I’m trying to think what the downside to the Glencore takeover could be.
It doesn’t make grain elevator ownership more concentrated. In fact, it’ll create a more even balance out there in the country. So that’s a good thing for farmers in general.
It eliminates the biggest Canadian grain company, but makes two other Canadian companies – Richardson and Agrium – bigger. And Viterra’s citizenship hasn’t seemed to make a bunch of difference in terms of how farmers feel about Viterra or other companies. Lots of farmers love Cargill, and that’s a yankee company, so nativism doesn’t seem to be a big factor among farmers. So Glencore’s non-Canadian nature doesn’t seem to be much of an issue to many people.
Read Also
Growth plates are instrumental in shaping a horse’s life
Young horse training plans and workloads must match their skeletal development. Failing to plan around growth plates can create lifelong physical problems.
About the biggest knock I’ve heard to Glencore coming here is its mysterious Swiss nature, connecting it to notions of secretive banking, cuckoo clocks and chocolate, and the well-publicized ookiness of the Marc Rich pardon, granted by one of my heroes – Bill Clinton. So that could make Glencore seem sinister and scary – or also kinda cool and effective at getting business done. People of a conspiratorial frame of mind swear that Glencore can manipulate world commodity markets, but is that just myth? And if it was true, would that help or hurt prairie farmers? Since they won’t control the prairie grain elevator system or the ports, what can they do?
Glencore is undoubtedly a sophisticated international player that has swum the murky waters of the commodities trading world for years, since well before the commodities bull market of the past 12-14 years brought light to the area. It operates everywhere, in every market, including dark and disturbing markets. But if that can bring a few extra sales of Canadian crops to weird little places it hasn’t always gone before, what’s to complain about? They’ll have to compete with Richardson, Cargill et al for farmers’ grain, so they’ll be in the competitive bidding business, so farmers don’t have much to lose by somebody like Glencore trying to get their grain. They’ll want to make the biggest margin they can possibly make, but who exactly is that not true about?
I’m a suitably cynical and jaded journalist, especially about claims of value that will be brought to citizens, consumers and farmers from corporate takeovers like this one, but I have trouble poking holes in the arguments that Glencore lays out in its discussion of why it thinks farmers should be happy about Glencore taking over Viterra’s elevator and port system:
“Glencore is confident the acquisition of Viterra will deliver significant overall benefits to grain farmers. The transaction will give farmers access to Glencore’s unparalleled global distribution channels and increase their ability to export their product into international grain and oilseed markets. Glencore’s global reach and expertise will provide farmers with strong protection from market volatility, more options to market their grain and oilseeds and more competitive pricing resulting from Glencore’s wider market access and its more consistent demand for grains and oilseeds.
“Glencore’s logistics network enables it to deliver grain and oilseeds to more regions more efficiently, and its balance sheet strength enables the company to buy greater volumes. This results in a more consistent demand profile and therefore greater pricing continuity for farmers.
“As a result of the asset sale agreement Glencore has entered into with Agrium Inc., and Richardson International Limited, the transaction is expected to result in the creation of a more robust competitive landscape for Canadian farmers. As appropriate, Glencore also intends to grant third party access to its handling infrastructure at prevailing market rates.”
The stuff above is from their press release. I’m not sure I agree with the bit about their global reach providing protection against volatility, but the rest seems eminently sensible.
But what do I know? I’m just an ink-stained scribbler. What’s not to like about the Glencore takeover? Tell me. Why not post a comment in response to this little rambling. You could begin it with: “Ed, you are an idiot, because what you fail to see is . . . “
Or something like that.
