MIL-OSI Global: Wheat Pool 2.0: The time might be ripe for a revival of Prairie co-ops

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Source: The Conversation – Canada – By Marc-Andre Pigeon, Assistant Professor, Johnson Shoyama Graduate School of Public Policy, University of Saskatchewan

When Bunge announced its intention to purchase Viterra — the Regina-based grain handling subsidiary of Swiss mining giant Glencore — in June 2023, it represented another milestone in the slow, but steady, erasure of Saskatchewan’s long history with the wheat pool co-operative.

The Saskatchewan Wheat Pool, the once-mighty agricultural co-operative that became Viterra, is remembered by its iconic, but decaying, grain elevators that still dot much of the province’s rural landscape.

The timing of the announcement is ironic for two reasons. First, it coincides with what would have been the Wheat Pool’s 100th anniversary.

Second, it’s occurring during a period when Saskatchewan and Prairie farmers are facing power imbalances in the market not dissimilar to those that gave rise to co-operative wheat pools in Saskatchewan and Alberta in 1923, and Manitoba in 1924.

The Saskatchewan Wheat Pool’s origin story is instructive. As journalist Garry Fairbairn described in the preface to his book on the Pool’s 60th anniversary in 1983, the Pool was founded by 45,000 farmers engaged in “individual acts of desperation, hope, and faith (that) combined to create an enduring co-operative empire and corporate democracy.”

As Fairbairn goes on to note:

“Some organizations, like some calves, are born with casual ease, their arrival scarcely noticed until one sunny morning finds them already routinely grazing on a gentle sloe. Others come only after a raw, hard struggle, a grim rancher straining to pull the calf from a desperate cow. The birth of the Saskatchewan Wheat Pool was definitely in the second category.”

As different as the wheat pool’s origins and Bunge’s purchase may seem, they both represent a response to the same underlying desire: control. Bunge, headquartered in Missouri, wants more of it; the wheat pool founders, based all over the province, wanted some of it.

Increasingly consolidated industry

The logic that compels a company like Bunge to integrate Viterra into its supply chain is the same logic that evokes nostalgia among farmers old enough to remember the wheat pools, and action among younger farmers with the energy to do something about it.

Once the Viterra takeover is complete, Bunge will be the top player in Canada’s grain trade (and third in the world), joining a small — and shrinking — number of companies with market power and the ability to impose prices and shift the risks of the market onto producers.

The top five companies already control 90 per cent of the global grain trade; six of them sell 70 per cent of all agrochemicals and four of those also sell 60 per cent of all the seed.

Already, there are indications — albeit anecdotal — that grain handling firms are exerting market power, with many farmers feeling like they have no choice but to sign grain delivery contracts where they end up bearing significant financial risks and most of the costs of climate change and market uncertainty.

The result? Farmers owing money on contracts they were unable to fulfill because of events out of their control.

With the rise of digital agriculture and little to no regulations or laws for agricultural data governance in Canada, we could see agricultural data issues as well, as supply firms amass and use data from customers to exert market power.

The view from Australia

To get a glimpse into what was lost when the Wheat Pool became Viterra, we can look to Australia. Like Canada, farmers in Australia no longer have a national wheat marketing board. It was eliminated in 2008, a few years before Canada’s. Unlike in Canada, however, Australian farmers held on to their co-operative grain handling company, Co-operative Bulk Handling (CBH).

Well into its 90th year, CBH has prospered despite a difficult operating environment not dissimilar to Canada’s, as well as periodic challenges to its mutuality. With a 62 per cent share of the grain handling business and AU$4 billion in annual revenue, CBH had a record annual profit of $497 million in 2022 and has reported record-breaking supply chain performance for its 2023 harvest.

Those results belong to CBH’s Australian farmer-members. CBH’s success can be attributed to its efforts to support its members by investment in the infrastructure — rail transport, port terminals, marketing, exporting and processing — needed to lower grain handling costs for its producer members.

A grain farmer tests wheat for moisture before harvest in Moree, a major agricultural area in New South Wales, Australia, in November 2012.

As a result, CBH says average post-farmgate costs for its members are 15 per cent lower than for Australian farmers who rely on multinational corporations — including companies like Bunge and Viterra — for storage, movement, marketing and export.

Through CBH, Australian farmers don’t just have a powerful corporate entity looking out for their financial interests, but a company that can help them navigate government lobbying and relationships with agricultural input providers and their growing arsenal of data being used to power artificial intelligence applications.

Co-operative green shoots

Of course, Canada’s agriculture sector today is vastly different than it was when the wheat pool came into being. While there are places in rural Prairies Canada that are prospering — especially those proximate to urban centres — the long-term trends remain.

These trends include dwindling populations, aging farmers, increasing farm size as producers pursue scale to amass some negotiating power (competing with investors buying up shares of farmland), and increasing challenges for anyone or any producer left behind.

But while perhaps dormant, the co-operative impulse is not gone and may indeed be ripe for a reawakening. There are some promising signs in both old and new technologies and from existing farmer co-operatives.

In Alberta, farmers have worked together to purchase their own short-line railway to ensure they could continue to ship their crops at reasonable prices. In the Platte region of Nebraska, farmers have organized a data co-operative to measure, count, aggregate and interpret data on their water usage.

In western Canada in 2010, a group of independent seed, crop protection and fertilizer retailers came together to form a co-operative — now called WinField United Canada — and a division of Land O’Lakes, one of the largest agricultural co-operatives in the United States.

For farmers and policymakers, the lesson should be clear: even as Saskatchewan contemplates the loss of another corporate sector headquarters, perhaps the best hope for the future of the province’s economy and its farmers can be found by looking back to the past and an organizational model that when governed properly, is rooted, resilient and responsive.

Jeremy Welter co-authored this article. He is a fourth-generation farmer, small-business owner and director on the board of the Agricultural Producers Association of Saskatchewan.

Marc-Andre Pigeon receives funding from the co-operative and credit union sectors as well as funding from government funding bodies for his research into co-operatives and credit unions.

Natalie Kallio receives funding from the co-operative and credit union sectors as well as from government funding bodies for research into co-operatives.

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