Remember how everyone argued about the Crow rate/benefit for 10,000 years, got very worked up about it, then the government shut it down and all but the most antediluvian forgot all about it?
We’re still waiting to see if that’s what’s going to happen with the CWB, whose monopoly caused a debate that consumed all the policy oxygen in the farming atmosphere for a generation. There are a lot of signs right now, although it’s still early, that the Crow situation will repeat. After all, crop prices are high, and as with the Crow when it got snuffed, when prices are high no one cares.
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How about Viterra? There isn’t too much crying about that one, from what I can tell. No one seems to be that sentimental about the situation. Saskatchewan Wheat Pool built a mighty empire with a tidal wave of farmer support, then blew it in the mid-1990s with a failed expansion strategy that lead it to near-bankruptcy and to become the subject of much farmer ire as it turfed hundreds of local elevators and farmer control, Mayo Schmidt saved it from financial ruin, rebuilt it as a cold-heartedly efficient grain-handling system, and began building his own empire. But Schmidt didn’t seem to do much about making farmers care one way or the other about Viterra – the new name being an innovation of his era – and that’s probably what’s behind the lack of sentimentality right now over Viterra’s liquidation. What’s to care about? If anything, if this goes through, there will be a better distribution of elevator capacity on the prairies than with Viterra’s present dominance. That’s what really matters to farmers.
So there’s the end of a near-century of grain industry history. An interesting element to me is that Viterra is worth more dead than alive – at least to Glencore, Richardson and Agrium. The assets Schmidt inherited, saved and added-to aren’t getting a premium for having been put together into an integrated whole, but are being valued more highly as individual elements that can be parcelled out to three other companies. Basically, I assume, the buyers are saying the assets were undervalued and holding them together was part of the problem and that each of them can make more money with those assets and get a better return for shareholders. They could be wrong. Some other grain companies have said they think Viterra’s sale price overvalues it. And the takeover and breakup might never happen. There are a lot of approvals to go through, from both shareholders and regulators.
But in the end, this takeover and breakup bid shows that Viterra didn’t prove its worth as a going concern to lots of investors, especially at competing companies. In that many investors and farmers are likely to be united: Who cares about Viterra? Cya later.
