A Saskatchewan-based organization is hoping to acquire a majority interest in CWB — the former Canadian Wheat Board — which is due to be privatized in the next three years.
Farmers of North America is asking its membership for “non-binding expressions of interest” in buying a controlling interest in a privatized CWB.
On its website, FNA states that it intends “to build a world class farmer-owned grain handling and fertilizer distribution business, starting on the grain side with the transformational move of attempting to take over a majority interest in the CWB.…. We feel that sales of a block of assets like this — of sufficient quality, scale, interoperability and geographic position — are very rare.… There are few public companies available to pursue in the grain handling industry in Canada, and many of the privately held companies are long-term, family owned organizations that have no apparent intention to sell. Moreover, of the related transactions that have occurred over the past two years, a number have involved asset acquisitions by the CWB including both critical port and inland terminal facilities.”
FNA is currently in the process of contacting its members and non-FNA farmers to gauge interest in acquiring a majority interest in CWB.
Information contained on FNA’s website suggests that investments by individual producers would start at $10,000 and could run as high as $75,000 or more.
The opportunity to invest in a farmer-owned grain company would be open to producers who are not FNA members.
FNA spokesperson Bob Friesen declined to say how much money would need to be raised in order to acquire a controlling interest in a grain company.
FNA’s members have already expressed an interest, at least in principle, in acquiring grain handling, fertilizer and transportation assets, he added.
“We are asking somewhere between 3,000 and 10,000 farmers to invest between $10,000 and $50,000 each,” Friesen said.
“I know that’s a really broad number, but in there you can probably to do your own calculation as to what that might look like.”
FNA is already in the process of raising money to build a large farmer-owned fertilizer plant at Belle Plaine, Sask.
That initiative, known as ProjectN, will proceed regardless of whether FNA carries through with plans to acquire a controlling interest in CWB.
On its website, FNA says it foresees the construction of as many as four fertilizer handling facilities, or “supercentres,” per year, within each of the three key regions under review.
With respect to grain handling, FNA believes that between one and four high-throughput elevators can be constructed each year. The actual number will depend on FNA’s success in acquiring existing businesses.
Friesen said FNA is considering acquisitions of existing grain handling facilities as well as capital investments in so-called green field projects, or new ventures.
When asked whether FNA or its members have already made capital investments in new or existing grain handling facilities, such as those recently acquired by CWB, Friesen said FNA has only been involved in “project development” or “preparatory work” aimed at acquiring a grain company.
Although Friesen did not refer to CWB specifically, FNA’s website makes numerous references to plans aimed at acquiring a controlling interest in the former Canadian Wheat Board.
“The effort is not actually to buy the CWB,” the FNA website states.
“This is not a typical scenario with a seller and a buyer, where the seller receives the money from the sale. The money raised by farmers to gain majority control of the CWB are proposed to stay in the company as an expansion investment.
“In our view, the true value of the CWB lies in its physical assets and that these can become the core of a future-oriented grain handling business. We believe that the extra value captured under our proposal is unique and one that would likely only occur in the context of the CWB privatization.”
According to FNA, CWB transactions that have occurred over the past two years — including the acquisition of port and inland terminal facilities — make the former wheat board an attractive investment opportunity.
In an email to members, FNA called CWB’s facilities a “rare block of grain handling assets that will not likely come again in our lifetime.”
However, FNA’s website goes on to suggest that the acquisition of CWB assets is not the only option available to FNA members.
“There are several alternate opportunities we are looking at for grain handling and marketing, only one of which is the CWB privatization.”
CWB officials have stated on numerous occasions that they would like to see an ownership model that gives western Canadian farmers a significant stake in the privatized grain company.
For the past year or more, farmers who have marketed grain through the CWB have accumulated equity in CWB at a rate of $5 for each tonne of grain delivered.
Until now, the approximate value of the privatized CWB has been largely unknown.
Based on figures furnished by FNA, the Saskatoon-based company is hoping its members will invest $100 to $150 million — perhaps more — to acquire a controlling interest in a grain company.