Grain Elevators

To understand the purpose and the form of grain elevators is to understand the grain economy which formed the basis of prairie settlement. In order for settlement to be successful there had to be efficiency in production and marketing of grain to world markets, and this meant having a system to assemble and store grain from farms and move it forward to port position for shipment overseas. This system consisted of farm hauling (horse and wagon, and later truck), roads, railway, and the grain elevator. The earliest form of grain storage was the flat warehouses built alongside the rail line which received grain, mainly in sacks. A typical flat warehouse might hold about 4,000 bushels. Bins would be located on each side of a central alley that gave access to loading and unloading the bins; this was done by shoveling grain into hand carts, and from there into wooden rail box cars. It took about one full day to load a box car this way: this system was too slow and Labour-intensive. The invention of the vertical leg by which grain could be elevated and stored in vertical bins was to solve this problem. The elevator had its origins in Buffalo, New York; the design was adopted and spread across the great plains of North America and into the Canadian Prairies, where it gave birth to a name for these vertical wooden facilities: “Prairie Sentinels.”

The earliest grain elevators were built to a standard set by the Canadian Pacific Railway (CPR) in order to obtain a licence to construct an elevator along its track; the minimum size stipulated by the CPR was 25,000 bushels. To fully understand the characteristic shape of the wooden elevator one needs to understand how it works. Figure GE-1 shows a cross-section of the standard elevator and its main working components. This drawing is of a 1935 elevator with a 30,000 bushel capacity powered by a Model Z Fairbanks one-cylinder engine located in the basement of the office building; the motor runs a long drive belt to a pulley in the elevator which provides power to run the leg. The vertical leg consists of a belt with grain cups, which moves the grain from the front pit to the top of the elevator, where grain is allocated to different bins or to a boxcar by a spout over the track. Grain is received into the driveway and weighed on the scale before being dumped into the front pit. The empty truck (a wagon in the days before the truck) would be weighed to determine the weight of grain delivered. To load a car from a bin, grain would be dropped into the hopper scale, weighed and then dumped into the back pit and elevated up the leg to the gerber at the top of the elevator. From there the grain would travel down the loading spout and into the boxcar (hopper car today). Figure GE-2 shows another view of the elevator with a focus on how grain was received, stored and loaded into grain cars.

The Saskatchewan Elevator Commission reported in 1910 that the cost of a standard 25,000-bushel elevator was $6,200, and that of a 60,000-bushel unit was $11,000: this placed the costs of construction at between 18.3 and 24.8¢ per bushel. In the early 1930s the estimated costs for a 30,000-bushel elevator was between $10,000 and $12,000: this means that the costs had risen to approximately 37¢ per bushel. Using the consumer price index as the basis for inflation, an elevator costing $6,200 in 1910 would cost approximately $106,000 in 2004. This would be $4.25 per bushel, compared to 25 cents in 1910: the cost is therefore now about seventeen times that of 1910.

There were ninety elevators in western Canada in 1890, with a total storage capacity of 4.3 million bushels. In terms of numbers, a peak was reached in the 1930s when settlement was mostly complete: there were close to 6,000 primary elevators. The average capacity, which had remained at approximately 30,000 bushels, also began to increase: it had doubled by 1960, and more than doubled again by 1990 to reach 168,000 bushels. By 1997, average capacity was seven times what it was in the early era; but between 1930 and 1997 the number of primary elevators had shrunk by 80%.

The history of elevators can be broken into three periods: up to 1910, when private companies dominated the trade; from 1911 to 1990, when farmer-owned Co-operatives came to dominate the business; and from 1990 to the present, with the transformation of the co-operative sector and the entry of new firms. In the period leading to 1910, the early elevator business was represented by flour-Milling companies with head offices outside of the prairies: the Ogilvie Milling Company, with headquarters in Montreal, which had built the first elevator at Gretna, Manitoba in 1881; the Lake of the Woods Milling Company, founded in 1887 and partly funded by George Stephens and Sir William Van Horne of the CPR; Robin Hood Mills, an American milling company; and the Western Canadian Flour Mills, owned by the Mackenzie and Mann operations, which were building the Canadian Northern Railway.

When the Canadian Northern Railway was opened in 1900, Mackenzie and Mann actively solicited American interest in elevator construction. The British-American Company was consequently formed in 1906; the US-based Searle Grain Company also entered the Canadian market and operated on Northern Railway lines; and in 1909 the Peavey interests of Minneapolis formed the National Grain Company, which operated on CPR lines. Many other companies were formed and also entered the elevator business, such as Alberta Pacific Grain Company, Pioneer Grain Company, Norris Grain Company, British Co-operative Wholesale Society, Scottish Co-operative Wholesale Grain Company, Parrish and Heimbecker, McCabe Brothers Grain Company, Pioneer Grain, and N.M. Paterson and Sons.

