An attempt by Farmers of North to acquire a controlling share in CWB has failed.
In an Oct 27 news release, FNA said its bid was “rejected by CWB management,” adding that “the deadline for raising capital passed before harvest was completed, denying farmers adequate time,” to assess the opportunity.
FNA, which describes itself as a business alliance with more than 10,000 famer members, has also issued an Open Letter to Farmers, suggesting that CWB refused to extend deadlines that would have given farmers more time to assess the opportunity and join FNA’s bid to acquire the former wheat board.
In an interview with The Western Producer last week, CWB officials denied that their timelines for privatization were an impediment, adding that FNA had as much time as any organization to submit a bid.
“On October 20, the CWB and its agent informed FNA that they have rejected FNA’s bid and decided to exclude the farmer-owned Genesis Grain & Fertilizer farmer partnership from the privatization of the CWB,” said FNA president James Mann in an Open Letter to Farmers that will be published later this week in The Western Producer.
“They indicated that they could not allow farmers time after harvest to assess the opportunity of taking majority ownership of the CWB. This is despite over 1,000 farmers providing more than $50 million in non-binding expressions of interest in a compressed time frame of days, not months, and under pressure to complete the harvest.”
The letter states that FNA’s subsidiary company, Genesis Grain & Fertilizer, will proceed with plans to build a fertilizer and grain handling network that buys farmers grain and distributes fertilizer manufactured at FNA’s proposed ProjectN fertilizer plant at Belle Plaine, Sask.
Last week, CWB’s chief strategy officer Dayna Spiring said she was surprised to learn that FNA felt that the CWB privatization process had been fast-tracked and that timelines were too tight to allow FNA to submit a competitive proposal.
In an Oct 27 news release, FNA said “prairie farmers producers have shown overwhelming support for a farmer acquisition of the CWB.”
In a series of meetings, more than over 1,000 farmers across the Prairies provided $50 million in non-binding expressions of interest in a matter of days, while under pressure to complete the harvest, the news release said.
“The CWB’s behaviour is puzzling,” said Mann.
“First, they reject an offer by farmers that would have facilitated farmer delivery loyalty through deferred delivery commitments to ensure volume for financial sustainability. Then, when the dust settles after majority ownership acquisition by another company, potentially foreign, they will expect farmers to come back and deliver to the CWB anyway.”
“We did not have eight to 10 months to reach out to farmers,” added FNA spokesperson Bob Friesen.
“Clearance on what we could say to farmers was not given to us by CWB management until the beginning of September. That gave farmers just over one month, during a very difficult harvest, to look at the opportunity and make a decision. Coupled with that challenge, we were given significant restrictions on how we were allowed to reach out to farmers, and what information we were able to give them.”
In an interview with The Western Producer last week, Spiring said Canadian farmers will have an ownership stake in CWB after it is privatized, regardless of which company is selected as the company’s preferred privatization partner.
“We want farmers to have equity in the CWB,” Spiring said.
“Regardless of who our ultimate investor is, farmers are going to play a role in this organization.”
CWB executives are talking with a number of companies interested in partnering with the CWB, Spiring said.
Efforts aimed at identifying a corporate partner began in 2012, shortly after CWB learned it would be required to submit a privatization plan to the federal government.
By law, CWB officials must identify a corporate partner, submit a privatization plan to Ottawa and, pending government approval, execute their plan before Aug. 1, 2017.
Spiring denied suggestions that CWB has fast-tracked the privatization process.
“There’s a lot of talk right now about how this process has been fast-tracked … and I know there are … certain parties out there that feel they don’t have enough time (to put a proposal together),” she said.
“I have trouble with that. There’s nothing new in this process. We knew with this legislation in August 2012 that we had to privatize … and we’ve also said for a number of years now that we intend to do that far in advance of those (legislated) timelines. Nothing has changed in that.”
FNA officials spoke with CWB about the privatization process in early 2013 and FNA officials then expressed their views that farmers should be given an opportunity to gain controlling interest in the privatized company, she said.
“I’m surprised that they now think there’s a new timetable and that they’re out of time.”
Spiring also said rumours suggesting that CWB is “selling off ” its assets to the highest bidder are false.
She said the company is looking for a corporate partner that has comple- mentary assets, relevant expertise and a pool of investment capital that will allow CWB to expand the com- pany and contribute to a more com- petitive grain handling environ- ment.
“Particularly, we’re looking at companies or investors that have some experience in grain handling because that has not historically been one of the skills of the CWB. We’re a great marketer. We know Canadian grain probably better than anyone else on the planet, but we don’t have the same experience operating grain handling facilities as alotofourcompetitorsdo.”
Financial capability will also be key, she said.
The preferred partner must have the financial wherewithal to invest in CWB and build a competitive network of grain handling facilities.
“I think there’s a lot of concern and a lot of hangups — unnecessarily — around whether the investors are Canadian, or American, or multinationals or whatever they are,” she said.
CWB declined on Oct. 28 to comment on the FNA’s October 27 news release.