The Manitoba government will provide a $615,000 forgivable loan to farmers who are establishing a short-line railway.

For more than a year, farmers in the Manitou area, about 170 kilometres southwest of Winnipeg, have been struggling to keep open a stretch of rail line abandoned by the Canadian Pacific Railway.

Wednesday's announcement by the province means the Boundary Trails Railway Company will begin operating this summer, said Kevin Friesen, president of the BTRC and a Manitou-area farmer.

The 35-kilometre rail line between Manitou and Morden will be the first short-line in the province owned by producers and business leaders.

"In the last five years of farming, the farmers in this area have been hauling their grain, some of them as far as 50, 60 miles, to the main terminals, which are located in Morden and Killarney," said Friesen. "What this will allow is not only a huge competition factor for those large companies, it will also allow [area farmers] to not have to ship their grain nearly as far."