Saskatchewan Wheat Pool

Saskatchewan Wheat Pool was for many years the province's largest and most visible business corporation as well as the most important organization of farmers. Its grain elevators have served as landmarks for many farming communities across the province. Its head office is in Regina. Officially renamed the Saskatchewan Wheat Pool (SWP) in 1953, the Saskatchewan Co-operative Wheat Producers Ltd. was incorporated on August 25, 1923. The Pool has gone through peaks and troughs in its eighty years of existence on both its commercial and policy sides. It began as a grain-pooling co-operative, performing a marketing and price-equalizing function similar to the Canadian Wheat Board. Almost bankrupted in 1929-31, the SWP relinquished this function to become simply a handling or elevator co-operative. From the 1930s to the 1990s, it also played an active role in policy advocacy for farmers towards all levels of government. This activity resulted in the SWP's fall annual meeting, where delegates debated resolutions on agricultural issues in what was referred to as “the Farmer's Parliament.” The Pool conducted educational campaigns for farmers and the general public.

On the commercial side, the SWP grew to become a dominant player in the western Canadian grain industry from the early 1970s until 1992, handling over 60% of the province's grain and generating net earnings as high as $72.7 million (1981). From 1993 onward the provincial market share eroded, declining to 22% by 2004. Multi-million-dollar losses from 1999 to 2003 forced a massive debt restructuring in early 2003, a further paring down of the SWP's grain-handling locations, and divestment from twenty-five subsidiaries during the period 1999 to 2004. These changes were the new CEO's attempt to bring the co-op's focus back to its core activity of grain handling. The plan appeared to work, as SWP posted its first net earnings ($5 million) in six years in 2004. SWP still bills itself as having “the most efficient and sophisticated grain handling, processing and marketing network in western Canada.”

Saskatchewan Wheat Pool was not the first farmer-owned co-operative in the province: elevator co-operatives had been established in the early 1900s to provide competition for the “line” companies that were believed to collude on prices and grades. The Grain Growers' Grain Company (which merged with Alberta Farmers' Co-operative Elevator Company in 1917 to form United Grain Growers) and Saskatchewan Co-operative Elevator Company (formed in 1911) were successful in offering alternatives for farmers. However, farmers remained discontented because of a lack of patronage refunds from the co-operatives, and because they remained dependent for marketing on the Winnipeg Grain Exchange, which they believed was tainted with speculation and price-setting. After an August 1923 co-op formation sales pitch by Aaron Sapiro, a co-op aficionado from the United States, farm leaders in each of the prairie provinces began their campaign to contract farmers to deliver their grain to a provincial wheat “pool.” The Alberta Wheat Pool began operations in 1923, followed that same year by the Saskatchewan Wheat Pool, and Manitoba Pool Elevators in 1924. In Saskatchewan's case, the 1923 pooling drive fell short of its target as too few farmers signed the intimidating pooling contracts that were required before the Pool could start. The second drive in 1924 was successful and became a kind of community mobilization. Newspapers backed the pooling movement, employees were given time off to help enroll farmers, and many town councils declared June 10, 1924, a civic holiday: Pool Sign-up Day. The Pool was declared a success on June 26, with 45,725 original contract signers.

In its early years, the SWP was integrated functionally with the Alberta and Manitoba pools. The grain would be marketed and the revenues pooled so that all farmers would receive the same price for each grade of grain, regardless of when they delivered. This helped farmers who often faced a seasonal price slump associated with delivering immediately after harvest. The prairie pools jointly owned and controlled a central selling agency, which provided direct selling into overseas markets in order to bypass the low prices achieved by hedging through the Winnipeg Grain Exchange. The central selling agency was successful for several years until a series of events caused financial burdens from which it could not recover: the 1929 stock market crash (“Black Tuesday”), multiple-crop-year carryovers, an overpayment on the 1929 crop, and a persistent inability to sell wheat overseas prompted the federal government to take control in the 1930-31 crop year. The federal government forced liquidation of the agency's stocks, and ended up paying $22 million in guarantees to the banks which had been financing the central selling agency's margin calls. Contracting through the prairie pools was abolished, and the SWP, along with the two other pools, essentially became an elevator company. The pooling concept for marketing was reincarnated in the 1935 Canadian Wheat Board.

Meanwhile, the Pool had been growing as a grain-handling or elevator company. The co-op pools were often denied handling agreements with elevator companies, so they began to construct and acquire elevators of their own. The SWP built its first elevator in Bulyea in 1924. Major gains in market share were made through the 1926 purchase of 451 elevators and three terminals from Saskatchewan Co-operative Elevator Company, and through the 1972 acquisition of Federal Grain Company (which allowed for monopoly in 217 locations). The SWP's elevator complement peaked in 1971 with 1,224 elevators, which enabled it to capture 67% of provincial grain handling (approximately 8.9 million tonnes). With the threat of branch line abandonment and the impending removal of the Crow Benefit (this rail freight subsidy was removed in 1995), consolidation of the Pool's grain handling system became necessary if the Pool was to remain competitive. The Pool began closing hundreds of its traditional wooden elevators (600 were closed between 1971 and 1982), which left many rural residents upset by the fact that a focal point in their community had been abandoned.

