Richardson International’s decision not to renew its Canola Council of Canada membership Dec. 31, was a shocker, but it could have been even worse.
According to several reliable sources, Viterra, Canada’s second-biggest grain company behind Richardson, had planned to leave too.
The 51-year-old council, a paragon of value chain consensus, is credited with making canola Canada’s highest gross revenue crop. Losing Canada’s two biggest grain companies would’ve been a major financial and psychological blow to the council.
“I think our biggest concern is if other grain companies, such as Viterra, also leave then that really weakens the idea of a full value-added chain being represented at the council table,” Manitoba Canola Growers Association’s president Chuck Fossay said Jan. 18, in response to Richardson’s decision.
After months of working with Richardson, to push for efficiencies, including merging the canola council, Flax Council of Canada and Soy Canada into a single oilseed organization, Viterra opted to stay with the canola council, but with a lower membership fee.
According to one source the cut will apply to other members too.
Sources say Viterra didn’t renew its membership in the flax council and it won’t renew its Soy Canada membership when it expires March 31.
Richardson, Canada’s biggest grain company, didn’t renew its membership in the canola and flax councils and won’t renew its membership with Soy Canada either, Jean-Marc Ruest, Richardson’s senior vice-president of corporate affairs and general counsel, confirmed in an interview Jan. 17.
At press time Viterra had not clarified its membership in the three organizations, including whether it had planned to withdraw from the canola council Dec. 31.
Flax council president Brian Johnson said in an interview Jan. 17 he wasn’t sure yet whether Viterra was withdrawing or not.
Soy Canada executive director Ron Davidson said Jan. 18 both Viterra and Richardson remain members until at least March 31.
“I am trying to look at all this now and see what we can propose back,” he said, noting he has only been on the job for 2-1/2 months. “We will be continuing to try and reach out.”
When asked in an interview Jan. 18 if Viterra was planning to leave the canola council, council president Jim Everson replied: “Not that I am aware.”
Asked about Viterra’s membership status and a fee cut, the council replied in an email: “Viterra is a member and funder of the CCC. We do not, as a matter of policy, provide individual organization’s financial commitments to CCC.”
In 2017 canola council’s members paid a levy of 23 cents per tonne on canola sold by farmers, exported by grain companies or crushed by processors, the email said.
According to one source, the council plans to cut the levy to 15 cents a tonne.
Richardson’s decision to leave the canola, flax and soybean groups, was not made suddenly, or in a fit of anger, Ruest said.
“We had provided notice to the three organizations — well over a year ago — that our funding commitments would end at the end of 2017,” he said.
Creating a single oilseed council is just a starting point, he stressed.
“We’re looking for a way of getting better value for the dollars that we’re spending in these industry associations,” he said. “We spend well over a million dollars a year funding these three organizations.”
Richardson continues its membership in a number of other industry associations, including Cereals Canada, the Canada Grains Council, the Western Grain Elevator Association and Canadian Oilseed Processors Association, Ruest said.
Richardson also helps fund the Canadian International Grains Institute.
It’s not just the money, but the staff time it also takes when a member of different groups, he added.
Richardson questions how much the canola council spends on market develop — something Richardson is prepared to do itself as an exporter, Ruest said.
It also wonders about the council’s funding model. As a major canola exporter and processor, Richardson contributes a lot of money to the council, but gets the same benefit as those who pay less, Ruest said.
“So we either get different services, or different governance rights, otherwise if everything’s equal then the cost of membership should all be equal,” he said.
Richardson also questions the council’s agronomic research and extension because companies, such as Richardson, do the same.
“At some point you have to hit the pause button and look at it and say, ‘is that really required and if so to what extent?’”
The council has 38 employees. In 2016 it received almost $8.3 million from its core funders — exporters, crushers, farmers and life science firms — its financial report says.
In contrast Cereals Canada co-ordinates the wheat sector with just six employees. It’s 2017 revenue collected from its members who are similar to those in the council, was just over $1 million.
Canadian canola and wheat plantings are close, averaging 20.3 million and 22.6 million acres, respectively, over the last four years, according to Statistics Canada.
Canola and wheat production averaged 18.9 million and 29.7 million tonnes, respectively.
Wheat is a much more diverse crop with many more end uses, classes and grades than canola, Ruest said.
Milling wheat is more complex than crushing canola, he added.
The canola council is not endangered by Richardson’s withdrawal, Everson said.
“We have a very solid value chain, a very solid budget and work plan and we’re very confident about where we’re going,” he said.
He agrees with Ruest about meeting members’ needs.
“I think we’re having a very good discussion within the value chain about those directions and those influences and will continue to do so,” Everson said. “Richardson is an important voice in our industry, but we have a value chain organization.
“I am really confident about the future and very optimistic about working through and being sure that what we do as an association is tracking with what the industry’s needs are.”
The council’s success in uniting the canola industry is a Canadian comparative advantage, he said
Markets change and vary with the product and country. Canola doesn’t need as much promotion in the United States as it does in a newer market such as Vietnam, Everson said in defence of market development.
The council’s agronomy efforts help grain company agronomists, he added.
It’s also strongly supported by farmers, the Manitoba, Saskatchewan and Alberta canola associations, said in a news release.
“That certainly is the message we have got over the years… ” Fossay said.
“It’s important to have third-party, impartial research.”
Ruest said the council could transfer agronomy to the provincial canola grower associations.
Richardson holds no animosity towards the canola council, Ruest said.
“We’re disappointed we got to this result, but that doesn’t make us hostile to the canola council,” he said. “We support the canola council. We’ll probably have initiatives where we can work with it. We may be able to come back to the fold at some point in time. But that’s a decision for them to make. We don’t want to drag people along with us who are reluctant or don’t want to participate. That doesn’t help anything either. It’s OK to have disagreement and different viewpoints on what’s important and what’s not.”