One of Canada’s largest grain companies says it has withdrawn from the country’s canola and flax industry groups, leaving the Canola Council of Canada and the Flax Council of Canada with tough budget decisions for 2018.
Richardson International, the parent company of Richardson Pioneer, is no longer funding the two national oilseed organizations as of the end of 2017, according to Jean-Marc Ruest, Richardson’s senior vice-president, corporate affairs and general counsel. The company also expects to withdraw from Soy Canada at the soybean industry group’s fiscal year-end in spring.
The actual amount paid by the Winnipeg-based company to each group has not been disclosed, but Richardson’s contribution to the Canola Council was over a million dollars per year.
With one of its largest exporting and processing members leaving, the Canola Council is facing a significant reduction in its budget for 2018. Multiple sources say another major grain company member also plans to reduce its funding, citing similar reasons for doing so as Richardson. Canola Council board members were in Winnipeg last week for their latest meeting to discuss budget and organizational priorities.
The Flax Council of Canada, meanwhile, announced last week that it will be closing its office in Winnipeg at the end of January due to a funding shortfall, which chair Brian Johnson linked to reduced funding from company members who wanted to see the flax council join a combined oilseed council.
So why is Richardson withdrawing its funding from the national oilseed groups?
“We can sum it up to the value proposition that is offered and received through our participation in those organizations,” says Ruest, in the interview below. “The cost of funding the organizations has been quite significant from a money, time and participation perspective. (continues below)
Listen to Jean-Marc Ruest explain Richardson’s decision to leave the national canola, flax and soybean industry groups, changes the company would like to see, and his response to concerns that Richardson will be getting a free-ride on work done by these councils:
For more than a year, Richardson has been “challenging those organizations to look at more effective means of carrying out the activities that they are, which includes reviewing their mandate and their structure,” he says, referring to the multi-commodity concept that’s been discussed for several years — the creation of an oilseed council that could represent the Canadian canola, flax and soybean industries.
“Do we really need to have single commodity groups or can some of these activities be better carried out and funded through a multi-commodity approach?” asks Ruest.
Simply forming an oilseed council wouldn’t be enough to bring Richardson back to the table, he says.
“Regardless of the structure, we have to come back to that issue of really clearly defining what the mandate(s) of these organizations are, what the activities are that they’re going to be carrying out, a reasonable level of expense, and then what the funding formula is for each participant. Those all have to be put on the table and discussed.”
He says they see value in funding market access work through these industry-wide groups, but conversely, they view agronomic and market development work as “things we typically do ourselves, in our own companies, or are offered in the private sector.”
Although other companies have yet to come forward publicly, there are others that share the same views as Richardson on the need to reassess priorities and funding models, says Ruest.
“”The concerns that Richardson has are shared by a number of different people. There are grain companies that feel the same way. I think there are life science that share the same views, and I think there are a number of producer groups that understand where we’re coming from and are starting to ask the same questions,” he says. “We see here in Manitoba, the producer associations that are looking at merging their activities, and I think that’s borne out of the same sentiment that we have with respect to oilseeds.”
Read/listen to Canola Council president Jim Everson’s comments on Richardson’s departure here.