The Pool expanded into Manitoba and Alberta in 1990 under the subsidiary AgPro Grain Inc. The grain-handling system was further consolidated and upgraded through the 1997 announcement of Project Horizon, which called for $270 million to be spent on the construction of 22 inland terminals throughout Saskatchewan (14), Manitoba (2) and Alberta (6). The Pool attempted to gain international presence in grain handling through its 1997 investments in Mexico, Poland, and England (the Polish and English holdings were divested in 2000, and the project in Mexico in 2004). In 2003, the SWP operated 43 high-throughput grain handling and marketing terminals throughout Saskatchewan (35), Manitoba (3), and Alberta (4). The Pool also owned 11 seed-cleaning and specialty plants, two wholly owned export terminals located in Vancouver (built in 1968) and Thunder Bay (purchased in 1959), and part-interest in the export facility in Prince Rupert, British Columbia (built in 1982).

Grain handling and marketing has been the Pool's core business activity, but over the years the Pool has been very diversified. Its divisions once consisted of agri-products, agri-food processing, livestock production and marketing, and publishing. The livestock production and marketing division and the publishing division were fully divested between 2002 and 2004. Today, SWP has ownership interest remaining in Can-Oat Milling (the world's largest industrial oat miller), Prairie Malt Limited (one of North America's largest single site maltsters), Ag Pro Grain Inc., Western Co-operative Fertilizers Ltd. (one of western Canada's largest fertilizer wholesalers), and Interprovincial Co-operative Ltd. (ranked twenty-second on Saskatchewan's Top 100 Companies List in 2004). Numerous other subsidiary companies have included the Western Producer farm newspaper (1923-2002), CSP Foods (1975-2002), Robin's Donuts (1987-2000), Heartland Livestock Services (1994-2001), Poundmaker Ag-Ventures (1991-2002), InfraReady Products Ltd. (1994-99), PrintWest Communications (1992-98), and CanGro Aquaculture (1991-2004).

The Saskatchewan Wheat Pool became well known for operating as a dual purpose organization: returning millions of dollars to members in the form of patronage refunds, and acting as the farmers' voice on agriculture policies. The SWP undertook lobbying efforts and direct discussions with all levels of government on issues such as railway transportation costs, the Crow Rate Subsidy, taxation, and health services. These policy activities were supported by a widespread educational effort, focused particularly on members' participation in the Pool's multi-tier democratic structure. This structure included advisory committees at each handling point, district meetings and elections, a province-wide delegate body that discussed policy, and a board of directors, elected by the delegates, that took great interest in agricultural issues. Up to the 1990s, the Pool was widely perceived as the most powerful agricultural lobbying and interest group in the province.

An important principle of being a co-operative is that members build up equity in the co-op through patronage and are entitled to repayment of their equity upon exit or retirement from the co-operative. In the early 1990s SWP foresaw the mass retirement of over half of its membership within the next decade; this would have put the Pool in a capital shortage position and hindered any plans for diversification or grain handling system upgrades. The Pool delegates approved a proposal to convert most equity into publicly traded shares that would be traded on the Toronto Stock Exchange (TSE). Two classes of shares were created. Only farmers are entitled to Class A shares: one share per farmer-member allows them to vote for farmer delegates in each of the districts; the elected delegates then vote for members of a board of directors, one elected director per district. The remainder of equity was converted to Class B shares, which began trading on the TSE under the stock symbol swp.b on April 2, 1996. They opened at $12, and rose as high as $24.40 in 1998; but accumulating debt levels, lost market share, and multi-million dollar net losses since 1999 dropped share values to as low as $0.20 in the last few years. The net losses forced a $470 million debt-restructuring plan to be implemented in early 2003. In October 2004, when SWP posted its first net earnings in six years, shares were trading at $0.37.

Compared to the 45,725 original contract signers, over 71,000 farmers (based on Class A shares in 2003) still hold membership in the SWP, which is the only prairie pool still remaining. After numerous failed talks to conduct a three-way merger between the pools, Alberta Wheat Pool merged with Manitoba Pool Elevators in 1998 to form Agricore; Agricore merged with United Grain Growers in 2001 to become Agricore United. SWP still operates with a farmer-elected board of directors. Nine Saskatchewan farmers have taken on the role of board president: Alexander James McPhail (1924- 31), Louis C. Brouillette (1931-37), John Henry Wesson (1937-60), Charles W. Gibbings (1960- 69), E.K. (Ted) Turner (1969-88), Garf Stevenson (1988-93), Leroy Larsen (1993-2000), Marvin Wiens (2000-04), and Terry Baker (2004-).

Kathy Lang

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Further Reading

Fairbairn, G. 1984. From Prairie Roots: The Remarkable Story of Saskatchewan Wheat Pool. Saskatoon: Western Producer Prairie Books; Fowke, V.C. 1973. The National Policy and the Wheat Economy. Toronto: University of Toronto Press.