Outside the Canola Council of Canada’s annual business meeting March 8 there were palm tress, cacti and deep-blue Kodachrome skies offering a respite from Western Canada’s cold and snow.
But inside was an elephant, acknowledged, but never named, called Richardson International.
The nod came when council president Jim Everson announced the council is reviewing its priorities.
Richardson, Canada’s largest grain company, stunned the nation’s agricultural industry late last year when it didn’t renew its membership in the Canola Council of Canada, the Flax Council of Canada and Soy Canada.
The move saves Richardson more than a million dollars a year, Jean-Marc Ruest, Richardson’s senior vice-president of corporate affairs and general counsel, said in an interview Jan. 17.
Most of the money went to the canola council, based on a levy of 23 cents a tonne paid by exporting grain companies, like Richardson, as well as Canadian canola crushers and farmers selling canola.
After a year of negotiations Richardson pulled the plug after it failed to convince the councils to save money by merging.
Richardson also questions the canola council’s focus on market development and agronomy, as well as its funding formula and level of spending.
In his address to the canola council’s annual meeting, which was open to the public for the first time in years, or perhaps ever, Everson left “governance” to last.
He started with the positives, including a record harvested area of 22.9 million acres and record production of 21.3 million tonnes in 2017.
“For the first time ever, more acres were seeded to canola than to any other crop (in Canada),” he said.
Long-reigning King Wheat, at 22.2 million harvested acres, according to Statistics Canada, was usurped by Canada’s Cinderella crop.
Canola, long the West’s highest gross revenue crop, had the most acres last year.
The council’s ‘Keep it Coming’ goal of 22 million acres of canola, averaging 52 bushels an acre by 2025, will be achieved, Everson said.
Last year’s acreage exceeded the 2025 target and production was just 4.1 million short of the 26-million-tonne goal.
Canola’s success is the result of its “unique to Canada” consensus decision-making, value chain approach, Everson said.
“Most other commodity associations in Canada to this day are still trying to emulate the success of canola in this regard,” he said.
Then Everson addressed the elephant: “But in 2017 the industry faced some challenges when it comes to the industry consensus on the role and priorities of the canola council itself.”
“Some important issues raised by members,” included:
- Can the council fulfil strategic objectives more efficiently through partnerships with other oilseed associations?
- What should the council’s role be in market development, research co-ordination, market access, agronomic knowledge transfer, relative to its members and partners?
- What resources are required to deliver superior service to the industry and how should those resource requirements be collected?
These are “legitimate and important questions… driven by a rapidly changing, commercial environment,” he added.
In response five task forces, each chaired by a director, have been set up as follows:
- Market access and government advocacy will ensure market access and government affairs priorities are in line with the council’s strategy and advise on external partnerships in achieving objectives.
- Market development will establish a consensus on the council’s role and priorities in market development, including areas and activities, level of investment, long-term strategic direction, measuring success and seek opportunities for collaboration with companies, grower associations and other commodity groups.
- Crop production and innovation will review and understand member company/organization goals and issues in agronomy services and research. Advise on priorities for the council’s crop production mandate and focus on strategic issues.
- Industry leadership is tasked with exploring the council’s role in leading canola sector activities and its role in Canadian agriculture. How can the council help shape the environment for a successful industry, best collaborate with others and secure opportunities that position canola for future growth?
- Finance will review funding models and make a recommendation to the board.
“The outcome will shape the outcome of the council’s priorities and plan for 2019 and beyond to ensure that they fully align with changing industry needs,” Everson told the meeting.
Will Richardson return?
“What I am absolutely sure it’s going to be effective of is making sure that we have a strong consensus and alignment among the present funders and directors of our board representing industry,” Everson said. “Then companies and other groups who may, or may not want to be part of our association can make a decision.”
A big loss
Richardson’s withdrawal was a financial and philosophical blow to the canola council. The combined loss of Richardson’s contribution and the fee reduction it triggered for remaining members resulted in a 32 per cent drop in the council’s planned 2018 spending, Everson said.
“We did that carefully,” he told reporters. “We tried to ensure that we were maintaining areas where we had high, high priority in looking at areas where we could probably reduce in the short term without having a big impact. It’s not easy to do those things.”
Asked if there will be staff layoffs, Everson replied: “We are finding efficiencies a little bit with our staffing.”
In a text later Everson added: “We have reduced staff at CCC with layoff (sic) and have taken advantage of a couple of retirements and departures to consolidate positions for greater efficiencies. No further changes are planned at this time.”
Everson didn’t immediately respond to a text asking how many employees were laid off and when.
The council spent $15.3 million in 2017.
It collected $16.6 million in revenue — $8.8 million from the core funders and $7.8 million from grants and government projects.
Farmers contributed 44 per cent of the $8.8 million in core funding followed by exporters and crushers at 26 and 23 per cent, respectively.
The council ended 2017 with a $1.3-million surplus.
While it’s legitimate to review the council’s role, Everson stressed the industry needs to consider its role in “amplifying” the results of the council’s canola research and agronomy work.
While Richardson suggests the council’s agronomy efforts duplicate those of Richardson and other companies, many farmers disagree, including Canadian Canola Growers Association president and Winkler farmer Jack Froese.
“We as farmers we see this need,” he said on the sideline of the meeting. “We see the independence of the agronomy team on the canola council. They’re not selling any product. They are also looking at what the market is going to demand and to make sure that those needs are going to be met.”
Losing its largest member arguably weakens the value chain.
But there’s also an expectation Richardson will return to the fold.
“I think cooler heads will prevail,” Froese said. “It may take some time, but… I think we will move forward and possibly even be better as a result of what has happened.”
Richardson didn’t immediately respond to an email seeking comment.
If Richardson’s absence is an existential threat to the council neither Everson’s nor board of directors chair David Dzisiak’s comments or demeanour showed it.
The council’s future rests with its members, they said.
“Let’s do this review, let’s come to a consensus with those who are around the table today on what we need to do to grow the industry in the future and then those who want to be part of our value chain… will invest in the new organization, and those who decide not to do so, won’t,” Everson told reporters.
Dzisiak had a similar message.
“We had a great meeting last September,” he said. “We went around and talked about what’s most important… and there was a unanimous vote by the board that we want to have a canola council, that we want to have it dedicated at canola and we’re going to restructure things. But there were some things that the rest of the companies and the growers and the board of directors didn’t want to have changed. Every company has their opinion and their view and they make their own decisions, but we’ve got unanimity around the board about what we want the canola council to be.”
The council wants feedback on its review efforts. Comments can be submitted to [email protected].