Alberta Wheat Pool
Encyclopedia
The Alberta Wheat Pool was the first of Canada
's wheat
farmer co-operatives.
met with then Attorney General John Edward Brownlee
to consider setting up a Wheat Pool
just in Alberta
. On the advice of Aaron Sapiro
, a California lawyer they created a non share, non-profit organization responsible solely for selling wheat for the best advantage. It was set up as a one-man, one-vote organization, with a 5-year contract required to deliver 100% of his commercial wheat to the Pool.
United Grain Growers
grain company and the Alberta Pacific Elevator company agreed to accept Pool deliveries in their facilities. Other elevator owners quickly agreed to accept Pool wheat when they realized the pricing power the farmers had created.
The Pool purchased the grain produced by its members at a provisional or initial price. The pool then sold the grain, and if there was a surplus in the account at the end of the year, it was distributed to its members at a pro-rated basis. Everyone who was a member of the Pool received the same price. Initially 26,000 farmers joined the Pool, with hundreds of shipping points.
The Alberta Wheat Pool started making direct sales to flour milling companies and even exported grain directly. Direct sales accounted for over 60% of the total in the first year. They had to use the services of the Winnipeg Grain Exchange
, despite objections from the farmers, in order to reduce risk which would in turn satisfy the banks that financed the venture.
After the first year, the Pool began to deduct 2 cents per bushel for purchase/building of Pool-owned elevators. This levy system was to be used often in the Pool's history. Considering that wheat sold at the time for over $1.00 per bushel, this was a low percentage cost. With this income, the Pool accumulated a $200,000 reserve. Shortly thereafter, Saskatchewan and Manitoba created Wheat Pools of their own.
The Pools grew in numbers and political power. In 1928 the combined Alberta, Saskatchewan and Manitoba Wheat Pools were among the biggest business concerns in Canada with a cash turn over of $323 million. The Pool attempted to purchase United Grain Growers Ltd., but the attempt failed. Instead the Wheat Pool began to build more elevators and terminals. By the late 1960s the Wheat Pool had 567 elevators.
In 1925 wheat prices rose to $2.17 then dropped down to $1.36. Fearing market collusion to lower prices, the Pool began to buy wheat futures
- 3 million bushels worth. This had the effect of raising prices to $1.69, possibly preventing the feared 'bear raid
'. As a result, the Pool was extremely profitable. The Pool did so again in 1929 and again in 1930. The first was profitable, but in 1930 (in part due to the stock market collapse
in 1929) there were major losses when wheat prices fell under $0.20. The losses far exceeded the profits in 1925 and in 1929 combined, and government loans were necessary to stay solvent. The loans took 17 years to pay off. In order to obtain the government loans, the Pools had to give up overseas direct sales. This caused anger among members and harsh accusations were delivered.
Nevertheless, the pool continued to grow quickly in members, wheat capacity and popularity. In 1935, a Canadian Grain Board (now the Canadian Wheat Board
) was created by the government as an alternative to pooling. The board had the ability to set a minimum price for wheat, which initially was 87.5 cents ber bushel.
By 1937, a worldwide poor harvest that had not affected Canada had turned the market around. Prices were well above $1 and the Canadian Wheat Board made a profit for the government. This was short lived when, in 1938, the world harvest was good and prices fell again to 60 cents, creating huge losses.
helped kept the price down, but it slowly rose from 56 cents in 1940 to $1.55 in 1945.
The government issued a guarantee that wheat price would remain above $1.00 a bushel until 1950. This was understood as part of several considerations given to the farmers in exchange for the low prices forced on them during a period when demand would normally have raised the price significantly.
combined its business operations with Agricore Cooperative Ltd. and carried on business as Agricore United
, a publicly traded company, no longer a farmer-owned cooperative. In 2007, Agricore United was taken over by the Saskatchewan Wheat Pool
, another publicly traded company. The merged corporation was renamed Viterra
.
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...
's wheat
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...
farmer co-operatives.
Early years
In 1923, the United Farmers of AlbertaUnited Farmers of Alberta
The United Farmers of Alberta is an association of Alberta farmers that has served many different roles throughout its history as a lobby group, a political party, and as a farm-supply retail chain. Since 1934 it has primarily been an agricultural supply cooperative headquartered in Calgary...
met with then Attorney General John Edward Brownlee
John Edward Brownlee
John Edward Brownlee was the fifth Premier of Alberta, Canada, serving from 1925 until 1934. Born in Port Ryerse, Ontario, he studied history and political science at the University of Toronto's Victoria College before moving west to Calgary to become a lawyer...
to consider setting up a Wheat Pool
Wheat pool
A wheat pool is a co-operative that buys grain from farmers.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 corporations, that had dominated the grain trade in Western Canada since the late 19th...
just in Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
. On the advice of Aaron Sapiro
Aaron Sapiro
Aaron Leland Sapiro was a Jewish American cooperative activist and lawyer and major leader of the farmers' movement during the 1920s...
, a California lawyer they created a non share, non-profit organization responsible solely for selling wheat for the best advantage. It was set up as a one-man, one-vote organization, with a 5-year contract required to deliver 100% of his commercial wheat to the Pool.
United Grain Growers
United 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...
grain company and the Alberta Pacific Elevator company agreed to accept Pool deliveries in their facilities. Other elevator owners quickly agreed to accept Pool wheat when they realized the pricing power the farmers had created.
