canadian Wheat Board's single marketing desk for Prairie wheat, durum and barley.
The Hudson Bay route and the Port of Churchill, opened in 1931, are considered the most efficient export path for grain from their catchment area in northern Saskatchewan and northwestern Manitoba, allowing farmers to save on rail freight costs and avoid St. Lawrence Seaway charges.
Working against the port is its narrow July-to-November shipping window due to ice on Hudson Bay. Grain and other freight and passenger rail traffic also face an 1,100-km trip over heaving northern Manitoba terrain to reach Churchill.
The port has been operated since 1997 by Denver-based OmniTrax, which also owns the former Canadian National (CN) rail line from The Pas, Man. to Churchill, now dubbed the Hudson Bay Railway.
The Canadian Wheat Board has overwhelmingly been the port's No. 1 customer, responsible for an average of 13 to 20 grain vessels using the port each year, compared to four or five vessels carrying other freight.
The government said it "recognizes that the Port of Churchill continues to be an important shipping option for wheat and barley, and that it has the potential to be an option for other products as well. At the same time, it will need time to adjust to a new grain marketing model in Western Canada."
Beyond the five-year CPUP, a government spokesman said by email Friday, there are "no plans, at this time" for further funding at the port.
The government said its program "has been designed to encourage grain marketers who have never shipped through Churchill to consider the feasibility of using the port."
CPUP applications can be submitted on or after April 1 of the fiscal year in question for the current shipping season (mid-July to the beginning of November). Applicants can submit for multiple shipments for each shipping season.
CPUP is budgeted to provide eligible shippers with up to $5 million per program year; no one shipper can collect more than $23 million over the life of the program, the government said.
A spokesman for Agriculture and Agri-Food Canada said in an email that the $25 million in shipper incentives was already allocated, not through last month's federal budget, but as part of the federal/provincial Growing Forward ag policy funding framework.
On top of the shipper incentives, the government on Friday confirmed last October's announcements for federal support for Churchill including:
- $4.1 million over three years through Transport Canada for port maintenance;
- an extension to 2015 from 2013 for the project completion date for infrastructure improvements funded through Western Economic Diversification Canada; and
- "exploring options for the development of the community of Churchill."
Federal funding for icebreaker services on Hudson Bay is outside CPUP, the spokesman added.