It’s a story of one grain company buying the assets of another, one of them a giant American multinational and the other a medium-sized family-owned Canadian firm.
But in this case, it’s the reverse of what one might have expected.
James Richardson International Ltd. of Winnipeg is buying four country grain elevators from ConAgra Ltd., bringing to an end the U.S. firm’s presence in Western Canada.
The four high-throughput elevators are in Yorkton, Nokomis and Corrine in Saskatchewan and Nesbitt, Man. Financial terms of the deal were not disclosed.
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“I think farmers should see this as great news,” said Jean-Marc Ruest, JRI’s assistant vice-president for legal and industry affairs.
A number of groups in the agricultural and grain industries have seen the presence of foreign-owned multinationals as a threat, he added.
“Whether that’s real or not, to see a Canadian-owned company that’s prepared to increase its presence and invest in agriculture is very much a good news story.”
Garth Gneuffer from ConAgra’s headquarters in Omaha, Nebraska, said the sale doesn’t mean the company is severing its ties to the Canadian grain industry. It will keep its grain merchandising office in Winnipeg, continue to operate an oat mill in Barrhead, Alta., and remain an accredited exporter of Canadian Wheat Board grain, he added.
“We have a strong relationship with the CWB, which we intend to maintain, and that gives us continued access to Canadian grain.”
Gneuffer said ConAgra was a small player in the Canadian domestic industry and the sale will result in a more efficient use of its financial and other resources.
The purchase means JRI now operates 28 high-throughput facilities as part of its network of 64 country elevators. The three Saskatchewan elevators will be the biggest in JRI’s system, with the largest at Corrine boasting storage capacity of 48,790 tones.
Approval not required
The transaction did not require advance approval from the federal competition bureau because it didn’t meet certain minimum thresholds laid out in competition regulations. Ruest said there is no reason for the bureau to get involved.
“The reason those facilities are attractive to us is they are in locations where we do not have a significant presence,” he said. “We certainly don’t think we are doing anything to lessen competition.”
Officials with two farm groups said they don’t think the transaction will have a noticeable impact on prairie grain growers.
“There’s no real loss of competition, so there’s no big concern,” said Cherilyn Jolly-Nagel, president of the Western Canadian Wheat Growers Association.
While one never wants to see an established grain handler leave the local scene, the elevators are being taken over by a well-known company with a good reputation and farmers in those areas will continue to be well-served, she said.
To see a company make a major investment like JRI has just made gives producers confidence in the future of the prairie grain industry, she added.
National Farmers Union spokesperson Terry Pugh said the most positive outcome for farmers is that the sale won’t result in loss of service.
The NFU has long been a critic of foreign multinationals and their control in the world’s grain industry. However, Pugh said when it comes right down to it, it doesn’t make a lot of difference to farmers whether their elevator is owned by foreign or Canadian capitalists.
“When you’re talking about such big companies, I don’t think farmers will notice much difference no matter who owns a particular concrete terminal,” he said. “It’s not the nationality of the ownership that matters, it’s the nature of the ownership.”
Pugh doesn’t think the deal means ConAgra is necessarily disappearing from the prairie grain-handling scene, speculating the sale may be more a reflection of short-term financial pressures rather than long-term strategies.
ConAgra is dealing with accounting and income tax errors that could cost it up to $200 million in profits.
“It may be a short-term cash sell off, it’s hard to know,” Pugh said.
