Agricore president Neil Silver said prairie grain elevators should escape many of the changes that may be in store for west coast terminals following an Agricore-UGG merger.
“For the most part both companies are largely done the aggressive closure and consolidation process,” said Silver.
There are 20 communities, eight in Manitoba and 12 in Alberta, where UGG and Agricore both have elevators. The list expands when facilities located in the same delivery area are included.
“We don’t see a lot of closures but that doesn’t mean there won’t be some more,” said Silver.
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“Where one has a big (elevator) and the other guy has a lesser plant, in those situations the choices might be pretty obvious.”
He said there is probably more duplication with farm input marketing centres than with grain elevators. A few of those centres may have to be combined or closed.
Together, the two companies own 172 elevators, or 25 percent of the prairie collection. Those elevators account for 27 percent of the total primary elevator storage capacity on the Prairies.
While officials say the amount of overlap in the countryside is minimal, in many communities in Alberta and Manitoba, Agricore and UGG are the only two elevators in town. That raises concerns about a lack of competition for farmers’ grain if the merger goes ahead.
Those concerns are at the heart of an investigation that has been launched by the Competition Bureau, a federal government agency that ensures no company has excessive market power in a region.
Silver expects the Competition Bureau, which must approve the proposal, as must two-thirds of Agricore’s delegates and two-thirds of its Class B and C shareholders, to take a close look at the communities where both companies have high throughput facilities. Three such areas include Rycroft, Alta., Camrose, Alta., and Starbuck-Fannystelle, Man.
Agricore has a 28,000 tonne capacity facility in Rycroft. Cargill and UGG also have elevators in that town that can handle more than 10,000 tonnes.
In Camrose, there’s a 16,850 tonne capacity UGG elevator and a 45,620 tonne Agricore facility outside the city at Legacy Junction.
The Agricore elevator in Starbuck has a capacity of 18,170 tonnes and the UGG facility one town over in Fannystelle can handle about 10,000 tonnes.
Silver said the merged companies would definitely see consolidation at their west coast terminals.
Agricore owns 70 percent of the Pacific Elevators Ltd. terminal and 50 percent of Cascadia terminal in Vancouver. UGG wholly owns a smaller facility there. Agricore’s terminal capacity in Vancouver is one of the main selling features of the merger for UGG.
Silver said the “early thoughts” on what will be done with the Vancouver terminals involves creating three “special houses.” He said Cascadia could concentrate on exporting board grains, Pacific could ship special crops and UGG’s facility could become a malt house.
The two companies also own three terminals in Thunder Bay, Ont., where there will likely be more consolidation. As well, they control about 45 percent of the Prince Rupert, B.C., grain terminal, which Silver referred to as a modern but debt-laden facility.