The Pool purchased the grain produced by its members at a provisional or initial price. The pool then sold the grain, and if there was a surplus in the account at the end of the year, it was distributed to its members at a pro-rated basis. Everyone who was a member of the Pool received the same price. Initially 26,000 farmers joined the Pool, with hundreds of shipping points.
The Alberta Wheat Pool started making direct sales to flour milling companies and even exported grain directly. Direct sales accounted for over 60% of the total in the first year. They had to use the services of the Winnipeg Grain Exchange
Winnipeg Commodity Exchange
The Winnipeg Commodity Exchange is the former name of a derivatives market based in Winnipeg, Manitoba, Canada now known as ICE Futures Canada. Futures and options contracts are electronically traded in western barley and canola ....
, despite objections from the farmers, in order to reduce risk which would in turn satisfy the banks that financed the venture.
After the first year, the Pool began to deduct 2 cents per bushel for purchase/building of Pool-owned elevators. This levy system was to be used often in the Pool's history. Considering that wheat sold at the time for over $1.00 per bushel, this was a low percentage cost. With this income, the Pool accumulated a $200,000 reserve. Shortly thereafter, Saskatchewan and Manitoba created Wheat Pools of their own.
The Pools grew in numbers and political power. In 1928 the combined Alberta, Saskatchewan and Manitoba Wheat Pools were among the biggest business concerns in Canada with a cash turn over of $323 million. The Pool attempted to purchase United Grain Growers Ltd., but the attempt failed. Instead the Wheat Pool began to build more elevators and terminals. By the late 1960s the Wheat Pool had 567 elevators.
In 1925 wheat prices rose to $2.17 then dropped down to $1.36. Fearing market collusion to lower prices, the Pool began to buy wheat futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
- 3 million bushels worth. This had the effect of raising prices to $1.69, possibly preventing the feared 'bear raid
Bear raid
A bear raid is a type of stock market strategy, where a trader attempts to force down the price of a stock to cover a short position...
'. As a result, the Pool was extremely profitable. The Pool did so again in 1929 and again in 1930. The first was profitable, but in 1930 (in part due to the stock market collapse
Stock market crash
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors...
in 1929) there were major losses when wheat prices fell under $0.20. The losses far exceeded the profits in 1925 and in 1929 combined, and government loans were necessary to stay solvent. The loans took 17 years to pay off. In order to obtain the government loans, the Pools had to give up overseas direct sales. This caused anger among members and harsh accusations were delivered.
Nevertheless, the pool continued to grow quickly in members, wheat capacity and popularity. In 1935, a Canadian Grain Board (now the 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...
) was created by the government as an alternative to pooling. The board had the ability to set a minimum price for wheat, which initially was 87.5 cents ber bushel.
By 1937, a worldwide poor harvest that had not affected Canada had turned the market around. Prices were well above $1 and the Canadian Wheat Board made a profit for the government. This was short lived when, in 1938, the world harvest was good and prices fell again to 60 cents, creating huge losses.
World War II
During World War II, the Canadian government gave away tons of food as gifts to allies in desperate need for the war effort. Many regions in Europe could not produce food, driving up demand. Price controlsPrice controls
Price controls are governmental impositions on the prices charged for goods and services in a market, usually intended to maintain the affordability of staple foods and goods, and to prevent price gouging during shortages, or, alternatively, to insure an income for providers of certain goods...
helped kept the price down, but it slowly rose from 56 cents in 1940 to $1.55 in 1945.
The government issued a guarantee that wheat price would remain above $1.00 a bushel until 1950. This was understood as part of several considerations given to the farmers in exchange for the low prices forced on them during a period when demand would normally have raised the price significantly.
Post World War II
Alberta Wheat pool continued to thrive and established itself as a world grain trader, supplier of crop input supplies and began to diversify. As production of grain increased and competition decreased the number of competitors, Alberta Wheat Pool elevators came to dominate the rural Alberta landscape.Corporate Mergers
In 1998 Alberta Wheat Pool and Manitoba Pool Elevators merged to form Agricore Cooperative Limited. In 2001, 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...
combined its business operations with Agricore Cooperative Ltd. and carried on business as Agricore United
Agricore United
Agricore United was a farmer-directed agri-business in Canada. It supplied crop nutrition and crop protection products, and offered grain handling and marketing services. It was created on November 1, 2001 by the merger of Agricore and United Grain Growers. It was headquartered in Winnipeg, Manitoba...
, a publicly traded company, no longer a farmer-owned cooperative. In 2007, Agricore United was taken over by the Saskatchewan Wheat Pool
Saskatchewan Wheat Pool
The 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...
, another publicly traded company. The merged corporation was renamed 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...
.
See also
- Wheat poolWheat poolA wheat pool is a co-operative that buys grain from farmers.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 corporations, that had dominated the grain trade in Western Canada since the late 19th...
- Agricore UnitedAgricore UnitedAgricore United was a farmer-directed agri-business in Canada. It supplied crop nutrition and crop protection products, and offered grain handling and marketing services. It was created on November 1, 2001 by the merger of Agricore and United Grain Growers. It was headquartered in Winnipeg, Manitoba...
- 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
- United Grain GrowersUnited Grain GrowersUnited 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...
- ViterraViterraViterra 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...
- List of Canadian Heritage Wheat Varieties