SASKATOON – Suitors are lining up to win the affections – and more importantly the business – of grain farmers in southwestern Saskatchewan.
Two established grain handlers and a fledgling farmer-owned company are in various stages of planning to build big new grain elevators in the Swift Current-Gull Lake area.
Last week Saskatchewan Wheat Pool announced that it had completed an environmental audit on a parcel of land just west of Gull Lake on the CP Rail main line.
The company said the audit will allow it to finalize a land purchase with an eye to building a major grain handling facility, although the details and the timing of the project have yet to be determined.
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A few weeks earlier, news came that Pioneer Grain Co. Ltd. is planning to build a high throughput elevator at Swift Current, to go along with new marketing and farm supply offices. Again, details like size and location are undecided.
Meanwhile, South West Terminal Ltd., a company started by a group of local farmers last spring, is busy raising money to build a 15,000-tonne terminal at Gull Lake. Cargill Ltd. will be a major investor if the public share offering is a success.
Ernie Sommer, president of SWT, said that while it will obviously be a very competitive situation, he believes there’s more than enough grain in the area to keep all three new elevators busy.
Break even tonnage
Over the last 10 years, annual grain production within a 100-kilometre radius of Gull Lake has averaged 46 million bushels, or just under 1.2 million tonnes. He said SWT needs to handle about four million bushels to break even, with condominium storage pushing total purchases up to around six million.
“If you triple that, that gives you 18 million bushels, which still leaves 28 million,” said Sommer.
As of last week, SWT was nearly halfway to its minimum goal of selling $1.2 million worth of shares, with about two months to go until the Feb. 28 closing date. The minimum purchase is 25 shares at $100 apiece.
Sommer said the news that two established grain handlers also plan to build in the area isn’t surprising and doesn’t affect his company’s plans.
“It’s an encouragement to work a little harder,” he said, adding one of his company’s goals all along has been to provide more competition for area farmers. “I guess it will be a little harder for all of us to make a profit, but in the end we should all give better service to the producer.”
Rick Jensen, Sask Pool delegate for the Gull Lake area, said while it’s safe to assume the pool will build some sort of facility in Gull Lake, the size and other operational details haven’t yet been decided.
“We’ve cleared the first hurdle in our goal to build a full service elevator,” he said, adding the pool has been looking for a suitable site in the area for three or four years. “I think this purchase will tell members that the pool is committed to this area of the province.”
He added the company can’t make firm plans until the federal government makes decisions about grain transportation policy. The nature of the project could change depending on what happens in areas like method of payment of the Crow Benefit, incentive rates and branch line abandonment.
Some local grain industry officials think that if the abandonment process is thrown wide open, virtually all the rail lines in southwestern Saskatchewan south of the Trans-Canada highway could quickly disappear.
Nick Fox, vice-president of Pioneer, said some of the rail lines south of Swift Current can only handle boxcars and consolidation is inevitable. He added that Pioneer’s decision to build in Swift Current represents a natural extension of the company’s existing operations.
“We’re very strong in that southwestern Saskatchewan area,” he said. “Swift Current is kind of the natural hub of our network of elevators down there.”
Fox laughed when asked if there is enough grain business in the area to justify the construction of three new high throughput facilities: “I can’t answer that question. We certainly think there’s enough for us.”
