The federal Competition Bureau is stepping in once again to try to preserve competition among grain handlers at the port of Vancouver.
The bureau is challenging plans by Saskatchewan Wheat Pool and James Richardson International to jointly manage and operate their terminals at the port .
The bureau is also engaged in a separate dispute with Agricore United over its 2002 order that AU sell one of its terminals at the port.
While the two cases are not directly related, taken together they reflect a growing concern about the impact on farmers and small grain shippers of consolidation in the grain handling industry.
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“They’re certainly similar,” said Gaston Jorre, senior deputy commissioner of competition. “They both relate to whether we would have a substantial lessening of competition in grain handling at the port.”
The pool and JRI have been running their two facilities, located next to each other on Vancouver’s north shore, as a joint venture since July, under an interim consent agreement with the bureau.
However, last week the bureau filed an application to the competition tribunal, a federal agency that operates like a court, to block the joint venture on the grounds that it would result in a less competitive market for grain handling services.
The bureau said the challenge is aimed at ensuring the transaction does not result in “a reduction of competitive options for farmers, through the Canadian Wheat Board and independent grain companies.”
The two terminals have a combined capacity of 345,240 tonnes, representing 36 percent of the total grain storage space at the port of Vancouver.
The bureau is also asking for an interim order to ensure that SWP and JRI operate their grain handling services at the port separately until the case is resolved.
Fran Malecha, vice-president of SWP and chair of Pacific Gateway Terminal Ltd., the name of the joint venture, said the project has been achieving its goal of creating operating efficiencies and savings that benefit everyone from farmers to railways to end-use customers.
He said joint management results in more efficient use of rail cars and vessels, better management of grain stocks and storage space, improved throughput and lower costs.
“We actually think we’re creating more competition by combining the two facilities and marketing jointly,” said Malecha. “Our view is we are creating efficiencies and additional capacity that makes the north shore terminals a more effective competitor in the port of Vancouver.”
However, the bureau reached the opposite conclusion, based on extensive analysis and consultations with customers, suppliers, industry experts and economists.
“We’ve done a thorough examination based on all the available information and reached the conclusion there was a problem,” said Jorre.
Malecha said the company is prepared to try to negotiate an arrangement that is acceptable to the bureau, but it is also ready to argue its case before the tribunal, something that would not likely happen before spring.
An official with the National Farmers Union said he was surprised and pleased by the bureau’s decision to intervene in the SWP-JRI joint venture.
“Clearly they’ve seen something that would indicate there’s a lessening of competition and we certainly support anything that will encourage a marketplace that gives farmers a break, ” said NFU executive secretary Terry Pugh.
Farmers and others involved in the food industry should be concerned about the amount of consolidation and sharing of markets that are taking place in the grain industry, he said, whether it is among grain handlers, meat packers or chemical companies.
While the companies involved may gain efficiencies and cost savings, there’s no reason to believe those savings will be passed back to farmers, he said.
