Canada’s second, third and fourth biggest grain companies say they’re not overly concerned by news that numbers one and two might merge into one giant grain company.
Saskatchewan Wheat Pool last week announced it is making a bid to buy Agricore United, Canada’s largest grain company.
The new company would have a dominant position in the prairie grain handling market and an interest in every major export facility on the West Coast.
However, officials with JRI International and Cargill say they’re more concerned with their customers than with their competitors. The two companies rank third and fourth respectively in terms of total primary elevator storage capacity. AU is first, SWP second.
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“It’s hard to say at this point in time what the impact on the industry would be,” said Jean-Marc Ruest, assistant vice-president for industry and legal affairs for JRI. “But we don’t have any great concern about it.”
He said the company is comfortable with its share of the prairie grain handling market and believes it has a solid customer base.
It’s also confident that the services it offers to farmers will enable it to maintain that position regardless of whether the proposed merger goes through.
While JRI believes the grain handling system is overbuilt and consolidation is probably needed, Ruest said the company had no inkling that anything as dramatic as last week’s announcement was in the works.
“We’ll just have to let the dust settle and see how it all plays out,” he said.
Focus on own company
Rob Meijer, director of public affairs for Cargill, expressed a similar view, saying it will be business as usual for the company.
“We are remaining very focused on ensuring our employees and our customers understand that as a company we are very committed to this industry,” he said.
“We’ll continue to invest in areas where it’s appropriate to ensure we retain our market share in terms of the farmers and end-use customers.”
He added it’s too early to speculate as to what effect the proposed merger would have on the industry as a whole or on individual competitors.
“At this point we’re choosing to sit back and stick to our knitting,” he said.
While well-established companies like Cargill and JRI may not be worried, some smaller grain dealers and handling companies were feeling more vulnerable in the wake of Sask Pool’s announcement.
Those who run farmer-owned inland terminals across Western Canada didn’t try to hide their concerns about the potential impact of the proposed merger on their operations, as well as on individual farmers.
“If they are successful in this, it’s more important than ever that our facilities exist independently to provide the competition that is necessary to ensure producers are well-served and have choices,” said Brett Meinert, chair of the Inland Terminal Association of Canada.
He said the biggest issue is probably the potential impact at the port of Vancouver.
Port presence
The proposed new company would have an ownership or operational stake in all six terminals at the port, which could reduce the ability of smaller independent companies to obtain competitive rates and services.
“It might have a serious impact on our ability to ship our product through the port,” said Meinert, a director with South West Terminal in Gull Lake, Sask.
He hopes the federal Competition Bureau does what’s necessary to protect smaller players in the industry.
