Wheat pool
Encyclopedia
A wheat pool is a co-operative that buys grain (mostly wheat
) from farmer
s.
In Canada
in 1923 and 24, three wheat pools were created. They were farmer-owned co-operatives, created to break the power of the large for-profit corporation
s, that had dominated the grain trade
in Western Canada
since the late 19th Century, and were an early source of Western alienation
.
The wheat pools were successful grain traders and marketers from 1923 to 1929. During the Great Depression
, however, huge losses forced them out of the grain marketing business. They persisted as grain elevator
operators but after 1935 all grain marketing in Canada shifted to a new government agency, Canadian Wheat Board
.
During the post-war era, the wheat pools almost completely replaced the private grain companies as elevator operators. By the 1990s, however, most had demutualized
(privatized), and several mergers occurred. Now all the former wheat pools are part of the Viterra
corporation.
Specifically they despised the private grain trade
system as symbolized by Winnipeg Grain Exchange
. Farmers suspected the grain trader of being middle men who only profited by leaching off the efforts of farmers. They were especially angered by the practise of hedging
that private traders practised on the futures exchange
, which they believed allowed traders to profit from falling markets, which hurt farmers. They also believed that private traders artificially held down prices during the fall harvest in order to shortchange producers.
(U.G.G.) and the Saskatchewan-government backed Saskatchewan Co-operative Elevator Company (Sask. Co-op Elevators). U.G.G. was formed by merger of two smaller co-ops: the Alberta government-backed Alberta Farmers' Co-operative Elevator Company and the Grain Growers Grain Company (G.G.G.C., which had previously acquired the elevators of failed Manitoba government elevator company) in 1917. Following the merger, U.G.G. was a powerful force with 300 elevators and a terminal at the Lakehead. While U.G.G. and Sask. Co-op Elevators were farmer-owned, they did not follow the traditional co-op structure of paying dividends back to the users on a patronage basis (per the amount of business), instead they paid dividends to shareholder-investors. For diehard co-operators this was unacceptable. Furthermore, the two companies were unable to negotiate a merger between themselves and were not involved in marketing grain overseas. They lacked the size or reach to challenge the open-market system.
for the 1919 crop only. Farmers got a guaranteed price for that crop, paid immediately, and later a further payment once the Board had sold all harvest and made a profit. This system of guaranteed prices and distributed income was extremely popular and when the Board dissolved in 1920, farmers were livid. It certainly did not help that, "from a peak of $2.85 per bushel in September, 1920 [prices] began a slow and sickening decline to less than a dollar a bushel in late 1923." This marked contrasted to the stable prices of 1919-1920 Board seemed to confirm farmer's suspicions of market trading.
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
) from farmer
Farmer
A farmer is a person engaged in agriculture, who raises living organisms for food or raw materials, generally including livestock husbandry and growing crops, such as produce and grain...
s.
In Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
in 1923 and 24, three wheat pools were created. They were farmer-owned co-operatives, created to break the power of the large for-profit corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s, that had dominated the grain trade
Grain trade
The grain trade refers the local and international trade in cereals and other food grains such as wheat, maize, and rice.-History:The grain trade is probably nearly as old as grain growing, going back the Neolithic Revolution . Wherever there is a scarcity of land The grain trade refers the local...
in Western Canada
Western Canada
Western Canada, also referred to as the Western provinces and commonly as the West, is a region of Canada that includes the four provinces west of the province of Ontario.- Provinces :...
since the late 19th Century, and were an early source of Western alienation
Western Alienation
In Canadian politics, Western alienation is a concept that the Western provinces - British Columbia , Alberta, Saskatchewan and Manitoba - have been alienated, and in extreme cases excluded, from mainstream Canadian political affairs in favour of the provinces of Ontario and Quebec...
.
The wheat pools were successful grain traders and marketers from 1923 to 1929. During the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, however, huge losses forced them out of the grain marketing business. They persisted as grain elevator
Grain elevator
A grain elevator is a tower containing a bucket elevator, which scoops up, elevates, and then uses gravity to deposit grain in a silo or other storage facility...
operators but after 1935 all grain marketing in Canada shifted to a new government agency, Canadian Wheat Board
Canadian Wheat Board
The Canadian Wheat Board was established by the Parliament of Canada on 5 July 1935 as a mandatory producer marketing system for wheat and barley in Alberta, Saskatchewan, Manitoba and a small part of British Columbia...
.
During the post-war era, the wheat pools almost completely replaced the private grain companies as elevator operators. By the 1990s, however, most had demutualized
Demutualization
Demutualization is the process by which a customer-owned mutual organization or co-operative changes legal form to a joint stock company. It is sometimes called stocking or privatization. As part of the demutualization process, members of a mutual usually receive a "windfall" payout, in the form...
(privatized), and several mergers occurred. Now all the former wheat pools are part of the Viterra
Viterra
Viterra Inc. is a leading global agri-business with extensive operations in Canada, the United States, Australia and New Zealand. With a growing international presence that includes trading and marketing offices on four continents, Viterra delivers high quality nutritious food ingredients to more...
corporation.
