Now: Grain handling and storage a big, big business; Then: Your support made this possible

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NOW:

As farmer-controlled facilities go, the grain export terminals that Saskatchewan Pool Elevators Ltd. operated in Port Arthur, Ont., represented a significant group of assets.

The date was Oct. 26, 1933, and the item that appeared on Page 24 of The Western Producer was a notice thanking Saskatchewan farmers for their ongoing support and the role they played in building what was arguably Western Canada’s largest and most efficient grain handling network.

“Saskatchewan farmers now own as well as operate the whole of their system of country elevators, 1,067 in number,” the 1933 notice stated.

“Besides, they own four of the five terminals which they are operating on the Great Lakes. Such an achievement was made possible only through the steady patronage of farmers throughout this province.”

The company, also known as Saskatchewan Wheat Pool, had grown rapidly in 10 years to become what was widely viewed as the most powerful grain handling company in Canada.

It had been formed in 1924 and soon after became the largest co-operative marketing organization in the world, according to the Sask-atchewan Archives Board.

A flurry of grain elevator construction occurred across the province following the pool’s formation.

A pool elevator was a common sight at almost every town across the province, and some communities had two or three pool facilities.

In August 1926, the Pool bought the Co-operative Elevator Co. and its assets for $11 million. It made a final payment on those assets in August 1932, bringing under pool control a debt-free, farmer-owned grain handling network consisting of more than 1,000 country elevators and four export terminals at Port Arthur, better known today as Thunder Bay.

One of the final pieces added to the Sask Pool network was Pool Terminal 4, a grain export terminal that had total storage capacity of more than 6.5 million bushels.

In a nutshell, Saskatchewan farmers owned land, grain elevators, export terminals and an unmatched level of customer loyalty: all the key elements of a successful vertically integrated grain company.

A lot has changed over the past 80 years.

The number of farmer-owned elevators is a fraction of what it once was, and with one exception, grain export terminals are controlled by large grain handling companies.

Today, 14 grain terminals are located west of Soo Locks, including six at Thunder Bay, one at Churchill, Man., one at Prince Rupert, B.C., and six at Vancouver.

Of those, Alliance Grain Terminal in Vancouver is jointly owned by six prairie grain companies, four of which are farmer controlled grain companies.

The owners of Alliance include Paterson Grain, Parrish and Heimbecker, Weyburn Inland Terminal, North West Terminal, Prairie West Terminal and Great Sandhills Terminal.

Alliance has a storage capacity of 102,000 tonnes, or 4.6 percent of Canada’s total terminal elevator capacity.

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The facility, formerly owned by Agricore United, was acquired by the new ownership group after the federal competition bureau ordered AU to sell the facility in 2002.

So what happened to farmer-owned assets in the Canadian grain industry, and how has the loss of farmer ownership affected Canadian grain producers?

Terry Boehm, former president of the National Farmers Union, said it is unlikely that farmers will ever again control such a significant portion of the bulk handling system.

In an industry that is now controlled almost exclusively by large private companies and multinational agri-businesses, it is difficult to imagine how farmers could regain anything beyond a minor ownership interest.

“The most unfortunate element of this story is that the very assets that farmers built and financed are now being operated by companies that are seeking to make profits off of farmers,” Boehm said.

“It will be very difficult for farmers to challenge the economic might of these players today … but it’s not impossible.”

Boehm said it is regrettable that prairie farmers lost control of the assets they financed.

Poor management and unmanageable debt loads led inevitably to the loss of farmer equity, he added.

“I think that the biggest thing that went wrong was that the management of the pool elevator system lost contact with farmers and really abandoned co-operative principles in their headlong rush to become Cargill North,” Boehm said.

Managers adopted a strategy that involved centralization and the construction of new assets at key locations on high volume rail lines.

However, the co-operatives in-curred significant debt during the push for modernization.

That, combined with the erosion of farmer loyalty, was Sask Pool’s death knell, Boehm said.

Gerrid Gust, chair of the Western Canadian Wheat Growers Association, offered a different perspective, suggesting that competition in the grain handling industry is preferable to a non-competitive environment, even if farmers themselves owned most of the assets.

“Our biggest concern is competition,” said Gust.

“Whether it’s farmer owned terminals, private money or foreign money, as many different options as farmers can have is preferable.”

Gust said it isn’t entirely accurate to say farmer equity was lost.

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He said many farmers with equity in farmer co-operatives realized significant financial gains when the pool and other farmer-owned entities became publicly traded companies.

“Every farmer had equity in those entities and everyone had a chance to sell that equity for a price that they deemed it was worth,” he said.

“Some of that (equity) went down to zero, but some guys did … really well on their shares of Saskatchewan Wheat Pool especially.”

The addition of other farmer-owned assets to today’s bulk handling system would further enhance the competitive environment, Gust said.

However, farmer investments in the future will likely involve producers buying shares in publicly traded companies, he added.

The skills and knowledge required to buy grain, manage logistics and sell bulk shipments to overseas buyers are different from the skills required to produce grain, he said.

Norm Hall, president of the Agricultural Producers Association of Saskatchewan, said farmers have attempted to take control of their industry whenever it has taken a turn for the worse or when farmer interests are ignored.

In some cases, companies leave an industry when margins are too tight and profits are insufficient, leaving farmers to provide a service for themselves.

“The three prairie pools and UGG (United Grain Growers) were formed when the big grain companies of the day were taking advantage of farmers on grade, dockage, weights, or price, or all of the above,” said Hall.

“At that time, there was no recourse to protect farmers, so they did what they had to, banded together to bring sanity and transparency to the industry. The perceived need for the ownership of the system seems to have faded, even some of the farmer owned inland terminals that were fought so hard for in the ’80s and ’90s, and partially funded by government dollars, are being sold to the multinationals.… With the big three in Canada now being Viterra (Glencore), Pioneer and Cargill and … changes to the Canada Grains Act, the Canadian Grain Commission and the CWB, the question that comes to mind (is) will history repeat itself? Time will tell.”

THEN: Your support made this possible

Saskatchewan farmers now own as well as operate the whole of their system of country elevators, 1,067 in number. Besides, they own four of the five terminals which they are operating on the Great Lakes.

In August last, Saskatchewan Pool Elevators Limited made the final payments on the properties which it acquired in 1926 at a total price of $11,061,269. The properties represented by this purchase form a substantial part of the great system of today.

The amount of principal, to-gether with interest, involved in the payments which completed the deal, totalled $2,085,071.

Such an achievement was possible only through the steady patronage of farmers throughout this Province. The Company sincerely appreciates the splendid support given to its facilities during 1932-33 and again during the present crop season to date. It hopes it may be afforded the privilege of serving an ever-increasing number of growers in the future.

Saskatchewan Pool Elevators Limited. Head office: Regina. A Saskatchewan farmer-owned concern operated by and in the interests of Saskatchewan farmers.

Download a PDF of the original WP page here: 1933_oct26_p24

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