CWB is going to have to get bigger and prove that it is serious about wanting farmer involvement, say leaders of western Canadian farm organizations.
The company’s elevator shortage and the possibility that the new owners could buy out the farmer share are tempering enthusiasm among many producers.
“It would be a lot more palatable if it didn’t have that seven-year buyout (provision),” said Lynn Jacobson, president of the Alberta Federation of Agriculture.
Global Grain Group, known as G3, is buying 50.1 percent of CWB for a $250 million investment. The remaining 49.9 percent will be farmer owned, and operated through a farmers’ trust.
Another concern raised by farm group leaders is the company’s eastern bias.
With elevators in Saskatchewan, Manitoba and Quebec and terminals on the Great Lakes and St. Lawrence Seaway, the CWB doesn’t offer much to engage Alberta and British Columbia farmers.
“The wheat board won’t be a player in our market until they have some facilities,” said Jacobson.
Manitoba’s Keystone Agricultural Producers has the same concerns with the small size of the G3-CWB combination, but it is optimistic the Bunge-backed company can boost its size.
That will enable it to compete with the big three grain companies that dominate the Prairies and west coast ports.
“This is about building,” said KAP president Dan Mazier.
However, Manitoba farmers are also rattled by the seven-year buyout provisions. Farmers he has spoken with are interested in how they will acquire farmers’ trust equity, and some seem happy to have a way to own a chunk of the prairie grain business. However, the buyout possibility undermines confidence that any farmer stake will last long.
“That’s what caught everybody by surprise,” said Mazier.
Agricultural Producers Association of Saskatchewan president Norm Hall was similarly nonplussed by the buyout provision.
“We’re disappointed that they put an ability for the G3 to say, ‘OK farmers, at the end of seven years we’re going to buy it up,’ ” said Hall.
He also thinks CWB will have to build more facilities and lock down west coast terminal capacity if it wants to convince farmers that it will add significant competition to Canada’s highly concentrated grain industry.
“They have to be building more,” said Hall.
All three farm leaders noted that the wheat board issue is still divisive, even after the federal government broke its monopoly and sold control of the company to G3.
“It’s still very polarizing,” said Hall.
He recently received calls from farmers both calling for CWB to be disbanded without a trace and for the old monopoly CWB to be resurrected.
Left wing and right wing farm groups showed elements of that polarization.
“It’s the next to last step of the biggest transfer of wealth away from farmers that this country has ever seen,” said Stewart Wells, a member of the Friends of the Canadian Wheat Board, which has been fighting the government’s privatization plans.
“This particular sale is like adding insult to injury, when you take the assets that farmers paid for — clearly paid for over the years — and give those assets to a company that last year had $58 billion of sales, a company that could move into Canada on their own if they wanted to.”
He said the arrival of a new grain company in Western Canada didn’t amount to more than “adding another shark into the shark tank.”
National Farmers Union president Jan Slomp also expressed disgust at the deal, saying he would have preferred almost “anything but this. It’s an insult to give less than 50 percent to the farmers because how are they going to control anything?”
He was also angry that farmers don’t get to have input in the deal.
“Where is the public input in these plans?”
However, right wing farm groups were generally supportive of the Conservative government’s actions on the CWB issue and with the G3 deal.
“This deal will strengthen the CWB’s ability to compete for farmer’s grain,” Western Canadian Wheat Growers Association president Levi Wood said in a news release.
“The global connections of G3 will also open up new market opportunities and ultimately improve returns to farmers.”