The plan to build a producer-owned strawboard plant in Killarney, Man. was shelved after local investors decided they’d rather sink their money into an inland grain terminal Pioneer is putting up there.
But the idea behind Southwest Strawboard isn’t dead, says chair Brian Moore. It’s just sleeping.
The 48 local investors who came together with almost $1 million for the strawboard plant recently formed an alliance with James Richardson International, owner of Pioneer grain company, to build a 17,000-tonne inland grain terminal near Killarney.
The deal with Pioneer was struck after the group began approaching the major grain companies about the possibility of forming a partnership on the strawboard plant.
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“They came back with a counter proposal to go into the terminal,” Moore said.
Investors uneasy
But investors didn’t need much convincing.
Moore said the strawboard project started to look weak when initial cost projections that looked unrealistic were revised. Costs grew to a steep $39 million, from $25 million, since the plant would have to be larger in order to turn a profit. That’s when investors started to squirm.
“We felt the company was highly leveraged and the market became more unstable and it would be better to sit on it for a year and watch,” Moore said.
The group’s willingness to join Pioneer in building a new terminal represents a growing trend that Moore said will continue.
“There’s a realization in rural communities now, where we’ve looked at wheat boards and governments where farmers got the runaround long enough, and now a lot of them are prepared to do something for themselves,” he said.
“I think you’ll find in the future the new generation of farmers are prepared to invest in communities and invest in themselves.”
Richard Rounds agrees.
The head of Brandon University’s Rural Development Institute said he believes there’s money in farming communities for local investment initiatives. The question is how much.
“The money is out there,” said Rounds. “But it will come down to whether they can find enough people to invest these larger sums.”
