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Farmer warns farmers ‘don’t be complacent about Viterra deal’


Peace River region farmer Leo Meyer may be a lone voice in
the agriculture wilderness, but he is urging Western Canadian farmers not to be
complacent about plans by the Swiss-based Glencore International to take over
Viterra.

Meyer has always been passionate about the agriculture
industry. He is a farmer, sells and trucks grain across Western Canada and has been active in a number of industry association. He says he isn’t being a fear mongerer, but he doesn’t see the take-over
of Canada’s largest grain company, by a multi-billion dollar global commodity
trader as a good move for prairie farmers.

And he is particularly concerned that so far so much of the
deal has been transacted with out farmer input, and very little opposition.

Meyer is urging producers to contact their member of
parliament and various commodity and lobby organizations to have the take over
bid reviewed carefully by the federal Industry Minister and The Competition

Bureau to ensure the interests of Canadian farmers are properly served.

NOT THE PLAN

“This buy out is not what thousands of Canadian farm men and
women worked for decades with their blood, sweat and tears, to see have happen
to the grain industry,” he says.

Meyer is referring to the efforts of farm families over the
past 100 years to build producer-run grain companies such as Alberta Wheat
Pool, Saskatchewan Wheat Pool, Manitoba Wheat Pool and United Grain Growers. As
the Canadian and world economies changed that led to different mergers among
those grain companies, which eventually resulted in the creation in 2007 of
Viterra as the largest single grain handling company in Canada.

While the Viterra take over would give Glencore control over
much of the Canadian grain market, he also sees the deal as being the foot in
the door — the thin edge of the wedge — in limiting farmer choice of crop

inputs, including options of from who and where they can buy seed. 

He says although Viterra was a large company in itself,
operating in a global marketplace, the take over by Glencore would put control
of the Canadian grain industry in a much bigger pair of hands. Glencore is a
commodity trader dealing in a wide range of agriculture commodities such as
wheat, corn, barley, oil seeds and sugars. It also is big in the oil, gas and
coal industries as well as metals and minerals. Annual revenues are between
$150 and $200 billion, it has about $80 billion in assets and 60,000 employees
worldwide.

“What this take over means is that Glencore has just about
every corner of the world covered — particularly on the cereal side” says
Meyer. “They control the Black Sea area and Russia, and they have a large stake
in Australia. What they were missing was a foothold in North America and with
this they will have it. And it isn’t just an ordinary foothold, it is a
foothold in the top quality cereal region in the world. It is significant.” 

CONTROL MARKET

Meyer says the combination of big business with very deep political connections increases the risk of a commodity, such as grain, being used as a bargaining chip in all kinds of political agendas. “You don’t agree with our politics? Well, perhaps I’ll make a phone call and shut off your food supply”…that kind of scenario.  

Meyer says total wheat production in the world is between
685 and 700 million tonnes. Out of that about 115 million tonnes is traded
annually. What’s up for grabs is control of that trading portion of the grain
market.  While Meyer has long been
a pro-choice supporter for Western Canadian grain farmers, he says with the CWB
monopoly gone, it opened the doors for Glencore to make its move. Again he
makes this point, “this isn’t what pioneering founders of Canadian grain
companies had in mind.”

While the initial offer was for Glencore to take over all of
Viterra’s operations, that plan has since been modified, bringing both
Richardson International (Pioneer) and Agrium into the picture. Viterra
currently has about 45 percent of Canada’s grain handling capacity while
Richardson has 25 per cent. The latest take over proposal would see part of the
Viterra grain handling facilities sold to Richardson increasing it’s stake to
about 33 per cent, and leaving Glencore with 33 per cent. Much of Viterra’s ag
retail/crop input business would be sold to Agrium.

“The only reason that Richardson and Agrium were brought
into the picture was to try and calm the waters,” says Meyer. He says
Glencore/Viterra knew it would be tough sell if Glencore took over the entire
Viterra operation.

There has been little opposition to the proposed take over.
Prime Minister Stephen Harper and federal Agriculture Minister Gerry Ritz have
both said it is “a good thing”. And even producer commodity organizations such
as the Grain Growers of Canada and the Western Canadian Wheat Growers have
given qualified support to the proposal. They support the deal as it concerns
grain handling facilities, but are concerned about Agrium getting dominate
control of the input and retail side of the business.

RETAIL CONCERNS

Stephen Vandervalk, president of the Grain Growers of Canada
and a Fort Macleod, Alta. area farmer says he isn’t comfortable with Agrium
having control over 30 per cent or more of the farm input business.

“They are a well respected company,” he says. “But we have a
huge concern about what this means. This proposal will not only give them a
huge market share in some areas, but Agrium also supplies some products to
their competitors – to other retailers. In my area for example, it would mean
we go from having three retail options down to two, so that could have a huge
affect on farmers. I have talked to Agrium and they don’t see the concern, but
as an organization it is definitely a concern we will be pushing forward with
the Competition Bureau.”

Meyer says with big players such as Glencore and Agrium
getting such large control of the Canadian grain handling and ag retail
business, respectively, he fears it is just a matter of time before farmers
will have little choice about even what grains they can grow or seed they can
buy. “It could be like the canola seed business,” says Meyer. “We will have few
options, and if we want to farm we will have to buy this product at this price.
We will dance to what ever tune they want to play.

“I see it becoming impossible for farmers to have truly
independent farming operations. We will have to be “in somebody’s system” or we
won’t be able to farm.”

He urges producers to pay attention to the situation and to
express their views. 

Lee
Hart is a field editor for Grainews in Calgary, Contact him at 403-592-1964 or
by email at
[email protected]

 

About the author

Field Editor

Lee Hart

Lee Hart is editor of Cattleman’s Corner based in Calgary.

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