Last week’s spring-like temperatures couldn’t disguise the chill that descended on relations between Saskatchewan Wheat Pool and the other two prairie pools.
Sask Pool announced March 24 that it will build six new grain handling facilities in Alberta and two in Manitoba over the next three years in order to compete for more of the prairie grain market.
Officials from Alberta Wheat Pool and Manitoba Pool Elevators say they weren’t surprised by Sask Pool’s move and aren’t about to give in.
“We’re not going to abandon the market and just say ‘why don’t you come on in, Sask Pool, welcome to Alberta’, ” said Gordon Cummings, chief executive officer of Alberta Wheat Pool.
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He added the Sask Pool incursion could result in overbuilding at some points, resulting in intense competition for farmers’ business and possibly the closure of smaller elevators.
Both AWP and MPE are also looking for ways to expand their operations into Saskatchewan, especially with their failed bid to buy United Grain Growers and set up a new grain handling co-operative in the province.
“There isn’t anyone in the grain industry that doesn’t recognize the Saskatchewan market as being very attractive,” said Alberta Pool vice-president John Pearson.
Alberta Pool, which already is working with farmers building a new grain terminal at Dodsland, Sask., is talking with other producer-owned terminals in the province and will “aggressively” pursue possible deals, said Cummings.
Manitoba Pool is “looking at potential developments in various places,” said company president Charlie Swanson, who declined to be more specific.
Cummings said the longstanding tradition of the three grain handling co-ops working together as so-called sister pools is “very close to dead.” The pools may still work together on specific projects or joint ventures, but it will be strictly business.
“It’s not going to be done for any reason other than that it makes economic benefit and sense to all of us,” he said. “It probably would have been nicer for the three pools to get together and merge but we clearly run in different directions and courses and we are competitors.”
Swanson said “whether or not there is opportunity for us to deal any further together down the road, only time will tell that.”
In the new competitive environment it will take a little extra work to maintain a good working relationship with Sask Pool, but it’s not impossible, said Pearson.
“It wouldn’t be right for us to punch the panic button. But there needs to be further discussion with some cool, collected heads.”
Sask Pool president Leroy Larsen makes no apologies for his company’s decision to move into the other provinces and take market share away from the other two pools.
“That’s the name of the game.”
He sees no reason for his company’s latest business venture to create problems amongst the pools, even suggesting it could be an incentive for closer co-operation and more joint ventures if there are efficiencies to be gained.
Sask Pool says its move into Alberta and Manitoba reflects its philosophy that provincial borders no longer mean anything in an increasingly globalized grain industry. During the UGG takeover bid, the other two pools made similar arguments, saying they needed to expand their traditional geographic base in order to be efficient and competitive in the new global trading environment.
