Privatization plan | Farmers’ stake remains unclear as CWB invests in another grain handling asset
CWB will continue to expand its network of grain handling assets in Western Canada, but company executives are offering few details on where they might be located or how big the network is likely to become.
Gord Flaten, vice-president of grain procurement, said the company is negotiating asset acquisition or equity deals with several parties.
“We are in discussions with a number of parties about some other facilities,” said Flaten, who spoke to producers at Crop Production Week in Saskatoon Jan 17.
“It’s not something that has been announced to date but we’re a long way down the road on those.”
CWB announced late last year that it had bought Mission Terminal, whose assets include a 136,000 tonne export terminal at Thunder Bay, Ont., a 110,000 tonne transfer elevator at Trois Riviere, Que., a small elevator at Alexander, Man., and equity in a collection of producer car loading sites and short-line railway companies in Saskatchewan and Manitoba.
Last week, it announced it had acquired a 10 percent ownership stake in Prairie West Terminal at Dodsland, Sask., whose assets include a 47,000 tonne concrete terminal near Dodsland and four older wooden elevators located at Dodsland, Kindersley, Plenty and Luseland, Sask.
It already owned two percent through Mission Terminal, so it now controls 12 percent.
Flaten said CWB intends to maintain grain handling agreements with other companies as it acquires its own assets and builds its own network.
“We’re really looking at these assets that we would own directly as supplementing (the volumes) … we already have in the country.”
Flaten said CWB is ahead of schedule in efforts to privatize the company.
Federal legislation stipulates it must submit to the federal agriculture minister a plan to privatize CWB on or before Aug. 1, 2016.
The plan must be executed by Aug. 1, 2017, pending ministerial approval, but Flaten said privatization is likely to occur well before then.
The corporate structure of the privatized CWB has yet to be determined, but ownership will comprise farmer equity and outside investors.
Farmers can acquire equity in the CWB by selling grain through the company’s sales programs.
Farmers gain $5 worth of equity in the privatized company for each tonne of grain sold through CWB this year.
Flaten said it has yet to be determined how much equity farmers will own in the privatized CWB, saying only that farmer ownership will constitute a significant but minority interest.
The farmer equity component of a privatized CWB is expected to be held in a farmer trust, which would be controlled by farmers and give them an opportunity to influence decisions made at the board level.
However, with farmer equity expected at less than 50 percent, it is unlikely, although not impossible, that farmers would retain control of the company.
“First of all, I would say there are no guarantees,” Flaten said.
“It’s going to be written into the composition of the privatized CWB what role this farmers’ trust is going to play. Ultimately, the people who own companies, including the farmers who are going to own a portion of (the privatized CWB), are going to have to make decisions as time goes by as to how we should govern this company.”
Flaten said it is possible CWB could launch an initial public offering to sell shares in a publicly traded company to outside investors.
However, CWB executives currently view this option as unlikely.
CWB has had a number of discussions with foreign firms that see an investment in the company as a way of ensuring access to Canadian grain stocks.
However, Flaten said he would like the company to remain a Canadian entity.
Bill Warrington, a farmer and wheat board supporter from the Kindersley area, said he supports CWB’s plan to acquire grain handling assets but would like to see farmers retain a controlling interest in a privatized wheat board.
“They have to get some elevators out in the country,” Warrington said.
“The other elevator companies that we deal with … are going to look after themselves first. There’s no doubt about it. Why wouldn’t they?”