Spring
2016
grainswest.com
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some of them are very large. Minneapolis-St. Paul-based CHS
is a $44-billion business. Its members and affiliates throughout
the Great Plains (these are local grain handlers and suppliers of
fertilizers and chemicals) are also very large.
“Thus co-ops can and do operate on a very large scale. A
number of authors have argued that traditional co-ops have to
change—they cannot operate on the scale required with what
might be called the standard co-op structure. However, there
does not appear to be any one single model for this alternative
structure.
“In the United States, for example, co-ops have evolved in a
number of different ways. Nor is there any requirement that they
have to move to an investor-owned (or publicly traded) model—
again, the experience in the United States is that co-ops have
remained strong as co-operatives.”
Similarly, some of Fulton’s colleagues at the Centre for the
Study of Co-operatives agree that co-operatives can be a very
effective model for large or small businesses, although they do
face challenges.
“As the business or the co-operative gets bigger and more
complicated, it becomes a test of their governance,” said Brett
Fairbairn, acting director at the Centre. “We’re seeing today
where these co-operatives are managed by boards of directors
of experienced farmers who are well educated and trained in
leadership. What can this group of well-trained farmers bring to
the table?
“There are many good features of co-operatives as well
ON THE MOVE:
An employee of the Saskatchewan Wheat Pool loads bags of enriched flour onto a truck, ready to be sold in the marketplace.
as weaknesses. And the one main weakness we saw in the
Canadian Prairie grain co-ops was the ability of the board to
give direction and control management.”
Eric Micheels, an assistant professor in business and
economics at the University of Saskatchewan, said one feature
of the farmer-owned co-operative is the capacity for more
“patience capital.”
“With a publicly traded company, to some extent the
pressure is on to return dividends to the shareholders,”
Micheels said. “Whereas with a co-operative, as long as the
investment meets the goals of the co-operative, it can probably
be a bit more patient for the investment to pay off. The board
may be willing to wait a bit longer for the returns rather than
need that quick hit on returns.”
While there are successful agricultural co-operatives in
Western Canada, such as Federated Co-ops, American
co-operative CHS Inc., which is establishing retail outlets in
Canada, has developed a diversified multinational business
over its 85-year history.
It is all about providing good value and service to member-
owners, as well as returns over the long haul, said Lynden
Johnson, CHS executive vice-president, country operations.
“In the agriculture industry it is very difficult to get that quick
return on a quarterly basis as is often demanded by publicly
traded companies,” Johnson said. “Our owners are farmers—
family farms. They know they are getting value and service, and
they know in the cyclical world of agriculture the returns are
