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    • #8128
      Lori SandersLori Sanders
      Participant

      Could the SWP be saved as a cooperative? Members saw the new concrete terminals and their ability to market grain at a quicker pace, and stopped supporting their local elevators. In the new world market where grain needed to travel quicker, a new system of grain gathering needed to take the place of the 300 plus wooden-crib elevators, many of which were in dis-repair. However, the SWP could not raise the capital as a cooperative and since members had diverted their product to producer-owned grain terminals, they had lost their membership’s loyalty. The best scenario for the company was to go “public” to survive the changing environment on the Canadian prairies and invest in a new grain gathering system to the demise of the wooden elevators (many of which were not being utilized thus adding to the cooperative’s costs).

      There were many factors that caused the SWP to loose it’s cooperative structure, but I do not believe they could have survived if they had not made many changes to their business.

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    • #8133
      Mary NirlungayukMary Nirlungayuk
      Participant

      to a degree i disagree changes to business is unavoidable i believe the membership felt it was best thing for the SWP and made the decision as a co-operatives we feel CEO’s or Managements are saying the right words and using their expertise. i believe grain elevators could of still been a co-operatives, I’d like to how they are doing today.

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    • #8142
      Paul HamesPaul Hames
      Participant

      I wonder what might have happened if the SWP had spent more time honouring their members. Members lost faith in the SWP. The farmers felt alienated and stepped away. As the SWP entered into the global market they lost sight of what had made them successful..

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    • #8151
      Jen BudneyJen Budney
      Participant

      Great comments, everyone. Lori, it’s very true that the SWP had to react in some way or other to the enormous changes happening in the industry and there were factors outside of its control, such as gov’t regulations that ultimately did not favour the survival of the co-op. Mary, as the case study alludes to, the SWP no longer exists — it became Viterra, a publicly traded stock corporation in 2007, and in 2013 was bought up by Glencore international — a British Multinational commodity trading and mining company with its headquarters in Switzerland — which sounds like the furthest thing from a co-op that I can imagine 🙂 . And Paul, yes, I think the board’s failure to consult widely with members was a huge mistake – if they had done so, they may have realized that members would not support the new concrete grain elevators — that is, they would not drive further and pay more just in order to support the co-op. The question remains as to what the right course of action would have been at this point, had they developed a better view of the future. Any ideas?

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    • #8153
      Walter PreugschasWalter Preugschas
      Participant

      Really, the cards were stacked against the SWP. They needed to have broad consultation with their members in order to come up with a vision for the future – who knows what that would have brought?

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    • #8165
      Kathy LittleKathy Little
      Participant

      These are all really good points. Like many co-operatives the board is challenged with making changes based on the bottom line, age of assets, current market conditions, etc. For SWP the wooden elevators serving small areas were no longer viable due to age and ongoing maintenance requirements. The decision to replace them with inland terminals was probably correct. How they decided to do it was probably wrong. If they had a plan to make the changes over time there would have been an opportunity to communicate with the membership. This would have also allowed for the members to adapt to the additional trucking that would be required. This is just one small decision in what appears to have been multiple poor decisions on the part of management and the board. It is difficult to say if they had made every decision correctly if SWP would still exist or if it would have still been bought out by a larger multinational.

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    • #8196
      Carol RipleyCarol Ripley
      Participant

      I believe that the Board lost sight of their responsibility to create and maintain value for the members. Or maybe they didn’t lose sight exactly, but they didn’t have enough communication lines to properly understand what members needed and wanted from their cooperative. The lack of diversity on the Board (diversity of perspective), the somewhat blind faith that they appeared to put in management, and the fact that they didn’t recognize that SWP had expanded beyond their area of expertise to oversee, also contributed to its demise in my opinion.

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    • #8227
      Jen BudneyJen Budney
      Participant

      Great point, Walter, about external forces sometimes being too large (and too fast) for co-operatives to control or mitigate against. Do you think it’s safe to say that even if the demise of the SWP was inevitable, the board likely would have chosen a different, more conscious way to fold than what actually happened? What could this have looked like, if it was inevitable?

