Everyone is talking about Louis Dreyfus, except the people at Louis Dreyfus.
Officials with the grain trading company still won’t confirm or deny persistent rumors that it will soon be building or acquiring grain collection facilities in Western Canada.
Tony Temple, president of Louis Dreyfus Canada Ltd., did not return several phone calls from The Western Producer July 14 seeking comment on the company’s plans.
The possible expansion plans of the Canadian subsidiary of the U.S. and French-based multinational Louis Dreyfus and Co. have been the subject of intense speculation in the prairie grain industry.
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And that has triggered renewed debate about why foreign-based multinational grain companies are so interested in investing in Western Canada and whether that’s good or bad for farmers.
Speculation has focused on Tisdale, Sask., as a possible location for Dreyfus, but it also appears the company may become involved in a facility being built south of Lethbridge on the main CP Rail line to the U.S.
Ken Getty, a former farmer from Coaldale, Alta., and a partner in the company building the facility at Wilson Siding, said last week he has been involved in discussions with a number of grain companies about forming a partnership.
Asked if Dreyfus is involved in the Wilson Siding project, he said: “I guess it’s a potential. Right now it’s totally ours but certainly we’re looking at an agreement with them.”
Getty said his facility will have steel bins with a total storage capacity of at least 12,000 tonnes, with the potential to expand to 24,000 tonnes: “We’re going to be operating this fall. Who we’re going to be operating with is up in the air.”
Grain industry officials interviewed last week said they knew nothing about Dreyfus’ plans beyond the talk that has been circulating in the trade.
“Those rumours have been around for a couple of months,” said Richard Wansbutter, vice-president of marketing and transportation for Saskatchewan Wheat Pool. “I guess the way I look at it is the real evidence is in the pouring of the concrete.”
But those same officials said it would come as no surprise if Dreyfus were to invest in grain handling facilities, given the rapid and radical changes underway in the grain business.
“It wouldn’t be a surprise to me,” said Larry Maguire, president of the Western Canadian Wheat Growers Association.
University of Saskatchewan agricultural economist Murray Fulton said it would be a surprise if a company like Dreyfus wasn’t considering expansion in Western Canada.
Some say the recent spurt of investment by foreign-based companies like ConAgra and Archer Daniels Midland is linked to expectations that the Canadian Wheat Board will lose its status as the single desk exporter of wheat and barley.
But others in the grain industry cite different factors (see above box.)
Harvey Brooks, an agricultural economist at the University of Alberta, said companies like ConAgra, ADM and Dreyfus can make good money handling grain on behalf of wheat board.
If the marketing system were to change, allowing them to get directly into the export business, buying and selling wheat and barley on the margins, that would be a bonus.
“They can make money anyway, but if the wheat board happens to go, not only was their investment a good investment, it’s even better,” he said.
Maguire said he thinks the stability and predictability provided by the wheat board may be an incentive for the foreign multinationals to invest in Western Canada.
“My fear is that they’re all coming in here because our system is so heavily based on regulation that they know they can pick up $8 or $10 a tonne in handling charges and all they have to compete with is a little bit of trucking premium to bring in the grain,” he said. “They’re not really competing on the price of the product so there’s more of an opportunity to get a return on their investment here than in many other places.”
Fulton said that if foreign multinationals are indeed going to set up shop in Western Canada, it’s probably better for farmers that there be several of them.
“As a farmer, I’d like some competition,” he said. “If I can get both ConAgra and Louis Dreyfus, that’s better than just having one of them.”
