Rural grain elevators — failure of Manitoba Elevator Commission

by Bruce Cherney (part 6 of 6)

On September 1, 1912, the Manitoba government-owned elevator system was leased to the Grain Growers’ Grain Company (soon after renamed the United Grain Growers, or UGG). The system continued to be leased to the UGG until the late 1920s when the last of the elevators were sold, primarily to the UGG, which chose the most viable structures.
Many of the sales of the MEC elevators took place from 1924 to1927, but some were sold as early as 1912. In 1916, for instance, the Dominion Elevator Company bought two elevators, one of which the company had sold to the MEC in 1910. After repairs and depreciation, the Manitoba government lost $2,637 on the latter deal (Everitt).
According to John Everitt (A Tragic Muddle and a Co-operative Success: An Account of Two Elevator Experiments in Manitoba, Manitoba History, Autumn 1989), “The leasing arrangement with the MEC enabled the Grain Growers to compete on more favourable, if not equal, terms with these private dealers much sooner than would otherwise have been possible.”
The same dissatisfaction with large private companies that gave birth to the MEC led to the formation of the pools by prairie farmers in the 1920s — the Saskatchewan Wheat Pool, the Alberta Wheat Pool and Manitoba Pool Elevators. 
By 1928, the Saskatchewan Wheat Pool operated 900 country elevators, the UGG had over 4,000, while the largest private company, the Alberta Pacific Grain Company Limited, had only 363 licensed elevators. 
In the 1933-34 crop year, there were 5,901 licensed country elevators, but from this point on their numbers began to decline, although capacity increased to almost 400-million bushels by 1970-71. 
“This is an indication first of the effects of the numerous corporate amalgamations that occurred among the line companies beginning in 1928, and secondly of the trend toward the concentration of grain deliveries through fewer but larger facilities in the interest of greater economy of operation,” wrote Charles W. Anderson in his book, Grain:The Entrepreneurs, 1991. 
The process of rationalizing grain  handling was advanced in the 1920s and 1930s when the design of terminals became standardized. “The government terminals,” wrote Jim Blanchard (A History of the Canadian Grain Commission), “typical of the elevators built in these years, all had concrete bins and brick work houses. Hopper scales gradually increased in capacity to handle the larger grain cars and generally speed up the process of weighing grain. Some mechanization began replacing human labor. The first automatic car dumpers and automatic samplers were installed in the 1920s.”
Anderson wrote: “Finally, the reduction in total capacity that has taken place through the 1970s and the 1980s is the result of further rationalization within the industry, as well as of the process of rail line abandonment that got underway during this period.” 
In addition, grain handling has been affected by factors such as lowering of tariffs between nations, the end of the Crow Rate freight subsidy to farmers in 1995 and the demise of the Canadian Wheat Board as the exclusive export marketer of prairie wheat in 2012. In the wake of the changes, there has been a scramble over market share by the largest companies, whether nationally or internationally based.
When the Alberta and Manitoba pools made a hostile takeover attempt on UGG, the firm struck a bargain with the U.S. agribusiness giant, Archer Daniels Midland Co., which acquired a 45-per-cent interest in the UGG. 
In 1998, Alberta Wheat Pool and Manitoba Pool Elevators merged to form Agricore Co-operative Limited. In 2001, United Grain Growers combined its business operations with Agricore Co-operative Ltd. and carried on business as Agricore United, a publicly-traded company. In 2007, Agricore United was taken over by the Saskatchewan Wheat Pool, another publicly-traded company, which was renamed Viterra.
International grain companies have built their own inland terminals: Bunge Canada built two, ConAgra Limited built three and Louis Dreyfus Canada Limited erected one.
As branch lines were abandoned by the railways, elevators became isolated and redundant to the grain companies, which either allowed the elevators to fall apart from neglect or be demolished by the hundreds. The decline of the rural elevator also marked the overall decline of many small agricultural-based communities. Typically, a community’s railway branch line would be abandoned by a railway and then the elevator would fall into disuse.
In an August 14,1971, Free Press article, it was reported that “105 points in Manitoba, or 68.2 per cent of the total rural elevators would be affected, directly or indirectly, by the proposed railway branch line abandonment.”
