BUSINESS & INVESTMENTS

SASKATCHEWAN FARMERS’ UNION WHEAT POOL MAY HAVE FAR-REACHING EFFECT

JOHN BANKER McCONICA February 15 1925
BUSINESS & INVESTMENTS

SASKATCHEWAN FARMERS’ UNION WHEAT POOL MAY HAVE FAR-REACHING EFFECT

JOHN BANKER McCONICA February 15 1925

SASKATCHEWAN FARMERS’ UNION WHEAT POOL MAY HAVE FAR-REACHING EFFECT

BUSINESS & INVESTMENTS

JOHN BANKER McCONICA

The author of this article is personally acquainted with Sapiro, and is a son of T. H. McConica, M.P., for Luseland, Sask. This is frankly a western review of the Pool and its possible ramifications. The “Financial Post” calls this union a “ivestern radical organization,” and counsels prudence in their investigation of our credit system, if the members seriously consider basing the Canadian monetary system “on services and commodities,” rather

than on gold...... The Toronto

“Globe” mentions that A. E. Bolton, of Saskatoon, a prominent organizer for the Union, has left for Moscow, at the Soviet’s invitation, to attend there an agricultural and credit conference.

—J.V.M.

WHEAT is the financial foundation of Western Canada. Let wheat fail, and not enough wealth would be produced in that vast stretch of country to pay for the seed that would be required the following spring.

Nowhere on the American continent or perhaps in the entire world is there a larger area, so homogeneous from a business point of view. The farmers of Western Canada have organized to dominate the wheat price of their country and they hope by utilizing what is termed “orderly marketing” to influence world prices for the benefit of the producer. Due to the community of interest, it was the ideal place to launch the first nation-wide co-operative society for the selling of wheat. On the second day of September last this monster experiment was launched. On that day the Canadian Wheat Producers, Limited, received its first load of wheat and after that date no grower who had signed a contract could sell his own wheat.

Organized for the purpose of marketing wheat in the interest and for the sole benefit of the growers, the Wheat Pool has been patterned after the various cooperative fruit selling agencies now operating in California. Tens of thousands of farmers raised a record-breaking crop of wheat in 1923 only to find, after selling that bonanza gift of nature, that they had made little or no financial progress. In desperation they have pledged their entire production for fiye years to this new, untried agency. Will it succeed? Only the future can answer this question, which is all important to the growers of more than fifty per cent, of the wheat produced in that extensive territory.

Instead of answers to the question as to the ultimate success of the Pool, the growers have been confronted by contradictory predictions. Aaron Sapiro, who first put the Pool movement into definite form in August, 1923, promises that success is assured if the rules which he has learned in his years of experience in co-operative movements are strictly adhered to. Huge audiences, in which some of the hearers came for hundreds of miles to hear him, have been swayed to almost fanatical enthusiasm by his undeniable eloquence and his rosy pictures of the future under the beneficent workings of the Pool.

In sharp contrast to these views, the wheat growers have been harangued and circularized to the effect that pools cost too much to operate; that the laws of supply and demand are as immutable as those of the Medes and Persians, and that the old-established channels of the grain trade can not be improved upon. The result of this campaign is that no grower signed the contract without fairly full information on both sides of the subject.

No Ephemeral Movement

THE formation of a wheat pool in Western Canada is not the result of a fly-by-the-night movement. Ever since the crop season of 1919-20, when the Canada Wheat Board took control of the export situation following the set prices during the war and distributed forty-two cents a bushel more than the growers expected Ao get, the farmers have been working for some kind of a central selling agency. The faster wheat went down in price, the louder they howled for a wheat board or a wheat pool. So loud and insistent was this demand for centralized selling, that for two years in succession the Dominion parliament passed legislation enabling the provincial governments to form a wheat board. Due to a strong feeling of repugnance against the government taking a hand in private business, this authority was extended to the provincial governments for but one year at a time. After the other difficulties were surmounted, it was found that there was one insurmountable one, as far as government selling was concerned. No man in whom the Government had confidence would head the wheat board, if it was a one-year proposition. Authority for a longer-lived board was impossible to obtain. Thus it became evident that a system of centralized selling must spring from some source outside the Government, if one was to be obtained.

