Scoular Co. is expanding its presence in Canada and bringing a new business model to the grain handling industry.
“We see things differently,” said Bart Brummer, vice-president in charge of Canadian operations.
“We do have a different vision. We do have a different culture. I think that’s the uniqueness that we really are going to bring to the Canadian landscape.”
The company wants to distance itself from the existing model of loading another boat in Vancouver or Thunder Bay or processing another bushel of canola at a local crush facility.
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“The focus in Canada, it seems, always has been asset driven.”
Brummer said 92 percent of grain handling capacity in Canada is owned by a small collection of players.
“The view that we bring is that we don’t see ourselves doing more of the same,” he said.
Scoular intends to handle grain that doesn’t go through a Scoular owned facility. It will use its fleet of Class 1 trucks and the rail system to move Canadian grain into its substantial U.S. network.
“We call that cross-country trade. We call that arbitrage,” said Brummer. “We’re pushing for expansion in the truck corridors to take some relief off the rail system.”
It doesn’t mean the company won’t have physical assets in Canada. It intends to acquire grain handling assets, form partnerships and enter into marketing agreements that support the north-south flow of grain.
Brummer said growers can expect announcements along those lines “in the coming months.”
He declined to comment on whether the company has put in a bid for CWB’s assets, but acknowledged the two have been in discussions and that there is a confidentiality agreement between the parties.
The company will handle a few select commodities, with a particular focus on wheat.
“We’re good wheat traders. We understand the wheat markets.”
Scoular also has interest in the burgeoning Canadian soybean industry in Manitoba and Eastern Canada.
It recently announced a partnership with Legumex Walker’s Pacific Coast Canola plant and a $16.5 million investment in the special crops side of Legumex Walker’s business.
Todd McQueen, senior vice-president of Scoular, said Canada is an intriguing new market for the 122-year-old grain company, which had $6.2 billion in sales in fiscal 2014.
“We really are interested in growing our business there, and we think there are opportunities for investing in assets,” he said.
Scoular keeps an internal database of new business development projects it is exploring in various regions.
“We’ve got numerous projects in that database that are in the confidentiality stage in Canada,” said McQueen.
“Some of them are small and some of them kind of medium-sized. I wouldn’t describe anything as huge.”
The company is searching for other projects to add to the database.
“It’s just a lot of activity going on up there, and we’re actively looking for businesses that we can work together (to) serve customers and grow our business in Canada.”
One opportunity it won’t be pursuing is a project to build a large grain collection facility near Northgate, Sask., minutes north of the Canada-U.S. border.
Earlier this year, Ceres Global Ag Corp., Scoular’s former partner in that project, announced it had terminated its agreement with Scoular. Scoular is suing Ceres for damages surrounding the project.
Scoular feels it can apply its vast grain handling and transportation experience to the Canadian marketplace.
“We just think going forward there will be lots of opportunities for new freight lanes and ways that we can better serve the marketplace and customers, and a number of those will require investments,” said McQueen.
The company is looking for unique business opportunities, such as its investment in an elevator in Netley, Man. It put money into the small facility so it could acquire and process rye for some of its distillery customers in the United States.
“We made an investment in some cleaning equipment and some space and kind of helped reinvent that business,” said McQueen.
The company is also considering building new facilities in Canada.
“We have a couple of spots where we’re considering it, but there’s nothing that’s really hot where we’re in the middle of working on a green field site,” he said.
Scoular’s interest in Canada isn’t limited to physical assets.
“We’re also investing in people. We’d love to add new qualified people to our group,” said McQueen.
“That’s one of our limiters today.”
The company is looking for merchandisers and traders who have connections to customers and existing businesses.
“We’ve got ideas and we’ve got the capital. We just need quality people to help run those businesses,” said McQueen.
The company employs eight people in its Calgary office and has three Canadians cross-training in the U.S. It also operates an office in Montreal. It has no other physical assets in Canada.
However, that hasn’t prevented it from being active north of the border. The first boatload out of the Port of Churchill this year was filled with Scoular grain.
It has also exported wheat out of the St. Lawrence and Thunder Bay, all of which flies in the face of the company’s new vision for grain handling in Canada.
“You do have to compete a little bit with the me-tooers,” said Brummer.
