Rare Mercedes sells for price of used car

When we buy a used car, we like to take a look at what’s available in the market and determine fair price between vendor and purchaser. We shake hands and we’re done.

With Glencore International’s recent purchase of Viterra Inc., it raises the question: what gives on their version of fair price?

For the last three years, Viterra has been range bound between $8 and $12 per share. Their performance as a company is no secret. Why the 48 percent premium?

Cargill walks around, kicks the tires and suggests $13, $14, $14.50 tops. Not a penny more.

Archer Daniels Midland notes the chips in the paint from the recent Agricore race, but sees plenty of traction available in the slightly oversized tires. Let’s make a deal at $15.50.

Not good enough. Viterra thinks it’s worth $16.25, a 48 percent premium over what it was advertised for before the media got hold of this juicy story.

Enter Glencore, the world’s largest commodity trader. It takes a slightly different approach, realizing that they don’t make cars like this anymore.

As well, Glencore believes that perhaps $16.25 will seem cheap in a few years.

Glencore’s purchase of Viterra gives us several reasons to take pause and think about why this happened and what it means.

I think we have heard all of the responses we might anticipate in a deal like this: concerns for protecting prairie jobs, keeping the head office in Regina, issues of market dominance, all of our grain handlers being fair game for takeover now that the CWB is gone, and the selling of another home-grown Canadian global company to a much larger global company.

I think all of these concerns have merit, but is there a much bigger point to be made here? Is agriculture and its soft commodities playing catch-up in an increasingly demand-rich and supply-scarce world?

This seems to be Glencore’s position. Does the Glencore deal give you confidence in our sector? It should. The question remains: who’s next? Better yet, what’s next?

How would you like the next 20 years to unfold in our sector? Should we be concerned about investment capital scooping up large amounts of productive prairie land? Many of you undoubtedly have first-hand knowledge of these transactions.

Do you feel land is becoming nearly unattainable in your area at these current commodity prices?

Is it priced on investment speculation rather than production speculation?

With funding cuts in many government departments, especially research, does this mean a further surrender on plant breeding rights to Bayer Crop Science, Monsanto, Richardson, Glencore and others?

If we prefer to invest in the latest seed technology, will we be forced to buy it from a specific retailer every season with specific marketing restrictions?

What about our rail cap? What about our producer cars?

Strength in a sector is often good. Good production in a strong sector is better.

However, let’s not allow better times to distract us when selling our hard-earned and cared for assets to the most eager bidder. After all, in a few years, we may look back and realize we were selling a rare Mercedes for the price of an old used car.

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