While this storm of discontent and almost semi-Bolshevik ferment was stirring the people, an ex-locomotive engineer living in a backwoods district in northern Saskatchewan saw what has proved to be a vision. This ex-railroader still has his union card up to date, although he has not pulled a train for eighteen years. He carried the union idea into a new field. He started the Farmers’ Union of Canada. Though but two years old, this union is a most potent factor in Western Canadian affairs.

L. P. MacNaimee is the ex-engineer who fathered and is now president of the Farmers’ Union. He budded better than he knew, because he made his organization non-political, non-sectarian and non-commercial. Thus he eliminated many of the causes for friction which tend to disrupt farmers’ organizations. He also made the union a secret society, with a pass word, a grip and the title of “brother” for each one who paid the necessary five-dollar fee. MacNaimee, in addition to being a man of vision, has proved to be a fighter and a man of considerable popular appeal.

Risen from absolute obscurity and narrow surroundings, where he did not see a street car or any other sign of urban life for ten years, he is a man of much natural force. His favorite gesture in public speaking is to pound the table in emphasizing his point. He wears the same kind of clothes in which he emerged from the northern woods. He still appears before his audiences wearing the blue denim shirt of a working man, though it is doubtful whether he has done any manual labor for more th^n a year. His garb is without a doubt a pose, as he is an observing man, but he continues to be effective and the union’s membership swells monthly. The Farmers’ Union was formed with the avowed intention of striving to improve marketing conditions. At the psychological moment, the union brought Aaron Sapiro to Western Canada and as a result of his visit in 1923 a Wheat Pool was formed in Alberta and forty per cent, of the wheat acreage in Saskatchewwan signed up. In the latter province it was not deemed wise to start operations without fifty per cent, of the grain under contract, so 1923 saw Saskatchewan sell about three hundred millions of bushels of wheat at prices most disappointing to the growers. The Alberta Pool went to work under the handicap of insufficient preparation. The actual quantity of wheat handled was not large, but the results were sufficiently satisfactory to bring about a considerable increase in the acreage pledged to the Pool.

Need Fifty Per Cent, to Operate

HOWEVER, previous to the announcement of at least modified success by the management of the Alberta agency, Saskatchewan obtained the required fifty per cent. This necessitated a large amount of organization. Due to an oversight in drawing the contracts, it was again necessary to obtain the signatures of all those signed in 1923. The whole province was divided into districts and covered by volunteer canvassers. The total was finally swelled to the required proportions by a drive on June 10. When the returns were all in, it was found that almost seven millions of acres had been put under contract in Saskatchewan alone. This was slightly more than onehalf of the estimated area sowed to wheat, according to the statistics of the Department of Agriculture.

Some of the salient features of the organization then formed are the following: Each province is organized separately. Three of the Canadian provinces, which embrace the territory from the Great Lakes to the Rockies, have formed wheat pools. An agreement has already been made between the three pools to sell through one agency formed for that purpose. It is the Canadian Wheat Producers, Limited, to which reference was made earlier.

The contracts entered into by the growers are iron-clad and enforceable. It is necessary for them to be binding, so that the Pool management can be assured of a given supply of wheat. Everyone will have more faith in the Pool if they know that it is obligatory for fifty per cent, of the wheat in the country to be delivered to that Pool. Local committees have been formed at each shipping point to see that all Pool members are scrupulous in fulfilling their contracts.

