Former pool president nervous | Marvin Wiens says he is uncomfortable seeing Viterra fall under foreign ownership
The last full-time farmer-president of Saskatchewan Wheat Pool laments the sale of company he helped build.
Marvin Wiens is uncomfortable that Viterra, a Canadian grain handling icon with ties to the three former prairie pools, could soon be in foreign hands if shareholders and Canadian regulators approve the $6.1 billion deal with Glencore International.
“I’m nervous about a foreign company making decisions on behalf of western Canadian farmers,” he said.
Many growers are happy with Viterra, as evidenced by its 45 percent share of the western Canadian grain handling business.
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“There’s no doubt about it, I’m disappointed about the loss of Viterra because we were just getting really comfortable with a company that was doing a good job,” said Wiens.
“Now we’re dealing with the unknown again.”
It stings that the company he helped build into a Canadian grain handling giant as president of SWP between 2000 and 2004 is shedding assets and being transferred into foreign hands.
However, the latest development is nowhere near as gut-wrenching as what happened seven years ago when farmers lost control of their beloved wheat pool.
Wiens was elected to SWP’s board of directors in 1984. His tenure as president coincided with one of the most turbulent times for the farmer co-operative, which was teetering on the edge of bankruptcy.
“It was probably four of the most difficult years of my life,” he said.
The pool was drowning in $1 billion of debt thanks to a three-year, $799 million expansion and construction strategy spearheaded by former chief executive officer Don Loewen.
“We were losing money on our elevator system. We were losing money on the hogs. We were losing money on the grain terminals in Mexico. We were losing money just about everywhere we looked,” said Wiens.
He was on the search committee that uncovered former ConAgra executive Mayo Schmidt, the man he credits with turning around the financial fortunes of the co-operative, but also leading it down the path to a publicly traded company with little farmer direction.
Wiens recalls flying to Toronto with his new chief executive officer to meet with a consortium of bankers to sign a financial restructuring plan that would rescue the pool from the brink of disaster.
It was a time of layoffs and cost-trimming. The SWP held a massive garage sale, selling non-core assets to pay off $200 million of debt.
“The decision to sell Heartland livestock broke the hearts of board members who were in the livestock business because that was just part of who we were. But we were told we had no choice, and we didn’t.”
Some directors refused to cash expense cheques during that tumultuous time to help the pool survive.
“That’s the kind of loyalty we had among our delegate and director body.”
The company was back on stable financial footing by the time Wiens stepped down from the board of directors in 2004, but he didn’t like the direction it was heading on governance issues.
The Toronto Stock Exchange advised the pool it needed outside influence on the board of directors to have any credibility with investors.
“They came from the corporate world and they didn’t see any value in the co-operative,” said Wiens.
Wiens retired from the board in 2004 to avoid having to vote on moving the pool from a publicly traded co-operative into a traditional corporate structure.
“There was a group of people that fought extremely hard to try and keep the pool because we knew that if we lost the farmer input at the board table, farmers would lose. And I think we have lost,” he said.
All ties to the co-operative movement were permanently severed in February 2005 when pool delegates approved a proposal to create a single class of common voting shares with no special rights for farmers.
Long gone were the 1970s when the board made decided to keep fertilizer prices low during a period of high grain prices.
“That will never, ever happen in today’s world. Was it the right decision for the pool as a whole? Maybe not, because maybe they needed to make more money in the good years along with the farmers,” said Wiens.
“But they did make decisions more based on what was good for farmers. I don’t think we have much of that left anymore, unfortunately.”
With its financial house in order, the pool went on to acquire Agricore United in 2007 to form Viterra, a Canadian grain handling giant. Viterra was well on its way toward becoming a global powerhouse when the Glencore offer arrived.
The Globe and Mail estimates Schmidt will walk away from the deal with $37.5 million, which is the value of his Viterra stocks, options, incentives and the cost of terminating his employment contract.
Wiens sold most of his SWP-Viterra stock over the years, but he still has enough to cast a vote at the shareholder meeting in May.
He thinks it will be much easier to vote yes to the Glencore deal than it was to endorse the governance changes seven years ago, which effectively killed the prairie grain co-operative movement.
