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What happened to those co-op grain elevator companies? Part 3

Grain co-op history and what marked the beginning of the end of those companies

The establishment of co-op organizations came out of the realization that people needed to work together for the benefit and betterment of everyone and the ability to join together to either sell or purchase needed products at fair value to ensure a decent living and livelihood for all involved.

When the First World War broke out in 1914, the demand for wheat was unprecedented, and all energies were devoted to growing the crop. The Canadian Wheat Board was formed as a temporary war measure to market the country’s entire crop, and this stabilized wheat prices for the first time. With the end of the war and dissolution of the Wheat Board, prices began to plummet and farmers were in crisis. The power players within the Winnipeg Grain Exchange prepared to recapture the wheat market.

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Farmer groups like the Farmers’ Union and the Saskatchewan Grain Growers’ Association believed the solution was for farmers to combine their crop and market it themselves. This was the start of the co-op grain elevator movement across the three Prairie provinces.

Grain co-op history

The first grain co-operative to be formed was in Saskatchewan in 1906. It was the Grain Growers’ Grain Company.

The Alberta Farmers’ Co-operative Elevator Company was established in 1913 by the United Farmers of Alberta, and in 1917 they amalgamated with the Manitoba-based Grain Growers’ Grain Company to form the United Grain Growers Company.

Alberta Co-operative Wheat Producers Limited (Alberta Wheat Pool) was formed in 1923. Manitoba Pool started in January 1924 as the Manitoba Co-operative Wheat Producers Limited and the Saskatchewan Wheat Pool was formed in 1923–24.

In 1996, the Saskatchewan Wheat Pool became a publicly traded company, putting an end to 73 years of co-operative ownership.

In 1998, Manitoba Pool merged with its counterpart the Alberta Wheat Pool to form Agricore Co-operative Limited. In November of 2001, Agricore and United Grain Growers ultimately formed a new corporate entity known as Agricore United, issuing public shares.

In 2007, Agricore United was taken over by the Saskatchewan Wheat Pool and the company took on the name Viterra. The merger marks the end of co-operative grain marketing in Canada. This publicly traded corporation operated until 2013 when it was purchased by Glencore International.

So what happened?

Back at the peak of the country grain elevator system in 1933, there were 5,758 elevators in operation across the Prairie provinces. In the 1930s, falling farm incomes led to rural depopulation.

In the 1950s, rising expectations, improved roads and mechanized farm equipment accelerated this trend. Fewer people working larger farms meant many small branch lines became unprofitable. Rail companies sought permission to abandon them. Deregulation of the railways and the demise of the Crow Rate in 1996 led to major rail line abandonments. This greatly affected the grain companies as they had to abandon many elevator locations that for them may have been profitable.

All of these events forced the grain elevator companies to revamp their business strategies going forward. For some — those that did not have the vision to see what was coming — it was too late, and they were either forced out of business or consolidated with other companies.

When I look at today’s reality where we now have only 354 grain elevators operating across the Prairies, that is a massive rationalization of an industry within a 90-year time frame — a 94 per cent reduction in numbers.

However, when I look at what companies are still in the grain game today, there are some that were there at the beginning before this all happened, and they are strong and viable today — which makes me ask the question, “How did they survive while the co-ops did not?”

I was working in the grain elevator business in Alberta from 1982 until 2006, so I was there for the transitions from Alberta Pool to Agricore, Agricore to Agricore United, and then to Viterra.

Here is my take on what happened or did not happen that could have allowed the grain co-ops to survive those years of change and to still be viable, member-owned co-ops today for the long-term benefit of its members.

In the early ’90s as all of the changes were happening, there were discussions amongst the three sisters as they were called (Alberta Pool, Sask Pool and Manitoba Pool) about merging together to become one large co-operative.

Rumour has it there were too many big egos at the negotiating table to ever allow the discussion to get to a meaningful point of possibility. There were more arguments about who was going to take over, what the company would be called, who would run the company and who would be on the board, that the discussion never got past the point to where it would ever become more than just an idea. They had lost focus on the fundamental philosophy of why a co-operative existed: for its members’ benefit and betterment.

Then, in 1996, the board of Sask Wheat Pool brought in a CEO from the United States who was incentivized to turn the company around. His idea was to take the company public and turn away from the member-owned co-operative model, which did not match up with the U.S. business philosophy of corporate enterprise.

This, in my opinion, were the first nails in the lid of the coffin of grain co-ops in Western Canada.

In 1998, the two remaining co-ops (Alberta Pool and Manitoba Pool) merged to form Agricore Co-operative.

So why couldn’t the three pools have come to an agreement earlier and kept a Prairie grain co-op alive?

Back to big egos and bad decisions made at the board tables of all of these co-ops. Sask Pool was the bigger co-op and it wanted to run the show, which no doubt upset the other two, and the beginning of the end of grain co-ops was the end result.

The rest is chronicled above.

About the author

Columnist

Brian Wittal

Brian Wittal has 30 years of grain industry experience and currently offers market planning and marketing advice to farmers through his company Pro Com Marketing Ltd.

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