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    • #8228
      Jan O’BrienJan O’Brien
      Participant

      In addition to the issues raised by the capital investment in concrete elevators, the SWP also extensive expanded leading to increasing debt. As the Fulton and Larson article points out management tends to be optimistic and put the best frame on the acquisition of businesses. The board which is already hampered by information asymmetry accepted management’s word without adequate challenge. This is where a board with diverse backgrounds could have assisted the homogenous board of farmers.

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    • #8238
      Ward WeisenselWard Weisensel
      Participant

      To me the most significant cause of the failure was the acceptance of a management culture that did not respect and support what the membership of SWP wanted. This did not occur over night as it took years for this to occur and the Board ultimately is accountable in the sense that they did not direct management away from this cultural disconnect. Ultimately, this was a Board responsibility and they bear the accountability for this disconnect in that they did not take the new CEO to task over some basic cultural and performance issues. Like most disconnects, the problems started out as small but they ballooned as Management became increasingly dominant in the decision making process. This ultimately led to the financial issues.

      In terms of the membership, it is difficult to hold them accountable as they are the customers. The Board and management should have been seeking their business and understanding why they were not getting it. But many farmers saw the cultural disconnect identified above and acted accordingly and there were not feedback mechanisms to get this issues back to the Board table and ultimately management.

      I think this was avoidable but it had to be addressed in the first year with Don Loewen as the new CEO. The lesson for us as cooperatives is the importance of managing a change in CEO particularly as it relates to the culture and values we want our organizations to reflect. If we get this wrong it becomes a major uphill battle.

      For our coop, I think we do have good diversity. That said, we have used independent advice from time to time and this has been useful to our decision making process.

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    • #8239
      Jim RossJim Ross
      Participant

      Warning editorial
      Understanding the history of agriculture in western Canada is an important part of being able to determine what the future looks like and maybe even more important of how to get there.
      In the short history it hasn’t been easy to get farmers together and stay together to work cooperatively.
      The cyclical nature of the business tends to wear thin the best of intentions when things get tough. Those who are farmers tend to be an independent lot and those who are good at it maybe even more so.
      Do those farmers make good directors? In my 30 plus years of being dairy coops I have run into only two individuals who had any formal training being a director and one of those was with another commodity group.
      Coming up through the ranks of the Sask wheat pool delegate system during the time leading up to its demise did not provide adequate training to be able to take over in those turbulent times.
      But like Enron, Arthur Anderson and Agrifoods Dairy coop, those hard lessons are what forces us to do better. But it gets tiring hearing about learning these lessons over and over, decade after decade.
      The squandering of the new found liquidity after the share offering was the same poison that hit Agrifoods in 2000 after they sold their ice-cream business and the went on a spending spree to go national.
      Profits in agriculture are hard to come by and need to be saved for a rainy day but that lesson doesn’t seem to translate into the farm organizations. Where surpluses do happen like in Sask pulse it isn’t used effectively and that leads to discontent like at Sask pulse and the movement to remove the check-off and at canola council where you get members withdrawing their funding.
      Governance matters is doing a good job in advancing governance but I think the post secondary institutions should have a required class in governance from either a board member perspective or an association executive perspective.
      It’s not in farmers norms to be thinking anything about governance

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    • #8338
      Cheryl WallaceCheryl Wallace
      Participant

      I thought I had put in comments on SWP but can’t find any so I will add here. There have been some excellent insights and comments so I am not sure I can add anything that hasn’t been said.

      There were so many factors of the failure from lack of knowledge and expertise on the board to a changing industry to too much control by management. SWP was being lead too directly by the CEO and the board didn’t have the confidence / expertise / knowledge to challenge the decisions or put in appropriate governance policy to help mitigate the issues.s

      In one of the comments Enron was mentioned. Too much diversity and expertise can be as much of a detriment as not enough. Group think or too diverse thinking each has its challenges. All organizations need to bring in outside experts and additional education that is tailored to its own issues. Even in the credit union world the issues I may have on my board may be very different from the issues on a similar sized CU.

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