SASKATOON – In an airport hotel in Saskatoon in mid-July, 133 men and four women will cast an historic ballot.
By the time their votes have been counted, Saskatchewan Wheat Pool could have taken another step on its journey to Bay Street.
Those 137 pool delegates, meeting behind closed doors, will vote on a proposal to convert pool members’ equity to share capital, opening the door for non-farmers to take an ownership stake in the organization.
If two-thirds of them vote yes, the pool will have advanced to another stage in its metamorphosis from farmer-owned co-operative to publicly-traded corporation. Insiders and outsiders agree it’s almost impossible to overstate the significance of the vote.
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“This is probably the biggest decision Saskatchewan Wheat Pool has made in its 70-year history,” pool director Ken Elder told a membership meeting in Davidson last month.
University of Saskatchewan historian Brett Fairbairn agrees.
“Whichever way the decision is made, it will be a historic moment in the development of the farm sector in Saskatchewan,” he wrote in a recent article in The Western Producer.
Reasons for proposal
After a series of country meetings over the last few months, the proposal itself and the reasons behind it are well-known. Here are the highlights of what’s being proposed and why:
- The pool won’t be able to earn enough money in the coming decades to carry out needed capital projects, invest in value-added companies and pay equity to eligible farmers, say company officials.
nConverting that equity to common stock will free up millions of dollars a year, improve the company’s debt ratio to make borrowing easier and allow for new share issues to raise additional funds.
nPool members will be able to sell or buy shares through the company before the stock is listed on the Toronto Stock Exchange. Members will no longer build up patronage as they do business with the pool but will be in line to receive an annual dividend of around three percent. The company hopes to attract new members with a stock option plan and marketing incentives.
- Only farmers will own voting shares and be eligible to be delegates or directors. Delegates will still meet annually to direct farm policy and commercial operations.
The pool’s board of directors is committed to the plan, although some directors have said they support it because it has to be done, not because they particularly like the idea.
Pool president Leroy Larsen said the question of whether he wants the pool to make the change is almost irrelevant.
“It’s something that has to happen,” he said in an interview last week. “The financial environment that all organizations and businesses operate in has forced change and this is Saskatchewan Wheat Pool’s approach to operating in that change.”
If the proposal is not accepted, he said, the company will have to do things differently in the future, like reduce equity payments and cut elevator construction.
“We have to get in place a much more permanent equity base and this is the approach the board thought was the most appropriate.”
Not everyone agrees. Delegate Doug Faller of Southey doesn’t believe the financial viability of the company is at stake.
“I accept the argument that the management wants more capital,” he said. But he considers the demand for new capital to be “artificial” since it’s driven mainly by external investments.
Faller said he supports the idea of the pool investing in new businesses and diversifying its operations, “but if you can’t afford to do things, then reassess them.
“What I’ve been hearing from people at the meetings is we really have to think about living within our means,” he said.
