It’s round two for Prairie Pasta Producers on a couple of fronts.
The new generation co-op is taking another crack at buying shares in an American pasta firm, which may prompt a second confrontation with the Canadian Wheat Board.
Prairie Pasta has the option to buy three million D-series shares in Dakota Growers Pasta Co. That would entitle members to deliver three million bushels of durum to the Carrington, North Dakota plant.
The group of Canadian durum growers is attempting to have the share offering approved by the Manitoba, Saskatchewan and Alberta securities commissions in time to sell shares to its members in April.
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This will be the second try at buying a portion of North America’s third largest pasta manufacturer. An option that expired last November failed to get the minimum one million shares required to seal the deal.
It didn’t help that the U.S. commerce department had slapped a 13.55 percent countervailing and anti-dumping duty on Canadian durum.
Prairie Pasta polled its members last fall after the duty had been revoked to gauge their level of interest in the pasta venture under better circumstances. There appeared to be a renewed enthusiasm for buying Dakota Growers shares.
“We would like to take up the full three million and it looks like we probably will,” said Prairie Pasta chair Perry MacKenzie.
But one long-time proponent of the project said there are many details to be worked out, including what role the CWB will play since the durum is being delivered to a buyer in the United States.
Prairie Pasta vice-chair Allan Brigden said that could be a big stumbling block.
“The wheat board has never, ever indicated to me that they’re going to acknowledge that we’re going to be able to deliver against this.”
Prairie Pasta failed to get the concessions it wanted from the CWB back when the plan was to build a $120 million pasta plant and mill in Canada.
That generated friction between the two parties, which appears to be resurfacing.
“They don’t want to give Prairie Pasta any breaks,” said Brigden. “Every time you’re about to turn the corner, somebody moves the corner.”
CWB director Larry Hill said the wheat board hasn’t sorted out its stance on the pasta project, but he knows which way the directors are leaning.
“The way we imagine it right now is using the producer direct sale system.”
That would see Prairie Pasta sell its durum to the board and then buy it back from the agency before transporting it to the U.S. mill. The co-op would keep any premium it received above the wheat board’s pooled price.
“I don’t think they’ll find that this producer direct sale will be too onerous once they try it,” said Hill, who wished the co-op well.
MacKenzie was hoping Prairie Pasta would be able to take advantage of the board’s new generation co-op policy, which would allow producers to ship grain to the plant outside of board contracts.
But Hill said that policy was developed in response to the previous proposal, which involved building a mill in Canada. It was not meant for a co-op delivering grain to a plant in the U.S.
MacKenzie remains optimistic that the two parties can arrive at a satisfactory solution.
