REGINA – High canola prices may have contributed to low profits for Canamera Foods last year, but the chief executive officer of Saskatchewan Wheat Pool said that doesn’t produce any conflict of interest for managers of the farmer-controlled company.
In his report to about 500 Class B shareholders attending the pool’s annual meeting, Loewen said a small canola harvest and resultant high prices were a major factor in reduced profits last year at Canamera, an oilseed crushing company in which the pool has a 33.3 percent interest.
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That led one shareholder to ask whether there was any conflict of interest between the pool’s desire for high profits for its processing businesses, whether in canola, oats or barley, and its farmer-members’ desire for high commodity prices.
“No,” said Loewen. “That’s simply the way it is.”
Speaking to reporters later, he said it wasn’t just high canola prices that caused Canamera’s problems, but the combination of those prices and low world vegetable oil prices fueled by an unusually large world soybean crush.
“As long as the soybean oil price is up there, high canola prices are fine,” he said. “We would like high prices for producers and high profits from our agri-food business. We’d like to have our cake and eat it too.”
He said it’s in the pool’s best interests for producers to get high prices, because that means farmers will buy more farm inputs.
Earlier, Loewen told shareholders 1996-97 was an excellent year for the pool, citing several highlights:
- Revenues were up seven percent to $4.23 billion, with net earnings down slightly to $47.3 million from $48.4 million ($1.60 per share versus $1.64). An “extraordinary” fourth quarter allowed the company to make up for last winter’s grain transportation problems and unusually low crushing margins.
- Grain operations earned $60.5 million, up eight percent. The pool handled 11.4 million tonnes of grain through primary elevators, up 23 percent. Terminal volumes were also up 23 percent to 7.6 million tonnes, thanks to a 50 percent increase in tonnage at Thunder Bay, Ont.
- Farm supply sales were a record $539 million, although earnings dropped nine percent to $55 million. A highly competitive market resulted in lower margins on fertilizer sales.
There were also higher expenses from the company’s Agshare marketing program and costs associated with recovery of bad debts. Loewen said the outlook for the farm supply sector is positive, with the pool’s expansion into Alberta and Manitoba expected to provide new sales opportunities.
- Sales were up five percent in agri-food processing, but earnings dropped by half to around $11 million, due to low returns from oilseed crushing subsidiary Canamera Foods.
- Livestock volumes were up nine percent but earnings down slightly to $2.4 million. Loewen said the outlook for the company’s livestock business is bright , reflecting the company’s decision to get into the hog business with Heartland Pork Management, which is expected eventually to produce more than two million hogs annually.
- Publishing operations produced earnings of $3.4 million, up 138 percent, due mainly to improved advertising sales at The Western Producer.
The pool last week sold its 56.2 percent interest in Printwest Communications Ltd., the company that prints The Western Producer. He said printing is not one of the pool’s core businesses, but added the company has no plans to sell the newspaper.
