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Richardson pullout roils canola sector

Alberta Canola backs council, saying its marketing efforts and agronomic support are key to canola’s success

Richardson International’s decision not to renew its membership means a big financial hit for the Canola Council of Canada, but it could have been even worse.

According to several reliable sources, Viterra had planned to leave too, but changed course — possibly because of a big cut in membership fees.

Losing Canada’s two biggest grain companies would’ve been an even bigger blow to the 51-year-old council, which is credited for playing a key role in canola’s success.

Alberta Canola Producers Commission was quick to pledge its support for the council. Along with its sister organizations in Manitoba and Saskatchewan and their national umbrella group, it praised the council both for its marketing and agronomic acumen.

“The science-based support they provide to company agronomists and farmers will keep canola a profitable and sustainable crop on Canadian farms for years to come,” they said in a statement.

While the growers’ groups are the largest source of the council’s funds, Richardson’s withdrawal from the council, and its much smaller flax and soybean sister groups, will hurt.

“We’re looking for a way of getting better value for the dollars that we’re spending in these industry associations,” said Jean-Marc Ruest, the company’s senior vice-president for corporate affairs. “We spend well over a million dollars a year funding these three organizations.”

The decision to leave was not made suddenly or in a fit of anger, said Ruest.

“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 was just one issue, he added. His company questioned how much the canola council spends on market development — something his company is prepared to do itself as an exporter — and a funding model where big companies pay more than smaller ones, Ruest said.

There’s also a cost for staff time to participate in organizations, he said, adding Richardson will continue its membership in other industry associations, including Cereals Canada, the Western Grain Elevator Association, and the Canadian Oilseed Processors Association.

Sources say Viterra shared those concerns and worked with Richardson to push for efficiencies, including merging the canola council, Flax Council of Canada and Soy Canada. Viterra eventually opted to stay, but with a lower membership fee, which according to one source, was to be cut to 15 cents a tonne from 23 cents. The reduced membership fee will apply to other members, too, the source said.

The council has 38 employees and in 2016 received almost $8.3 million from its core funders — exporters, crushers, farmers, and life science firms.

In contrast, Cereals Canada co-ordinates the wheat sector with just six employees and a budget of just over $1 million. The two crops are close in acreage, but wheat is a much more diverse crop with many more end uses, classes, and grades than canola, Ruest said.

The canola council is not endangered by Richardson’s withdrawal, said canola council president Jim Everson.

“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.

Canola Council of Canada president Jim Everson says the council is working with its members to ensure it meets their needs. He says Richardson’s absence doesn’t endanger the council.
photo: Allan Dawson

The council’s success in uniting the canola industry is a Canadian comparative advantage, he added.

Markets change and vary with the product and country. Canola doesn’t need as much promotion in the U.S. 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.

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.”

His company may even “come back to the fold at some point in time,” he added.

“But that’s a decision for them to make,” he said. “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.”

— With staff files

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