Richardson pulling out of oilseed councils regrettable

Richardson International’s decision to withdraw from the three oilseed councils — canola, flax and soybeans — is regrettable.

Aside from the Winnipeg-based grain company’s participation in establishing the strategic initiatives of these organizations, it’s withdrawing about $1 million in funding, most of which went to the Canola Council of Canada.

It is hoped that other grain companies do not follow suit.

Richardson’s actions are important in the industry. It’s the largest agri-business in Canada and a significant worldwide player with more than 2,500 employees. So when the company makes a decision like this, it’s important to reflect on why, and how it can be avoided in the future.

Richardson has been after the canola council, the Flax Council of Canada and Soy Canada for some time to combine their organizations, arguing the company is not getting its money’s worth for its investment. The company says the organizations are duplicating their services and competing for agronomic services.

However, as we know all too well in Canadian agriculture, despite some overlapping membership among various groups, there is not a great deal of desire to be joined at the hip to one another. (Certainly, oilseeds are not alone in this. SaskWheat, for example, has steadfastly refused to join Cereals Canada.)

In fact, industry governance is so fractured that former federal Agriculture Minister Lyle Vanclief once compared trying to get groups together to “herding cats.”

So the three oilseed councils’ refusal to bow to Richardson’s insistence that they merge is a reflection of the entire industry.

Crop councils typically fund research, advocate for political policy, help with marketing and provide agronomy services, the latter of which isn’t to be overlooked.

The value of providing agronomy service to farmers, often for free, that is independent of grain companies, is important, especially with increasing consolidation in the industry.

In the case of canola, flax and soy, there are indeed differences that would make consolidation into one organization tricky. Canola is the Goliath, with more than 18 million tonnes of annual production in Canada. The council has a stated goal of increasing that to 26 million tonnes by 2025 through improvements to yield and genetics. That is an aggressive goal, and one that will take a great deal of commitment and energy.

Compare that with soy, with 7.7 million tonnes of production annually, and flax, with slightly more than 500,000 tonnes, and you see their point: they feel their marketing and other efforts would be subordinate to canola.

Unfortunately, the flax council is shutting its Winnipeg office, and while production of soy is largely focused in Ontario and Quebec, canola dominates the Prairies. The soy council wants to double production by 2027, and since canola and soy are somewhat competitors in oilseed markets, there is some understandable reluctance to embrace each other’s governance.

It’s not just Richardson’s funds that will be missed. The soy council says contributions by industry members often draw as much as 30 times more money from many other sources combined.

The canola council issued a statement acknowledging that it is reviewing its priorities “to ensure it fully-aligns with changing industry needs.”

Other farm organizations would do well to follow suit. The industry is changing, whether it’s for the better remains to be seen.

There is an argument that while Richardson was unhappy, membership in these councils and acknowledgement of the fractured nature of the industry was a corporate responsibility — a relatively mild one at that.

Still, it is a grain company’s prerogative to do this, but it’s not healthy for the industry.

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