Grainswest - Spring 2024

Spring 2024 grainswest.com 13 BY GEOFF GEDDES • PHOTO COURTESY OF ALBERTA CANOLA “Historically, no one seems to take growers into account with deals like this; we’re just told where to go and what to do.” —Wayne Schneider As well, a larger company may have more efficiencies and greater access to capital, leading to more investment in the crop sector. “If I was Viterra or Bunge, that’s certainly how I would frame it,” said Driedger. “Whether enhancements to efficiency and available capital will spawn benefits that trickle down to farmers or industry in Western Canada is another question.” The effects of the merger may vary from region to region in the West. TIMING AND COMPETITION “If it’s an area where you have a Bunge crush plant and two elevators—one belonging to Viterra and one to a third company—losing an elevator could be significant, because you’re going from three buyers to two,” said Driedger. “With a space containing many active buyers, the impact may be more muted.” Timing may also play a role. Where there is less competition, this might not be as noticeable when business is good and the volume of crop movement is substantial. Wayne Schneider farms 1,800 acres of canola, barley, wheat and pulses in Nisku, and serves as a director on the board of the Alberta Canola Producers Commission. “Right now, Viterra and Bunge both own canola crushing facilities in Manitoba that are 75 kilometres apart,” said Schneider. “After the merger, will they still run both operations, or will one location be divested? If one is closed, it will mean more logistical challenges and greater transportation costs for those nearby farms.” ROUGH SEAS AHEAD? There may also be ramifications for ports, as Bunge holds a stake in 10 Canadian port export facilities located between Montreal and Vancouver. “If Bunge plans to maintain or increase their export activity, that works out well for us,” said Schneider. “If not, and they shut down some of those facilities, that may force us to reduce our exports.” Farmers like Schneider also see poten- tial for vertical integration between the two companies, right from buying the grain to value-added processes. “More value-added products could mean greater revenue for Canada as a whole, but as farmers, we haven’t been privy to the plans until now,” he said. “Historically, no one seems to take growers into ac- count with deals like this; we’re just told where to go and what to do.” Recent meetings between the crop commissions, government and the two corporations have taken some of the edge off this sense of exclusion. “We [Alberta Canola] have met with the Competi- tion Bureau and with representatives of Viterra and Bunge, and they heard what we had to say,” said Schneider. “We are glad to be part of the process and to have a voice in the future of agribusiness.” As the situation continues to evolve, Alberta Grains has spoken with Bunge and Viterra as well to discuss the deal and the perspectives of the two corporations. “Both companies say their businesses are complementary,” said Sereda. “Bunge has a large global reach and supply chain created through its canola crushing and oilseed production. As its contribution, Viterra brings a well-established organ- ization with substantial grain buying capacity. The two parties feel this could create market opportunities for farmers who can leverage Bunge’s global access.” This international reach includes Bunge’s 25 per cent share in G3, a grain business based in Winnipeg. In addition to the operation of numerous grain elevators in Western Canada and port terminals down east, G3 owns a grain export terminal at the Port of Vancouver. “Now, instead of just dealing with the Bunge-Viterra footprint, we are looking at a Bunge-Viterra-G3 footprint,” said Sere- da. “We have G3 elevators across Alberta, so that’s another thing to consider.” EYES ON THE PRIZE Given the stakes, Sereda is pleased by Ottawa’s diligence in assessing the merger proposal and the possible reper- cussions of the deal. “Transport Canada has really focused on port facilities and launched a public good assessment under the authority of the Canada Transpor- tation Act to evaluate the post-merger landscape,” said Sereda. Because port operations are so critical for the movement of grain and many oth- er goods, especially in Western Canada, Transport Canada will assess the poten- tial impact of the deal on this movement and the Canadian economy. “We are very interested in what the assessment may uncover, and we are collaborating with other groups to study the implications in more detail,” said Sereda. While this is not the first merger to involve major grain companies, the magnitude of the deal sets it apart. “With most such agreements in the past, they involved two companies in a similar line of business, like when the Saskatchewan Wheat Pool merged with United Grain Growers [UGG],” said Driedger. “If you compare that to the current proposal, it’s not exactly apples to apples.” Although the evaluation by Transport Canada closed on Dec. 22, 2023, Alberta Grains continues to work with fellow commodity groups that have been asked to study the deal. If all goes as envisioned by Bunge and Viterra, the merger should be completed by mid-2024. The corporate matchmaking process may be slower than a typical dating app connection, but a lot rides on its outcome.