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CPP needs your grain

It's good news: Viterra returns to the Canadian fold

With the Canada Pension Plan Investment Board buying 40 per cent of Viterra, Lee Hart is hoping his share of the federal pension funds will turn a large profit.

Well I am really hoping Canadian farmers get serious about being efficient and profitable and market all those No. 1 crops through the greatest grain handling company in Canada — Viterra.

Hey farmers, no more dinking around with lacklustre yields and all that needless shopping around to the “other” grain buyers. Now that my Canada pension depends on the success of the grain handler I am a Viterra team player 100 per cent.

To be honest until the announcement earlier this month it didn’t really register with me that “my” pension money was invested anywhere. I thought the government collected CPP and put the cash in a closet until I needed it, or they had to pay a senator’s generous, but necessary expense claim.

But I was wrong. Apparently the Canada Pension Plan Investment Board is very busy investing its $282.6 billion in pension funds in a wide range of ventures which hopefully turn a profit and pay dividends. You go CPPIB!

The CPPIB says it is trying to build an agricultural portfolio. Where were they a few years ago when western Canadian beef producers were looking for some backers of an estimated 48 beef-processing plants on the Prairies, all said to be profitable, and needed to save the Canadian beef industry? Glad the CPPIB stayed out of that actually… 48 proposals and now 10 years later we probably would have 47 shuttered plants and one struggling operation processing cows in the morning, yaks in the afternoon, and rented out on weekends to 4-H clubs wanting to process rabbits.

Until this deal in early April where the CPPIB bought 40 per cent of Glencore Agri (Vittera’s parent company) for $2.5 billion (U.S. dollars) they really haven’t been involved in too much agricultural investing. The Board has investments in some 30 countries in a wide range of enterprises, but according to reports it only had about $800 million invested in agriculture and that included about 120,000 acres in the U.S. and another 115,000 acres in Saskatchewan it bought for $128 million in 2013.

The last CPPIB annual report, which is some 120 pages of riveting reading, only mentions the word agriculture three times and essentially says it is looking to diversify more into agriculture.

Well now here they go. They have bit into 40 per cent of Glencore Agri in Canada which is essentially 40 per cent of Viterra. I haven’t read any reports on exactly what that 40 per cent got them — it could be country elevators or port facilities or some of both. I did hear rumours that CPPIB chair person Heather Munroe-Blum has already ordered 12 grain shovels from Peavey Mart for herself and other board members, so that could mean they plan to be hands-on managers. None of them look like grain farmers, but really how long does it take to figure out the business end of a grain shovel.

I don’t know about the business end, but I believe it is a good deal to have the CPPIB investment simply from a Canadian-ownership perspective. I didn’t hear anything negative about the Swiss-based commodity giant, Glencore’s ownership… but still it will be good to see the Canadian flag planted on at least some of Viterra’s properties.

And the CPPIB investment helps Glencore pare down some debt. Last year the company was sitting with about $26 billion in debt. Now, through the sale of some assets, the debt is down to about $17 billion. I know personally I get a little worried when my VISA statement starts to nudge that $1 billion credit limit, so I imagine someone at Glencore was having a couple of sleepless nights. As a an investment tip, if you are in need of an Australian coal train or a Kazakhstan gold mining unit it is probably a good time to make Glencore an offer. They’re likely in the mood to deal.

In the meantime, farmers, shop Viterra. Buy Proven Seed and any contract they push in front of you, sign it. And get those grain trucks serviced so you can get commodities delivered in a timely fashion.

So far this outfit I am with hasn’t figured out that I am just some editorial “boy candy” in Alberta. But if they do, I will be knocking on the CPP closet door and I want something to be in there when it opens. And I hope it is more than a grain shovel.

About the author

Field Editor

Lee Hart

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



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