The period from 1911 to 1990 was dominated by the growth of farmer-owned co-operatives. The term “line elevator companies” was associated with privately owned companies which owned a number of elevators along a single line of railway track. In the early period farmers fought the monopolization of the grain business by these companies, which were referred to as the “syndicate of syndicates” for their alleged collusive practices in fixing prices. After the first decade of settlement, farmers were so convinced that monopoly elements dominated the grain trade that they were ready to replace private monopoly with public monopoly. They petitioned the federal government to take over all terminals, and the provincial government to take over all country grain elevators. Although governments resisted this policy, there were exceptions: the government of Manitoba, for example, purchased a number of primary country elevators in 1910 - which proved to be unprofitable.

The Saskatchewan government appointed a commission to look into the problems farmers were facing in marketing their grain, and recommended against the government going into the elevator business. Receiving little help from the federal or provincial government, the farmers turned to direct action. One solution was for them to raise the capital and build their own elevators, and in 1899 there were twenty-six locally farmer-owned elevators on the prairies. The Saskatchewan Elevator Commission, investigating these farmer-owned elevators, found them lacking in performance - partly because farmers did not support them even though they were shareholders. The first major action by farmers was the formation of the Grain Growers' Grain Company in 1906 under the leadership of E.A. Partridge of Sintaluta, Saskatchewan. It operated as a marketing agency for farmers selling grain in world markets, the profits returning to farmers. In 1912, the Manitoba government leased its elevators to the Grain Growers' Grain Company: it was now in the elevator business.

In Saskatchewan the government supported the idea of a line of elevators owned and operated by farmers. The plan was for the provincial government to advance 85% of the capital for the construction of local elevators, the loan being repayable in twenty years; local farmers were to raise the other 15%. This led to the formation of the Saskatchewan Co-operative Elevator Company. A similar plan was followed in Alberta, resulting in the formation of the Alberta Farmers' Co-operative Elevator Company, which merged in 1917 with the Grain Growers' Grain Company to form United Grain Growers (UGG). The Saskatchewan Co-op chose to remain independent; UGG was to build a line of elevators in Saskatchewan.

When the government resisted all pressures to restore the Canadian Wheat Board (CWB), which had been put in place by the federal government to market the 1919 crop, farmers set up their own marketing agency, which operated on pooling principles. Farmers in each prairie province were to form the Manitoba, Saskatchewan, and Alberta Wheat Producers Limited. These organizations then formed the Central Selling Agency to jointly market wheat obtained from farmers under contract. These three organizations became known as the Wheat Pools, and each set up a fund to build its own elevators. In Saskatchewan the Wheat Pool took over the Saskatchewan Co-operative Elevator company in 1926. In 1925-26, the three Pools owned 100 elevators, but by 1926-27 they owned 658. The mergers which took place in the private grain trade resumed after World War II. Federal Grain was formed from the merger of the Searle Grain Company and Alberta Pacific Grain Company in 1967; in 1927 Federal Grain had sold its 1,000 elevators to the three Pools. The other main change was the sale of National Grain (267 elevators) to Cargill in 1975. In 1975 the private trade owned 892 elevators, and farmer-owned companies had 3,272 or 79% of the total number.

The structure of the elevator business has undergone a massive change. The “Prairie Sentinels” have mostly been torn down or sold to local farmers, and replaced by larger concrete facilities, some of which have been financed by farmers (e.g., Weyburn Inland Terminal). This has been driven by the condition of the old wooden elevators, but mostly by changes in technology (larger farms and farm trucks) and by the rationalization of the rail network with the possibilities of moving grain in unit trains. One of the more important changes is the re-entry of the large American and international grain companies to the Canadian prairies. Prior to its merger with Agricore, UGG was 45% owned by Archie Daniel Midland (ADM). The last several years have seen the entry of several of the international grain companies such as Bunge Canada (two elevators), ConAgra Limited (three elevators), and Louis Dreyfus Canada Limited (one elevator). The Saskatchewan Wheat Pool changed its ownership structure and is now a stock traded company. One can regret the reality of “progress,” which has meant larger grain farms, fewer rural people, fewer communities, and longer distances for grain to be hauled and for farm children to attend schools. What the future holds is not clear, but we do know that the landscape will never be the same when the last of the “Prairie Sentinels” is gone from rural communities.

In 1950 there were 3,035 primary elevators in Saskatchewan, with storage capacity of 283 million bushels and twenty-two licenced buyers. Twenty years later, in 1970, there were 2,750 elevators, with storage capacity of 225 million bushels. After that the number of elevators declined tremendously, so that by 2004 there are only 197 primary licenced elevators, with a storage capacity of 2.8 million tonnes (100 million bushels). Although there are only six major grain companies as buyers, there are now approximately fifteen terminals owned by farmers - wholly or in some joint venture with a major grain company.

Gary Storey

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Further Reading

Anderson, C.W. 1991. Grain: The Entrepreneurs. Winnipeg: Watson and Dwyer Publishing; Fowke, V. 1957. The National Policy and the Wheat Economy. Toronto: University of Toronto Press; Wilson, C.F. 1978. A Century of Canadian Grain. Saskatoon: Western Producer Prairie Books.