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Structural Change in Grain Handling

Structural Change in Grain Handling. A case Study of UGG Jorge Mendez Manzanilla. History of UGG. Grain Growers Grain Company started in 1906 Headquarters in Manitoba, branch office in Alberta opened in 1909 Merged with Alberta Farmers Cooperatives in 1917

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Structural Change in Grain Handling

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  1. Structural Change in Grain Handling A case Study of UGG Jorge Mendez Manzanilla Cooperative Program in Agricultural Marketing and Business

  2. History of UGG • Grain Growers Grain Company started in 1906 • Headquarters in Manitoba, branch office in Alberta opened in 1909 • Merged with Alberta Farmers Cooperatives in 1917 • Company grew and expanded to include: • Farm Supplies Division • United Livestock Growers • UGG Sawmills Company Limited • UGG Securities Company Limited Cooperative Program in Agricultural Marketing and Business

  3. Over the 1990’s Cooperative Program in Agricultural Marketing and Business

  4. UGG Share PricesJuly 1997-June 2002 Cooperative Program in Agricultural Marketing and Business

  5. Return on Equity Cooperative Program in Agricultural Marketing and Business

  6. Debt to Equity Cooperative Program in Agricultural Marketing and Business

  7. Long term debt/Equity Cooperative Program in Agricultural Marketing and Business

  8. Current Ratio Cooperative Program in Agricultural Marketing and Business

  9. Market Share Cooperative Program in Agricultural Marketing and Business

  10. Why Archer Daniels Midland? • Feb 1997- Daryl Kraft said”I don’t think ConAgra or any other U.S. agrifood giant would be interested in UGG, because of the monopoly in buying and selling grain maintained by the CWB” • May 1997 – Daryl Kraft says the merger with ADM is ”obviously long term planning. They are assuming they won’t have to deal with the CWB in 5 or 10 years. Clearly they’d like to control the grain without having to negotiate with an intermediary” Cooperative Program in Agricultural Marketing and Business

  11. Foreign Direct Investment • Reasons for investment • Barriers to trade • National infrastructure • National resource endowments • Intellectual capital • ‘Growing the market’ • Relative cost Cooperative Program in Agricultural Marketing and Business

  12. Conclusions • ADM now owns 25% of Agricore United • UGG, Alberta Wheat Pool, Manitoba Pool Elevators are no longer cooperatives • Larger multinational company is able to take advantage of economies of scale, spread development, marketing costs over a larger volume, captive input supplies • ADM motivation likely affected by the relatively low price of Canadian firms Cooperative Program in Agricultural Marketing and Business

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