Cargill, the largest grain handler in the world, plans to buy the grain operations of Continental Grain, its largest American competitor, in a deal estimated to be worth hundreds of millions of dollars.
The deal will give Cargill another 65 elevators in the United States, including six port terminals. Cargill, which had sales of $51 billion (U.S.) last year, will have the ability to handle about 40 percent of U.S. grain shipped from the Gulf of Mexico.
The deal will have little direct effect on Canadian farmers. Continental has few operations here and only its Vancouver grain trading office is included in the Cargill takeover.
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But indirectly, the fact that the leviathan of the grain trade plans to get a lot bigger has some Canadian farmers concerned.
‘”The fewer players there are who set the agenda, who can flood markets, short markets or who can manipulate for their own benefit, the less control farmers have and less well we will be,” said Nettie Wiebe, National Farmers Union president.
“This jolt demonstrates that there are not more places being set around the international grain trading table. There are placemats being removed.”
Those who believe Canadian grain companies can replace the Canadian Wheat Board and do as well on international markets have to consider the size and market power of the vastly larger competition, Wiebe said.
Marvin Wiens, vice-president of Saskatchewan Wheat Pool, said concerns about grain industry consolidation prompted the co-operative to restructure into a publicly traded company to grow and diversify to compete.
Although power in the grain business is consolidating into few hands, Canadian farmers are positioned to handle it better than their American counterparts, said Wiens.
“One of the major tools we have is the Canadian Wheat Board. I think we have to keep reminding ourselves that we have a distinct advantage over our American counterparts.”
The board does not buy farmers’ grain; it sells it on their behalf, he said.
Not all farm groups are worried about the Cargill-Continental deal. Larry Maguire, president of the Western Canadian Wheat Growers Association, said the deal is part of a general trend toward amalgamation and consolidation throughout agriculture and food processing.
Cargill’s larger size will make it a stronger competitor, but Maguire doesn’t think it will dominate markets.
“There is a good deal of competition worldwide. There are a lot of large players in there besides Cargill, so I’m not too worried about that kind of impact.”
Continental head Paul Fribourg said his company decided to sell because it had neither grain processing operations nor presence in the seed and biotechnology field.
