"We're not there yet. But we are on track."

This was the take-home message for 300 assembled delegates at the Saskatchewan Wheat Pool annual meeting for class B shareholders, held in Regina, Saskatchewan, yesterday [Tuesday].

"Team Pool is on track, we are managing one of the toughest agricultural environments in history," says Marvin Wiens, President and Chairman of the Board. "Opportunities will be created through the fundamental change that is occurring in every facet of the agricultural sector."

As a farmer's cooperative, the Pool (TSE: SWP.B) has long been a leader in the Canadian grain trade. But low commodity prices and stiffer international competition has hurt the Pool. Two years ago the SWP lost C$91m (US$57.3m) in operations and carried a huge debt, forcing a rethink.

The stakes have been upped this year with a merger of its counterparts in Manitoba and Alberta into one entity: Agricore United.

But the Pool says it is ahead of the pack in consolidating and streamlining operations and is transforming its extensive holdings into "a commodity pipeline."

"Its an approach that will drive our transition from a handler for raw commodities to a marketer of valued-added commodities to destination customers," says Mayo Schmidt, CEO.

The Pool is now doing business out of a network of new large capacity centralised concrete terminals. This has meant closing 350 iconic wooden elevators, forcing many farmer members to drive longer distances. But by being able to load larger unit trains, the Pool argues it can move more grain quickly and at a lower cost. This wins it efficiency rebates from the railroads and more contracts for shipping Canadian Wheat Board grain (Canada's mandatory wheat marketing agency).

To pay off debt, the Pool has been steadily selling off non-core agribusinesses. These include a stake in troubled facility in Gdansk Poland, a Canadian meat processor and a stake in a prairie-wide international wheat

marketing pool.

"(Divestiture) allows us to reduce debt and focus on our strengths - our core grain handling and marketing operation," says Schmidt.

Other initiatives include new strategic alliances. One of the most interesting involves a deal with the Hamburg-based, Toepfer International who will act as global marketers for the SWP's annual supply of roughly 8.5 million tonnes of cereal grains, oilseeds and pulses crops.

The Pool has also became the first grain handling operation in Western Canada to become ISO 9000 certified, allowing them to trade in Identity Preserved grain, key to supplying demand for GM-free markets.

"We anticipate extra revenues supplying these products on an Identity Preserved basis, " affirmed Schmidt. "We are prepared to operate in either environment, either GM or GM free."

Revenue for 2000-01 topped C$3.3bn, but the Pool still carries high liabilities and debt. This year's drought in Western Canada hurt yields and thwarted meeting projections of profitability. The cooperative lost C$44.1m last year. Officers are now projecting being in the black by 2003.

By Arthur Hanks, just-food.com correspondent