EDMONTON – The bad news is Agricore made little money last year. The good news is it did better than the other grain companies.
“Our results are the best in the industry,” said chief executive officer Gord Cummings.
“It’s a rather sad commentary to say we’ve done as well or better than others. But that seems to be fairly small consolation,” Cummings told the 94 delegates at the prairie grain co-operative’s annual meeting.
Agricore made $2.9 billion last year, but after taxes and expenses the grain company was left with a net income of $1.2 million, up slightly from last year’s $900,000.
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“There’s no questions the kind of earnings we had in the past year are not acceptable to us,” said Agricore president Neil Silver.
“It has not been a great year.”
Like the other prairie grain companies, increased competition, low grain prices and poor product margins cut deep into company profits.
The company earned $62 million in 1997 and $98.9 million in 1998, which included $40 million from half the sale of its Vancouver port, Cascadia, to Cargill.
“We must increase our profitability,” Silver told the delegates. This is the second year in a row that the company has not paid patronage dividends.
In the mid 1990s, Alberta Wheat Pool and Manitoba Pool Elevators launched multi-million dollar building projects to build high throughput elevators in key locations across the Prairies.
With the merger of the two companies in 1998, Agricore now has 22 in Alberta, 13 in Manitoba, including one joint venture, and six in Saskatchewan, including one under construction. Agricore wholly owns only two of the elevators in Saskatchewan.
“The hundreds of millions we have spent in the last couple years have come to an end,” Silver said.
There were two or three more on its “wish list,” but they have been shelved until profits improve.
Results were disappointing in the agri-business division, the part of the company responsible for seed and chemical sales, Cummings said. Chemical sales were well below budget. The division made $5 million compared to $14.7 million last year.
The sale of the money-losing Prairie Sun Grain and Refried Bean businesses will help cut losses in the future. Together both those businesses lost more than $5 million last year.
The terminal business was a bright spot, he said. More than 4.6 million tonnes of grain were shipped through Cascadia last year. The terminal handles 40 percent of the grain moving through Vancouver.
The company will focus on cutting costs and streamlining business next year.
“We must take some costs out of the system,” Silver said. “We have worked with management finding solutions to those problems.”
He said there are plans to close more wooden grain elevators and close or amalgamate some smaller farm supply centres.
“Producers can’t afford both the old and the new system,” Cummings said.
He said the old wooden grain elevators must come down if the company is going to have a healthier financial picture.
He said farm supply centres generating less than $2 million of business will likely close or be amalgamated. He wouldn’t give further details on which centres would be affected.