The contracts are for a long term—five years. This was the moot point in fighting the Pool. Farmers are usually a pretty independent lot, and it was a bitter pill when they gave over the right to sell their own wheat for such a long time. Most of the opposition to the Pool centred around this point, but the founders of the organization stuck it out. It has been found from experience in cooperative movements to be necessary to cover production for a term of years, so that trade connections can be secured and retained. Had it not been that it was found impossible to get a capable head for a one-year government agency, it is doubtful if it would have been possible to gain this important point.

The co-operative company which has been formed is a non-profit one. It seems that there are two different kinds of cooperation. One is the system where the capital for carrying on the enterprise is furnished by the co-operators and a profit is made on each transaction. At the end of a certain period a distribution of this profit is made either on a basis of the amount of business transacted with the concern or a return on the amount of money invested, or both. This system is valuable when the co-operators are the purchasers and where business is done with non-members of the organization.

No Profit for Agency

THE second system of co-operation is of use in the marketing of produce or merchandise. The concern is so conducted that no profit is left in the hands of the agency. No non-member of the organization is allowed to sell through it. The Pool is advancing the growers one dollar a bushel for their wheat as soon as it is delivered. Each grower is also given a receipt for the number of bushels delivered. As soon as possible, further payments will be made, until at the end of the season, each man delivering wheat to the Pool will have received the same price, which price will be the average received for wheat throughout the season, less the necessary handling charges.

Although the company is a non-profit one, provisions have been made that two cents a bushel may be retained by the Pool each year for investment in elevators, flour mills or any other property necessary to the conduct of the business. Shares of stock equal to the value of the property acquired will be transferred to the growers from whose wheat the purchase price was deducted. The Pool has operated so far without the acquiring of property and from present indications no heavy investments will be necessary.

The Pool is a machine built for one purpose and one purpose only: the selling of wheat. No other commodity will be handled. If it seems wise to pool some other commodity another organization must be built to handle it. For this machine to run properly it will be necessary to have a good driver. So far the executive board has been unable to secure the driver. For the present A. J. McPhail, who was largely responsible for the intensive organization of Saskatchewan, is the acting general manager.

Credit at the Bank

BEFORE the Pool was given its permanent organization, each contract signer was mailed a ballot containing the names of certain electors. Electors were selected for each sub-division. They met and elected district directors, who had to be resident in the districts they represented. The company is controlled by these district directors, who must be actual growers. They must be actual growers, so that when they work for the best interests of all the members, they likewise benefit themselves. These directors are elected for one year only, to prevent, as far as possible, the formation of an inner ring of control, such as is frequently found in popular organizations.

Contracts have been signed with many of the companies owning lines of elevators through the country, whereby wheat belonging to the Pool is handled through these elevators. The banks have authorized sufficient credit for the financing of the business and this new departure in marketing wheat seems to be off to a fair start.

The object of all of this organization is to prevent farmers from competing with each other in the selling of their wheat. In Western Canada seventy-five per cent, of the entire crop has left the farmers’ hands in the three months following harvest, although exports during the three months the farmer is “dumping” are very little higher than at any other time of the year. Thus the farmers throw three-quarters of their crop on the bargain counter to be sold for what it will bring. Then later on they have to sell the remaining one-quarter in competition with the cheap wheat they sold in threshing time. The Pool hopes to “feed” the market in such a way that it will not be unduly depressed by forced selling.

Among those who are exponents of cooperative selling, Western Canada is looked upon as but the first step in the formation of a world pool, comprising the principal wheat-raising countries. They expect the movement to expand very rapidly, if the experiment with the Canadian crop meets with success. Labor is organized, manufacturers have their associations and the farmer is left to his own fate. He remains as the only unorganized factor in modern life and as a result he is getting the worst of it. When he is in the market to buy any commodity he is told the price he must pay for it, but when he has anything to sell, he has to take what they will give him for it. In order to partially correct this and help fix his own prices for wheat, the farmer has pledged that from which he must earn his living for the next five years. It is to be handled in a different way than wheat has ever been marketed on this scale before. This time next year we will know the answer to the question: “Will it succeed?”