Canadian grain industry promoter faces questions from its members over plan to build $100M facility in Winnipeg

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Cereals Canada, a player in promoting Canadian grains, is suffering from a crisis of confidence after several high-profile members signalled an intent to leave the organization after announcements for a new, $100-million facility in downtown Winnipeg.

Cargill and BASF Canada Agricultural Solutions are among a number of companies to recently submit withdrawal notices to Cereals Canada.

BASF filed the notice to the organization ahead of its annual meeting on June 27. A focus of the meeting was the planned $100-million Global Agriculture Technology Exchange, a research and technical services facility. Another industry giant, Cargill, submitted a similar notice earlier in the month. The withdrawals are not effective immediately and members must continue to pay fees for two years.

On June 27, the association also announced that it has replaced its chair, executive committee and four board members.

The turn of events raises questions about the future of Cereals Canada. Maintaining and expanding the cereal industry’s $10.8-billion export market is the primary mandate of the organization. A new building, while expensive, is key to achieving this mandate, says the association.

However, members are not so confident. Contending with thinning margins, some are cutting membership costs. Others are asking why Cereals Canada is still relevant today.

Cereals Canada’s mandate is to improve access to international markets through offering high-value Canadian products, said Dean Dias, chief executive officer of Cereals Canada.

“The goal is to make sure that our customers around the world are demanding the quality of Canadian crops.”

Cereals Canada was founded in 1972 as the Canadian International Grains Institute to provide technical support for the Canadian grain sector.

But this mandate is not possible in the current building, said Mr. Dias. The current facility houses a flour mill, analytical labs, pilot bakery and Asian milling line, among other things.

However, there is no capacity for more equipment, said Mr. Dias. For example, Cereals Canada would like to explore the potential for Canadian-durum couscous, a commodity in high demand in North Africa. But the building – under government lease – will not accommodate the new equipment needed to build a couscous assembly line.

The $100-million cost of the Global Agriculture Technology Exchange includes land costs and updated equipment. Cereals Canada is hoping to secure industry and public funding from all tiers of government.

The proposed sites in downtown Winnipeg places the exchange close to industry associations and an international airport, said Mr. Dias.

“The goal was to launch the vision,” he said. “The vision is to be in the space that will help us continue to be globally recognized, best-in-class expertise.”

One of the proposed sites is owned by Richardson, a member and one of Canada’s largest agribusinesses.

Greg Sears, a regional director at Alberta Grains and farmer in Peace River Country, is loosely in favour of this new plan.

Mr. Sears believes that Cereals Canada does good work. He pointed to the organization’s work on opening the Vietnamese market to Canadian producers by lobbying authorities to revise a quarantine pest list that had restricted Canadian imports owing to the creeping thistle weed common in Canadian grains.

He believes the membership dues, which cost Alberta Grains a total of $700,000 annually, are worth it. So too is a new building if it helps Cereals Canada continue to expand exports.

Others aren’t convinced. “As a farmer I find it baffling and almost offensive,” said Gunter Jochum, about plans for the new building.

Mr. Jochum, a grain and oilseed farmer and president of the Wheat Growers Association, has questions about why the new building is needed, and why it must be based in downtown Winnipeg. He questions why Cereals Canada has failed to provide a business plan for the new building, a budget breakdown or a value proposition.

When The Globe and Mail asked Cereals Canada for these items, spokesperson Brigit Harvey said they had been shared with the board and members but, for confidentiality purposes, could not be released.

But Mr. Jochum also takes issue with the vision for Cereals Canada. A national association of all cereals growers should be focused on doing what individual corporations and universities cannot do alone, he said.

Mr. Jochum would like to see Cereals Canada focus on macro-level government policy, such as Bill 282, which prohibits foreign access to supply managed markets in new trade agreements.

Other industry partners are more concerned about costs. North West Terminals, which withdrew its membership a couple of years ago, said it could no longer afford to keep paying. Revenue has been thinning as large competitors invest in infrastructure and aggressively buy up grain, suppressing prices, said CEO Jason Skinner.

BASF said its decision to withdrawal was not final, and was part of a process to reconsider all memberships across the business. It is conditional based on changes to the two-year notice period.

A Cargill echoed the same sentiment in a statement e-mailed to The Globe, and failed to respond to questions about timing of the withdrawal.

Editor’s note: A previous version of this article incorrectly stated that Cereals Canada was founded as a replacement for the Canadian Wheat Board and later merged with the Canadian International Grains Institute. Cereals Canada is not connected with the Wheat Board and does not buy or sell grain. It was founded as the Canadian International Grains Institute. This version has been updated.