World Grain - December 2008 - 53

COMPANY PROFILE: RICHARDSON CREATES NEW CORPORATE IDENTITY

Richardson a longtime free trade advocate
For many Canadian grain farmers, Pioneer Grain Ltd. has served as a touchstone
during periods of political upheaval and
market uncertainty.
Over the years, Pioneer Grain Company,
the flagship of the Richardson family's agricultural businesses, has gained a reputation
for being an honest broker and a steadfast
supporter of an open and competitive grain
marketing system in Western Canada.
To understand the importance of Richardson's adherence to a free market, you
have to understand the turbulent history of
Western Canada, which, in the early 1930s,
was swept up in the rhetoric of the Socialist
Labour Farmers Party and the message of
the Co-operative Commonwealth Federation's Regina Manifesto.
After declaring their cooperative principles and their abhorrence of a competitive market, the democratic socialists tried,
with considerable success "to replace the
present capitalist system, with its inherent
injustice and inhumanity, by a social order
from which the domination and exploitation of one class by another will be eliminated, in which economic planning will supersede unregulated private enterprise and
competition."
From this premise, a network of farmerowned cooperative grain elevators was cre-

ated in each of the Prairie Provinces that
eventually became Canada's largest grain
handling and marketing system.
As a large proportion of grain farmers
on the Prairies turned to the rapidly expanding cooperatives, the bright orange,
privately-owned Pioneer elevators held their
place among the brick red "pool" elevators.
Pioneer was the largest of several privatelyowned elevator companies that managed
to survive cooperative movement. However,
there remained grain producers in Western
Canada who continued to believe that an
open and competitive marketplace could
serve them best and, for a few, delivering to
Pioneer Grain demonstrated their political
beliefs to the community.
The market dominance and political influence of the pools began to wane, however,
when the Western Grain Transportation
Act became federal law in 1983, replacing the Crows Nest Pass Freight rate - a
legislated rate for moving grain that lacked
financial incentives for the railways and did
not cover the costs of transporting grain to
export positions.
The implementation of the Western
Grain Transportation Act made it possible
for Canada's two largest railways to offer
grain companies financial incentives for efficiencies, such as discounts to elevators that

could provide a 50- or 100-car spot for loading grain cars. For Western Canada's lethargic grain transportation industry, the Western Grain Transportation Act was a breath of
fresh air. But for grain handling companies,
including the co-ops, it meant making massive capital expenditures to upgrade and
consolidate their elevator networks in order
to remain competitive.
The costs of making these changes
caused the co-ops to overextend their financial resources, eventually forcing Canada's largest cooperative and grain handler,
Saskatchewan Wheat Pool (SWP), to the
brink of bankruptcy. This threat to the Regina-based cooperative could have created
a major crisis for grain farmers, a crisis that
was only narrowly averted by the pool's
newly elected President and CEO, Mayo
Schmidt, a United States businessman who
restructured the cooperative and turned it
into a corporation with badly needed access to shareholder equity.
With this change to the structure and
principles of SWP, followed by the purchase of the remaining grain cooperatives
in Western Canada in the form of Agricore
United, the curtain was drawn on an era
of Prairie history that was one of North
America's most successful and long lasting
agrarian revolutions.

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54

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World Grain - December 2008

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