Agrarian activism
The pools were the culmination of a long tradition of agrarian activism dating back decades in the Prairie Provinces of Canada which peaked in the 1920s. One notable date was the founding of the Territorial Grain Growers Association (T.G.G.A.) in 1901. The T.G.G.A.'s successor organizations would be important organizers in the later campaigning to organize the wheat pools. The co-operative movement was also being established in Canada at this time.Farmer grievances
At this time farmers were deeply alienated from the Canadian political and economic status quo. Farmers accepted as common knowledge that grain companies, railways, banks, and the government were part of a system that sought to exploit and oppress farmers. They developed a class solidarity and a fear and loathing of the ruling elite.Specifically they despised the private grain trade
Grain trade
The grain trade refers the local and international trade in cereals and other food grains such as wheat, maize, and rice.-History:The grain trade is probably nearly as old as grain growing, going back the Neolithic Revolution . Wherever there is a scarcity of land The grain trade refers the local...
system as symbolized by Winnipeg Grain Exchange
Winnipeg Grain Exchange
The Winnipeg Grain Exchange was established in 1887, and dissolution in 1986.It was also the predecessor of the Winnipeg Commodity Exchange.- List of Presidents :The exchange had 97 presidents, Of which:...
. Farmers suspected the grain trader of being middle men who only profited by leaching off the efforts of farmers. They were especially angered by the practise of hedging
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...
that private traders practised on the futures exchange
Futures exchange
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. These types of...
, which they believed allowed traders to profit from falling markets, which hurt farmers. They also believed that private traders artificially held down prices during the fall harvest in order to shortchange producers.
Elevator co-ops
Some attempts had been made to set up co-operative grain elevators. There were many local co-ops that owned a single elevator, but the two most important were the United Grain GrowersUnited Grain Growers
United Grain Growers, or UGG, was a Canadian grain distributor. Founded in 1906 in Winnipeg, UGG was active in grain sales, crop inputs and livestock production services...
(U.G.G.) and the Saskatchewan-government backed Saskatchewan Co-operative Elevator Company (Sask. Co-op Elevators). U.G.G. was formed by merger of two smaller co-ops: the Alberta government-backed Alberta Farmers' Co-operative Elevator Company and the Grain Growers Grain Company (G.G.G.C., which had previously acquired the elevators of failed Manitoba government elevator company) in 1917. Following the merger, U.G.G. was a powerful force with 300 elevators and a terminal at the Lakehead. While U.G.G. and Sask. Co-op Elevators were farmer-owned, they did not follow the traditional co-op structure of paying dividends back to the users on a patronage basis (per the amount of business), instead they paid dividends to shareholder-investors. For diehard co-operators this was unacceptable. Furthermore, the two companies were unable to negotiate a merger between themselves and were not involved in marketing grain overseas. They lacked the size or reach to challenge the open-market system.
Government marketing
During the Great War the Canadian government had completely taken over the grain industry. The government created a series of boards in and around the war, each with progressively more power to control the grain trade. The Board of Grain Commissioners of 1912 was purely for regulation (to supervise grading, etc.), but by 1915 the government had seized control of all wheat exports to help the war effort, and by 1917 futures trading on the Winnipeg Exchange was banned. In 1917, the new Board of Grain Supervisors was given monopoly powers over wheat, and fixed uniform prices across the country. Soon after the Board took over marketing of crops as well. Farmers were worried that after the war prices would crash and various agrarian groups lobbied Ottawa to keep the Board in place. The government relented by creating the Canadian Wheat BoardCanadian Wheat Board
The Canadian Wheat Board was established by the Parliament of Canada on 5 July 1935 as a mandatory producer marketing system for wheat and barley in Alberta, Saskatchewan, Manitoba and a small part of British Columbia...
for the 1919 crop only. Farmers got a guaranteed price for that crop, paid immediately, and later a further payment once the Board had sold all harvest and made a profit. This system of guaranteed prices and distributed income was extremely popular and when the Board dissolved in 1920, farmers were livid. It certainly did not help that, "from a peak of $2.85 per bushel in September, 1920 [prices] began a slow and sickening decline to less than a dollar a bushel in late 1923." This marked contrasted to the stable prices of 1919-1920 Board seemed to confirm farmer's suspicions of market trading.
See also
- Alberta Wheat PoolAlberta Wheat PoolThe Alberta Wheat Pool was the first of Canada's wheat farmer co-operatives.-Early years:In 1923, the United Farmers of Alberta met with then Attorney General John Edward Brownlee to consider setting up a Wheat Pool just in Alberta...
- Saskatchewan Wheat PoolSaskatchewan Wheat PoolThe Saskatchewan Wheat Pool was a grain handling, agri-food processing and marketing company based in Regina, Saskatchewan. The Pool created a network of marketing alliances in North America and internationally which made it the largest agricultural grain handling operation in the province of...
- Manitoba Pool Elevators
- Canadian Wheat BoardCanadian Wheat BoardThe Canadian Wheat Board was established by the Parliament of Canada on 5 July 1935 as a mandatory producer marketing system for wheat and barley in Alberta, Saskatchewan, Manitoba and a small part of British Columbia...
- a government agency responsible for exporting wheat