The abandonment of the branch lines was being allowed by the federal government as part of its 1970s policy to streamline the handling and storage of Canadian grain; that is, the creation of large-scale grain handling facilities at central locations. By 1978, the federal government, through its Prairie Rail Action Committee (PRAC) was recommending the abandonment of rail lines it considered unworthy of upkeep.
In a January 2, 1975, news release, Robert E. Moffat, the general manager of Manitoba Pool Elevators, said the Canadian National Railway (CNR) was proposing to abandon tracks serving 114 grain elevators in Manitoba, leaving only 75 elevators along the CNR line to be retained (Brandon Sun, January 4, 1975).
Moffat may have been jumping the gun somewhat, as the railways still had to apply to the federal government for permission to abandon lines, but the policy adopted did put 6,283 miles of prairie track in jeopardy.
The Hall Commission, named after Supreme Court of Canada Justice Emmett Hall, recommended the closure of some branch lines and the inclusion of others in a permanent network. 
“However, in the mid-1990s the railways were still unable to abandon all of the highest-cost branch lines. The federal government set up the Robson Committee, which gave permission to the railways to abandon all 525 miles (845 kilometres) of high-cost branch lines. The Canada Transportation Act of 1996 streamlined the abandonment process, and branch line abandonment accelerated. In the next five years the railways abandoned over 1,450 miles (2,333 kilometres) of prairie branch lines ...” (Encyclopedia of Saskatchewan).
The 1971 Free Press article reported that the elevator companies started the process of rationalization without the impetus of the railways. “Manitoba Pool Elevators is planning to close 19 elevators this year and other grain companies report a similar process within their operations.”
Farmers complained of added shipping costs associated with elevator abandonment, but, according to the Free Press article, a study found that increasing the farmers’ distance from an elevator didn’t really make much of a difference. “He already had to have a truck and it is just increasing the amount of time he spends and the amount of gas he uses to increase the distance.” 
Today, the same argument wouldn’t apply as the price of diesel fuel and gasoline has skyrocketed to levels not seen in the 1970s (gasoline in 1971 was about 55-cents per litre, while it now varies from just over a dollar to sometimes well over $1.20 a litre).
Professor E.W. Tyrchniewicz, of the University of Manitoba’s department of agricultural economics, said in the 1971 article, “Much of the farmers’s obsession with distance goes back to the horse and buggy days when travelling was far more difficult than it is today.”
According to a May 17, 1977, Brandon Sun article by Larry Marshall, the question was not so much about rail line abandonment, but if the elevators stayed in rural communities.
“If they stay,” said L.W. McTavish, a garage owner in Cardale, Manitoba, “the town won’t change that much. But some elevators along here have been allowed to deteriorate. At Lavinia, they had one break open and they tore the other one down. Depends how they service the ones that are left at McConnell, Decker and Beulah.”
At Elgin, R.G. Bell, who along with his sons operated a local garage, said: “If they close the elevators, three different businesses will go, and we only have seven or eight. But if they’re closing this end of the line, they’ll gradually strangle the other end, too.”
But while distance may not have been considered much of a cost factor to farmers, the abandonment of branch lines and elevators dealt a deathblow to the economies of many small hamlets and villages in Manitoba and across the prairies. The elevators brought farmers and their families into town, where they spent money at the stores, ate at the local cafe or socialized at the ball diamond, skating rink or curling club — all of which are among the essential ingredients that contribute to the lifeblood of a successful community. 
According to an Historic Sites of Manitoba plaque commemorating the 1999 centennial of Elgin, Manitoba, located 67 kilometres south of Brandon in the RM of Whitewater,  by 1911, the community had five churches and 42 businesses, including five elevators. Today, it is a typical small Manitoba hamlet on the prairie landscape with most of its businesses long departed, so it’s struggling to maintain its existence.
Manson Moir, president of the Tilston pool elevator, told Sun reporter Graham Hicks (May 17, 1977) that is was no surprise that the Hall Commission recommended the abandonment of the local Alida subdivision line, as the railway bridge near Lauder was washed out and had not been repaired since 1976. Farmers along the Alida line were already delivering their grain to elevators to the south at Tierson or Melita, or to the north to elevators at Reston and Pipestone. As a result, the Tilston elevator was slated for closure by June 30, 1977. The Alida line was abandoned a year later.
