SASKATCHEWAN Wheat Pool may be on the verge of a huge change, both economic and cultural. The grain company set up to protect the interests of farmers by making them the principals in the business is now thinking seriously about putting the company into the hands of shareholders.
That means anyone who wants to invest the business can, and with that investment have a margin of control.
This, after the company’s shares have dropped from $20 per share a few years ago to about 35 cents at the start of 2005.
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Admittedly times are difficult. The Pool and its farmer-owners are struggling with lower prices and the cult of efficiency and operating margins and market forces.
To raise the money to build and operate its business, the Pool needs to get more money than farmers can provide.
That was also true when the prairie pools were set up. In the early years, it meant relying on bankers. The imminent collapse of the prairie pools led to the formation of the Canadian Wheat Board.
Now the Sask Pool needs more than bankers. It needs investors who are also shareholders.
The problem with shareholders is that they have no ultimate loyalty to the company. Their loyalty is to themselves, particularly how much money they can make. And if they are not getting the kind of return they expect, they will try to change the company. If that doesn’t give investors the profit margin they want, they have two other options.
They can take their money elsewhere, selling off their shares for whatever they can get. If the sale price pushes share values down, the company’s financial picture is dragged down too. But that’s life in the world of free-market capitalism.
Or, some shareholders can try to put enough money together to buy out the other shareholders and take control. That would be possible if the SWP removed the limit that no one could own more than 10 percent of the company.
So, once again, the fate of farmers would lie in the hands of others. The circle would be complete.
When I was working in radio and covering the activities of the agricultural community back in the 1980s, someone made an interesting observation. The comment was that Cargill could pick up SWP for pocket change, if it wanted to.
Back then, of course, it could not. In the future that may be possible, but only if the farmers who own the Pool approve some changes under discussion.
I wonder what life would be like in Saskatchewan, especially rural Saskatchewan, if the Pool were a subsidiary of Cargill or another multinational agri-food business.
Would things be better? And whose concerns and values would direct the company and its future?
Rob Brown is a former agricultural writer and broadcaster now doing studies in ethics. He can be reached at cedarrbb@netscape.net. The opinions expressed in this column are not necessarily those of The Western Producer.
