Adapt like a chameleon | CWB announces plans to add assets, farmers remain ‘significant’ owners
CWB equity will give farmers ownership of a real grain company rather than just a marketing agency, says president Ian White.
The organization announced Nov. 26 that it will buy port terminals and producer car loading facilities, making it unique among the big prairie grain companies.
“It will be a Canadian, farmer-focused company,” White said.
“It will be something that farmers part own. It’s not going back to exactly the same model as they might have had in prairie pool days, but they will still have the opportunity to be a significant ownership part of this company.”
CWB’s agreement to buy Mission Terminal in Thunder Bay, Les Elevateurs des Trois-Rivieres and Services Maritimes Laviolette in Quebec and producer car loading facilities in Manitoba and Saskatchewan gives it the ability to obtain crops from farmers, ship it to a terminal and export it without having to use third parties other than the railways.
CWB won’t say how much the purchase will cost.
The deal removes one of the biggest challenges to the former Canadian Wheat Board, which until now has relied on grain elevator companies to handle and export crops. Most analysts and grain industry players have been skeptical of this arrangement.
CWB will be a serious player in eastward crop exports if the sale is completed as planned by Dec. 31. It will be able to move 1.5 million tonnes through the purchased facilities, which are presently owned by Upper Lakes Group.
White said CWB will also handle non-CWB producer car crops and crops from other grain companies.
As well, White said CWB hopes to obtain ownership positions in more grain collection facilities across Western Canada and on the West Coast so that it can become a broad-based grain company.
“Ultimately, to compete effectively and to offer farmers good value in every market circumstance and to be able to capture some of the revenue between country and port … we need to have interests,” said White.
“We’re not prescribing at this time what they might be. It could take a number of forms.”
CWB is paying for the facilities with recent profits and money left over from the former wheat board’s non-pool activities, including a surplus from the producer payment options programs and interest from government-backed credit sales to export customers.
White said no “farmer money” is being used in the transaction, although he realizes many farmers think the former wheat board built up equity and assets over its decades-long life.
White said even CWB’s hopper cars and office building carry a substantial debt burden, and the agency always paid out all pool money to farmers each year.
An interesting asset that comes with Mission Terminal is Adrian Measner, the former wheat board chief executive officer who was fired while the federal government was striving to eliminate the agency’s monopoly marketing powers. Measner is chief executive officer of Soumat, the Upper Lakes subsidiary that owns all the assets the CWB is buying.
“He comes with the business,” said White. “He’s been doing a very good job with his management team.… We’re taking all the management.”
White said farmer ownership is central to the CWB’s strategic plan because it believes farmers want to own part of the industry.
“That’s one of our main pillars,” he said.
CWB announced weeks before the Mission Terminal announcement that farmers could choose to be issued CWB equity as part of the payment for their delivered crops.
The federal government gave CWB five years in which to privatize itself when it broke the monopoly, and White said acquiring grain handling facilities is a key part of making that possible.
“We’re really excited by this purchase,” said White. “We think this is the start of a new era in the grain industry.”