Delmar Commodities Sold To Local Buyers

What’s next for a man who has moved grain elevators up mountains and built a successful grain-marketing and -processing empire from big industry’s castoffs?

Martin Harder is thinking he might write a book about his journey from broke farmer to grain broker to successful grain company president.

“I think I have a story to tell,” says Harder, who recently sold his shares in Delmar Commodities Ltd., the company he and his wife Eleanor created in 1995.

What started as a one-man grain brokerage grew into a major independent grain-marketing, -handling and -processing business, employing 23.

Delmar Commodities has elevators at Somerset, Jordan Siding, Sperling and MacGregor, totalling 22,000 tonnes of storage capacity – equivalent of an inland terminal. Plus there’s Jordan Mills, Delmar Commodities’ soybean extrusion plant that makes and sells soybean meal.

Earlier this year, Delmar Commodities also became the western Canadian distributor for Legend Seeds, an American soybean and corn seed company.

GROSS SALES

The company’s gross sales hit $55 million last fiscal year and are heading for an estimated $70 million in 2010-11.

With the sale of Harder’s shares Nov. 1, Delmar Commodities is now owned 50 per cent by five Delmar employees and 50 per cent by the Keystone Grain Group, owners of Keystone Grain in Winkler, which specializes in processing and marketing sunflowers, flax, specialty crops and organic commodities.

Delmar Commodities and Keystone will remain separate companies, says Harder, who will chair a joint board of directors for two years.

“From outside appearance there will not be a change,” he stresses during an interview between congratulatory phone calls. “It will be the same identity, the same people will operate this company as they did before.”

Harder, who was just acclaimed to a second term as Mayor of the City of Winkler, will also have his eyes open for new opportunities, but outside the grain business because of a five-year, no-compete agreement.

“It’s not that retirement frees me up to do the things I want to do because I’ve enjoyed every minute I’ve been here,” Harder says.

So why sell now? It’s a bit like when athletes retire at the top of their game.

“This is the right fit at the right time when Delmar is in its best financial position ever,” Harder says. “You’d rather want to step aside when you are confident the company will continue to grow and thrive. I leave this company on a high in my long 36-year career in the grain business.”

The fit is also right with the Keystone Group. It’s stable, local and shares Delmar Commodities’ business philosophy.

“We (both) believe it is vitally important to have good customer service,” Harder says. “That’s what drives the company. We also have the same philosophy as far as our corporate support to community and charitable organizations.”

Delmar Commodities donates 10 per cent of its net profit to charity.

Two years ago, Harder was in negotiations to sell his shares to an American company, but pulled back.

NOT SOLELY FINANCIAL

“The deciding factor never has been and never will be the financial side of it,” Harder says. “The deciding factor is the relational side. So when I was looking out for the best interest of my employee group it was based on whether the relationship would work because that is the future.”

Harder says the key to Delmar’s success has been customer service.

“My target was simply directed at serving the customer, doing it right and the customers did the rest,” he says.

Harder also credits good employees.

“Don’t look at doing it yourself – because you never will.”

There have been lots of highlights, but moving the former Manitoba Pool elevator from La Riviere to Somerset in 2004 tops Harder’s list.

“That was bordering on insanity the risk I took in the move,” he says.

Elevators have been relocated before, but not from gorges as deep and steep as the Pembina Valley.

Harder bought the elevator delivered, but invested almost $500,000 in concrete for the elevator to sit on.

Wet weather delayed the move, documented by a Discovery Channel film crew, until late November. A skiff of snow made roads slippery. It took eight days to push and pull the elevator, its annex, office and three steel bins, out of the valley to its new home about 10 miles north.

“What I never did tell anybody is that… I could not get any insurance,” Harder says. “If that sucker had’ve fallen somewhere along the way… I would’ve had $500,000 worth of cement with nothing to put on it.”

TRANSPORTATION ISSUES

The elevator survived, but the rail line serving it didn’t. The Southern Manitoba Railway, an American company, ripped up the line, which by then ran from Morris to Mariapolis, for scrap in 2007.

It was a blow. Not only had Delmar Commodities bought the elevator in Somerset and moved another one there, it also owned an elevator on the same line at Jordan Siding, where Jordan Mills is also located.

“I felt very betrayed, not as much by the short line,” Harder says. “I felt betrayed because of the lack of serviceability from CN.”

Canadian National, which once owned the lines and picked up cars from the Southern Manitoba Railway in Morris, refused to give Delmar Commodities the same rate for loading 50-car trains as it gave to elevators on its own lines.

“That in reality is what caused the short line to fail,” Harder says. “If you couldn’t get a 50-car rate, then you couldn’t compete.”

Harder now says losing rail access was the best thing that ever happened. The Somerset facility handles lots of grain, even though it has to be trucked out.

“The success of the company happened after I didn’t need to deal with the railways anymore,” Harder says. “Those railways are a detriment to the success of agriculture in Western Canada. I will say that until the cows come home.

Harder says the Canadian Wheat Board (CWB) is also an impediment. The future is adding value and processing and the CWB gets in the way.

“I have a binder in my desk – a complete feasibility study for a flour mill at Somerset,” Harder says. “It was not profitable, partly because of the transportation issue, but partially because of the restraints put on business by the wheat board.”

As grain companies consolidate and grow ever larger, Harder is certain there is a future for small niche players like Delmar Commodities.

“Lots figured the big elephants would stomp on me, but I’m a mouse and the mouse has an opportunity to run away and hide and the elephant doesn’t know where he’s going. Ultimately the big companies will never be able to meet the service requirements that we’re able to provide.” [email protected]

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Mytargetwassimply directedatserving thecustomer,doingit rightandthecustomers didtherest.”

– MARTIN HARDER

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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