Input sales grow revenue | $4 million in upgrades over two years allow SWT to ship 135 car trains
GULL LAKE, Sask. — It’s not always easy being the little guy located between grain handling giants Viterra, Richardson International and Paterson Grain.
But Monty Reich, general manager of South West Terminal at Gull Lake, Sask., says operating an independent, farmer-owned terminal definitely has its perks.
For starters, loyalty among SWT’s farmer customers is second to none.
This year, it is expected to push the terminal’s total handlings to 400,000 tonnes, a record for the 17-year-old facility.
“It’s extremely competitive in our area … but the competition is good and I think the producers appreciate it,” Reich said.
“We’re another option for producers, and we really pride ourselves on trying to have a close relationship with all of our customers. We’ve got an open door…. We try to sit down and listen and take our customers’ questions and concerns into consideration and I think, like any smaller business, we can be a bit swifter on our feet than the bigger companies can.”
Like many independents, SWT got its start in the mid-1990s when local producers got together and took stock of the changes occurring in the grain industry.
At the time, established line companies were closing smaller, less efficient elevators and centralizing their operations at larger, more efficient facilities located strategically across the West.
Farmers in the Gull Lake area, led by a handful of key players, began looking at the possibility of starting a farmer-owned facility.
After assessing the venture’s potential, a local share offering was launched and $3 million in start-up capital was raised.
Another $1 million was generated through sales of condo storage, and a partnership agreement was signed with Cargill.
Cargill owns a 44 percent stake in the company, comprised exclusively of non-voting shares.
Local investors, who hold voting shares and serve as the company’s directors, own the remaining 56 percent. The agreement with Cargill has worked well for SWT.
Cargill has taken a hands-off approach, allowing local management to steer the company in the direction it sees fit.
In exchange, SWT gains access to Cargill’s grain marketing network, its farm retail operations and port terminal space at Vancouver and Thunder Bay.
SWT’s elevator cost $9 million to build.
Work began in late 1995, and the facility opened its doors a year and half later, receiving its first load of grain in January 1997.
Since then, storage has been expanded to 53,000 tonnes and handling equipment has been upgraded to allow for more efficient receivals and car loadings.
Reich said location had much to do with SWT’s initial success.
The inland terminal is situated 10 kilometres east of Gull Lake on the Trans-Canada Highway.
It is also served by Canadian Pacific Railway’s main line, which runs west from Regina through Moose Jaw, Sask., Swift Current, Sask., and Medicine Hat, Alta., en route to Vancouver.
The terminal has a 135-car spot, which gives CP an opportunity to ship unit trains frequently and efficiently.
The terminal draws grain from an area that stretches 100 km east and west between Swift Current and Maple Creek, Sask., and 200 km north and south from Cabri, Sask., to the U.S. border.
The company has consistently improved its volumes, increasing from an average of less than 300,000 tonnes annually five years ago to a projected 400,000 to 420,000 tonnes this year, provided rail service and logistics can support that pace.
“If you take the last three years, our average handle would be up to 360,000 or 370,000 tonnes and we’re on target this year to be over 400, so we’ve definitely increased our turns,” Reich said.
“We’d love to say we have the potential to turn (our capacity) 10 times … but that would mean shipping a unit train every week of the year. We physically can. In the last two years we’ve put about $4 million into the elevator just to upgrade it and make it more efficient and faster so that we can load those 135s every week.”
Reich said SWT’s visibility in smaller communities gives it competitive advantages over its larger rivals.
As larger line companies centralized and withdrew from smaller communities, SWT devised a plan to invest in local communities and develop relationships with local growers who were losing elevators and farm retail services.
Today, SWT has a thriving network of satellite facilities that supply fertilizer, chemicals and other inputs to local growers.
Farm input sales through SWT’s retail arm now generate 40 percent of the company’s annual revenues.
Retail outlets are located in Gull Lake, Cabri, Hazenmore and Shaunavon, all in Saskatchewan, with additional expansions to be considered in the future.
“Right now, our crop inputs side of the operation has turned into a very large piece of our business and has really helped the company to evolve to where it is today,” Reich said.
“It’s been part of our capital investment plan to invest in our small communities. That’s why we’ve put our crop input supply businesses into those smaller communities to try and get closer to our customers.”