For most businesses, a financial report showing a three-month after-tax
loss of $12.8 million, a net consolidated loss of $26 million and
long-term debt of $480 million would have senior executives leaping out
of windows.
For Saskatchewan Wheat Pool, it’s a sign the company is on the road to
recovery.
Considering the financial depths to which the pool sank in the last few
years – losing $91 million in 1999-2000 and accumulating debts of more
than $1 billion – things are looking better. But it’s clearly a long,
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winding, bumpy road back to profitability.
“Yes we are losing money, that’s painfully clear,” says chief executive
officer Mayo Schmidt, who took over the reins of the troubled company
in January 2000. “But this is a process, not an event.”
Saying he’s more concerned about the future than the past, Schmidt said
the company is “relentlessly and vigorously” pursuing a recovery plan
that has the support of lenders and investors.
Pool officials say the worst is behind them and the changes made during
the last few years, while painful for many communities, employees and
farmer members, should allow the company to prosper in a deregulated
grain handling and transportation environment, assuming that crops and
market conditions are normal.
They even suggest the financial crisis and the changes it engendered
were a blessing in disguise, leaving the company with a lean,
efficient, sophisticated grain collection system.
“We took the necessary steps and did it quicker than our competitors,”
said Schmidt. “We took a big negative for our company and turned it
into a positive.”
The Toronto-based financial and investment community seems to think the
company is on the right track.
“They’ve gotten good proceeds from asset sales, they’ve reduced debt
and they’ve improved their financial flexibility quite a bit,” said
grain industry analyst David Schroeder of Dominion Bond Rating Service.
“I think they’ve bottomed out and are improving now.”
Schmidt even talks cautiously about expanding again once the books are
in good shape. But this time, the pool will focus on companies that
provide direct and immediate returns.
The pool’s startling descent to the brink of financial ruin and its
struggle to return to profitability makes a compelling story, but
should farmers care what happens to the company?
Stewart Wells, a former pool delegate and now president of the National
Farmers Union, said if the pool was a stronger advocate for farmers’
interests on issues like grain transportation and orderly marketing,
then its survival would be important.
“But if they’re just going to be continually focused on trying to
maximize their profits for the next quarter so they can service their
shareholders in downtown Tokyo or wherever, I couldn’t care less
whether it’s them, Cargill or Louis Dreyfus,” he said.
Brett Fairbairn, who watches the pool from the University of
Saskatchewan’s Centre for the Study of Co-operatives, said farmers
should care. He said the pool is one of the precious few places in
prairie agriculture where farmers have significant influence.
“It’s important that people get over their feelings about what’s
happened in the past and look to the future and ask what avenues are
available by which farmers can influence their industry,” he said.
“The pool’s democratic control structure remains an important avenue.
Losing it would be bad for agriculture and keeping it invigorated would
help the industry.”
