Spring
2016
grainswest.com
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co-operatives from 1911 to the 1990s, said Gary Storey, a
retired University of Saskatchewan ag economics professor.
The dominant players for many years were four separate
co-operatives: the Alberta, Saskatchewan and Manitoba
wheat pools, and United Grain Growers.
In 1998, the Alberta Wheat Pool and Manitoba Pool Elevators
merged to form Agricore Cooperative Ltd. In 2001, United
Grain Growers combined its business operations with Agricore
Cooperative Ltd. to form Agricore United, a publicly traded
company.
Meanwhile, the Saskatchewan Wheat Pool (SWP) carried
out a massive expansion phase after listing its shares on the
Toronto Stock Exchange in 1996—a strategy that nearly drove
the co-operative into bankruptcy. A new CEO, Mayo Schmidt,
was hired in 2000 to get the company back on track with
a restructuring and refinancing program that was initiated
in 2003. He eventually led the Pool to become a federal
corporation under the Canada Business Corporations Act in
2005, ending its co-operative status.
In 2007, the SWP won a bidding war against James
Richardson International to take over Agricore United, creating
a new company called Viterra Inc. Six years later, commodity
giant Glencore PLC struck a $6.1-billion deal to buy Viterra.
Now, Glencore might sell some of Viterra’s assets in an
effort to reduce company debt, but there have been no new
developments since last fall.
HOW THE CO-OPERATIVES STARTED
In recounting the history of grain elevators in a chapter for the
online Saskatchewan Encyclopedia (esask.uregina.ca), Storey
explains that, from the late 1800s to 1910, Canadian grains were
handled and marketed by numerous private Canadian, U.S. and
European companies.
According to Storey, “In the period leading to 1910, the
early elevator business was represented by flour-milling
companies with head offices outside of the Prairies … “When
the Canadian Northern Railway was opened in 1900, interest
in elevator construction was spurred. The British-American
Company was consequently formed in 1906; the U.S.-based
Searle Grain Company also entered the Canadian market and
operated on Northern Railway lines; and in 1909 the Peavey
interests of Minneapolis formed the National Grain Company,
which operated on CPR lines. Many other companies were
formed and also entered the elevator business, such as Alberta
Pacific Grain Company, Pioneer Grain Company, Norris
Grain Company, British Co-operative Wholesale Society,
Scottish Co-operative Wholesale Grain Company, Parrish and
Heimbecker, McCabe Brothers Grain Company and N.M.
Paterson and Sons.”
But as these companies and their elevators appeared on
the Canadian Prairies, pioneering farmers grew increasingly
discontented with business practices of “line elevator
companies,” Storey writes. The companies were often referred
to as the “syndicate of syndicates” for their alleged collusive
practices in fixing prices.
Fearing a private monopoly, farmers petitioned the federal
government to take over the grain terminals and provincial
governments to take over all grain elevators.
“Although governments resisted this policy, there were
exceptions,” said Storey. “The government of Manitoba, for
example, purchased a number of primary country elevators in
1910, which proved to be unprofitable.”
While governments wouldn’t act, farmers decided to take
action on their own. In 1899, there were 26 farmer-owned
elevators on the Prairies, although they all struggled to
some degree. The first major farmer action came in 1906
with the formation of the Grain Growers’ Grain Company in
Saskatchewan. Support from the Saskatchewan government
for the concept of farmer-owned-and-operated elevators
eventually led to the formation of the Saskatchewan
Co-operative Elevator Company. A similar path was followed in
Alberta with the creation of the Alberta Farmers’ Co-operative
Elevator Company, which eventually merged with the Grain
Growers’ Grain Company in 1917 to form United Grain
Growers. The Saskatchewan co-op remained independent.
These early co-operatives were looking for a way to
collectively market their grain. In the early 1920s, farmers across
the Prairies created the Manitoba, Saskatchewan and Alberta
Wheat Producers Ltd., and that company formed the Central
GRAIN LEGEND:
John McFarland was the general manager of
the three Pools’ Central Selling Agency. He also acted as Prime
Minister R.B. Bennett's chief wheat advisor.
