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By TOM STEVE
Rolling
FORWARD
Farmerownershiprevisited
In 21st-century agriculture,
E.A. Partridge and Sintaluta, SK, are little
more than footnotes in the history books.
And yet Partridge and the tiny farming
community about an hour east of Regina,
SK, played a major role in shaping a farm-
er-controlled grain industry in Western
Canada. That story is worth revisiting in
the current debate over farmer ownership
of grain companies, fertilizer plants and
seed companies.
Partridge, a homesteader and part-time
schoolteacher, was instrumental in found-
ing the Grain Growers’ Grain Company
(GGGC), the first large-scale farmer
co-operative in Western Canada.
In early 1905, Partridge made a trip to
observe the activities of the Winnipeg
Grain Exchange. Based on that expe-
rience, Partridge argued that farmers
needed to unite to achieve fair returns in
the face of the unsavoury practices of the
grain trade. A first organizing meeting of
the GGGC was held in Sintaluta in Janu-
ary 1906, and the company was officially
launched in September with Partridge as
president.
In 1917, the GGGC and the Alberta
Farmers’ Co-operative Elevator Compa-
ny amalgamated to form United Grain
Growers (UGG). The Prairie wheat pools
followed in the 1920s, and for the balance
of the 20th century the Prairie grain-han-
dling business was dominated by the pools
and UGG. These farmer-owned co-ops
were highly diversified, owning port
terminals, fertilizer manufacturing, seed
research programs, feed mills, value-add-
ed processing, hog barns and livestock
auction houses—even a controlling inter-
est in a doughnut chain (Robin’s Donuts).
Over the years, the pools and UGG were
forced to restructure their finances, and,
in the case of the Saskatchewan Wheat
Pool, came within a whisker of bankrupt-
cy. Eventually, the companies combined
under a single banner as Viterra in 2007.
In 2013, Viterra was sold to the Swiss-
based multinational Glencore Xstrata,
thus ending the era of significant farm-
er-ownership of Canadian agribusiness.
While a handful of successful farmer en-
terprises remain—among them Alberta’s
Providence Grain and Westlock Termi-
nals—farmers no longer hold a significant
financial stake in the industry.
Recently, the notion of farmer invest-
ment in the value chain has resurfaced,
with some arguing it is needed to counter-
balance the power of the multinational.
Farmers of North America, a Saska-
toon-based company, has made a pitch
to farmers to invest in a $1.76-billion
nitrogen fertilizer plant at Belle Plaine,
SK, and recently tried to raise a further
$380 million in an unsuccessful bid to
acquire controlling interest in the CWB
(formerly the Canadian Wheat Board).
There is also talk of farmers investing in
a wheat and barley breeding company in
light of indications that Agriculture and
Agri-Food Canada intends to get out of the
varietal development business.
But history has shown that farmers are
lukewarm on the idea of making large
investments in their industry beyond the
farm gate. Case in point: For many years,
UGG and Agricore United offered a share
purchase plan that gave customers the
option of buying shares in the compa-
ny through a deduction off their grain
cheques with no brokerage fees. There
were few takers.
Viterra became a takeover target,
even though it had a global expansion
strategy, a healthy balance sheet and
strong profits. Why? Its share price was
chronically depressed because Canadian
investors (including farmers) did not see
the value of investing in a global Canadi-
an agribusiness.
Whether the time has come for farmers
to reacquire an industry they previously
owned is a question that will be debated
in coffee shops and at farm meetings
across Western Canada. The new CWB
may afford such an opportunity—but do
farmers want it? Some would argue it’s
more prudent to diversify your invest-
ments into other industries, such as oil
companies or railways.
And farmers should be wary of promises
of windfall profits. The farmer-controlled
grain companies produced their fair share
of red ink and significant erosion of share-
holder value.
So, when considering investments in
grain companies, fertilizer plants and
seed companies, farmers should ask the
tough questions and consider the lessons
of history.
Tom Steve is the general manager of the
Alberta Wheat Commission.
Winter
2015
Grains
West
8
SHOULD FARMERS RE-AQUIRE A STAKE INCANADIANAG?