Willing to offer co-op option | Company says it’s looking for the right opportunities
INVER GROVE HEIGHTS, Minn. — American grain elevator and agribusiness giant CHS Inc. hopes to become a common sight on the Canadian Prairies.
“We would definitely like to enter Canada. It’s just where we enter and how we enter is a discussion we’re always having within CHS,” said John McEnroe, executive vice-president for country operations.
“We’re in the process of talking to a lot of people. Our growth will be good growth. It will be in areas where people want to see us come in, where we see an opportunity to come in.”
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CHS Inc., formerly known as Cenex Harvest States, is a complex agribusiness and energy co-operative that dominates large areas of U.S. agricultural region just south of the Canadian Prairies.
Its grain elevators run right up to the border and its farm supply and agronomy facilities are found across Minnesota, the Dakotas and Montana, but not in Canada, with the exception of CHS DynAgra in Beiseker, Alta., which the co-op bought last year.
CHS operates the Cenex brand of fuel products, owns refineries and food processing plants, is a major feed supplier and has operations across the United States.
It has recently expanded overseas, adding operations from Brazil to Singapore to Eastern Europe.
Farmers control the company. They are the only shareholders who can vote at meetings, although preferred shareholders have a non-voting equity stake in the company.
The company says it did not build a Canadian presence before because the grain system under the former CWB monopoly did not integrate well with the U.S. system. McEnroe hopes it can now move into Canada and treat the Plains and the Prairies more like one region rather than two distinct systems.
However, many differences still remain between the western Canadian and U.S. systems, and McEnroe said CHS is making sure it understands the situation well before moving.
“We’re talking to different companies up there, but we’re looking again for opportunities,” said McEnroe.
“DynAgra won’t be our only purchase up there. Obviously we want to expand our territory in Canada … but we’re looking for the right ones, not just any opportunity.”
CHS could buy companies and facilities, operate joint ventures with existing players like it does in the U.S. or establish a co-operative membership on the Prairies.
It could also adopt a combination of approaches. For example, in the U.S. it competes head-to-head with Cargill and also has joint ventures with it.
Tim Miller, CHS’s western North America grain system manager, said future facilities in Canada will likely offer farmers one-stop shopping, which is how most of them operate in the U.S.
“Our business model down here is to have grain and agronomy together,” he said, noting that the company’s centres often also have feed-grain, fertilizer and fuel services.
“If it’s feasible to do that in Canada, that’s what I think we want to do.”
McEnroe said prairie farmers who CHS has spoken with like the idea of a grain industry co-operative, even if the main Canadian grain elevator co-ops have disappeared.
“We sense that when we go up there and talk to producers. They seem generally interested in having a co-op option up there,” he said.
“We definitely would have interest in being a co-op in Canada, if and when we do it.”
However, he said rules governing co-operatives are complex, so the legal situation is still being assessed.