In a May 27, 1978, Free Press article by Paul Sullivan, Don S. Patterson, the executive vice-president in charge of grain for N.M. Paterson and Sons, said company elevators would have to be shut down in McCabe, Somerset, Swan Lake, Minto, Elgin and Fairfax.
The company wanted to operate just 100 elevators, “but one day it won’t be economical, especially when it comes time to rebuild elevators that are very old,” said Paterson. “Those old wooden elevators last forever. Every year you fix one, you give it five or 10 years of life, but eventually they’ll be obsolete and we won’t bother fixing them.”
To stay competitive, the company had erected “high-throughput” elevators at Orkney and Carlevale, Saskatchewan, each with a 160,000-bushel capacity.
“I’d say rationalization is our number one problem today,” Jim Deveson, an Arden-area farmer and president of Manitoba Pool Elevators, told Sullivan (Free Press, August 5, 1978), “If all the PRAC recommendations are accepted, we’ll lose a quarter of our elevators — we’ve got a total of 62 on those lines (recommended for abandonment). We’ve been preparing for this for 10 years, so we’ve built our new elevators on lines that are going to stay around. But the fully depreciated elevators were creating revenue to pay for the new ones. If we eliminate them, we’ll have to apply the cost somewhere else ...
“There’s no question rationalization will have a significant effect on Manitoba Pool, but it will have an even greater effect on the individual farmers who will lose their elevators. They’ll have to outlay more money to buy bigger trucks to haul their grain to further points.”
In his 2003 book, Prairie People: A Celebration of My Homeland, Robert Collins wrote that the Canadian Grain Commission reported  just 418 rural elevators remained on the prairies, and that 25 to 30 per cent were “ugly, efficient cement boxes called ‘high throughput.’ Typically, they can hold twenty thousand metric tonnes — about twenty-eight times the capacity of their wooden ancestors — and can load 50 railcars within eight to twelve hours. Mammoth grain trucks, ranging dozens of miles to feed these monsters, are pounding the life out of prairie roads that were never designed for such traffic.
“And the romance is gone. The prairie skyline has lost its distinctive face. Little towns, struggling for existence, no longer raise those homely wooden heads to announce, ‘Over here, it’s us!’”
“The new structures, with price tags of about $10 million, use large-volume equipment to load multi-unit rail cars in a short period. The computer-equipped concrete elevators can store up to 35,000 tonnes of grain, compared with 5,000 for a large wooden one,” said Brian Hayward, chief executive officer of Winnipeg-based UGG, in a 2003 Financial Post article by Ian McKinnon. 
But there are communities attempting to maintain the towering sentinels as a symbol of the prairies. In Elva, Manitoba, local residents are selling art prints to preserve the oldest remaining wooden grain elevator in Canada. The Elva elevator was built by the Lake of the Woods Milling Company between 1892 and 1899. It became part of Ogilvie Milling in 1954, and was sold to Manitoba Pool in 1959, which closed it in the late 1960s. It has since been purchased and is currently owned by businessman C.P. Cook of Westhope, North Dakota.
At Inglis, population about 200 people, in the RM of Shellmouth-Boulton, restoration of a row of five elevators, the last remaining example of its kind on the prairies, is ongoing. Plaques have been erected by the Historic Site and Monuments Board of Canada (2000), making it a National Historic Site, and the Manitoba Heritage Council (2002). Another plaque recognizes the $100,000 donation by the Murphy Foundation to complete the restoration of two former Reliance Grain Company elevators on the site. Other financial support has been received by the Thomas Sill Foundation, corporations and foundations as well as private individuals.
“The Inglis elevators outlived their contemporaries because they were located along the railway line that was marked for closure over thirty years ago,” wrote Karen Nicholson (Small Farmers, Big Business, and the Battle over the “Prairie Sentinel,” Manitoba History, Spring/Summer 2003). “The elevator companies were reluctant to spend any money to modernize the structure, but found them convenient storage bins until the grain-handling system entered the modern age.
“Inglis residents have taken the site into their hearts and everything in the tiny hamlet seems to have been spruced up to reflect the pride the local people take in their unique skyscrapers. Ironically, the elevators provide more employment today than they did as grain-buying facilities.”
When the last of the country elevators are gone, an important era in Western Canadian history will have come to an end.