I’ve got to admit, I’ve never fully understood the geometry behind federal regulators’ decisions on which assets a company has to sell in exchange for clearance on a big merger or takeover.
There may well have been a solid reason why, after Husky sold off its retail gas stations in 2022, our neighbourhood wound up with two Co-op stations on the same street about a dozen blocks apart. I’m still not quite sure what the reason was, but I’m not yet complaining.
Evidently I wasn’t alone in my confusion, though, when the federal government announced the conditions by which it’ll allow Bunge to complete its takeover of Viterra. As much as Canada’s farmer organizations can ever be said to have a consensus, in this case the consensus appears to be that the conditions Ottawa imposed were almost the literal least it could do.
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It’s chicken day
This issue’s recipe: honey lemon chicken. Chicken Day means getting whole processed birds from a local farmer, getting them home in coolers, cutting each up for bagging and freezing, then stripping the carcasses for stock and pet food.
The feds’ primary concern, as flagged by the Competition Bureau last year, appears to be preserving some competition for farmers’ canola in the greater catchment areas for Bunge’s two crush plants in northeastern Saskatchewan and southern Manitoba — an environment the government plans to achieve by having the merged company sell six elevators in those general regions.
Fair enough, I guess — although if the goal of the divestment order is to “maintain competitive options,” as the feds put it in their announcement, then the choice of Viterra’s Winnipeg site on Coulter Avenue, an elevator that was closed in the summer of 2022, as one of the six is odd, to say the least.
I went out the other day to have a look at the site. To my untrained eye, it seems well secured and in reasonable condition for a buyer willing and/or able to restart it. At the time of its closure, the former Canada Malting plant’s grain capacity was 34,580 tonnes, a pretty good size for an inland terminal by today’s standards, and it still includes a connection to the CPKC track running right through town.
But it’s also now in the middle of the city, making it somewhat more time-consuming for a farmer or trucker to reach. It’s also ancient compared to most of the other concrete elevators on Viterra’s roster — such as its brand new, similarly-sized, much more easily accessible terminal which opened in 2022 just outside the city, in the RM of Rosser.
Against that backdrop, the Coulter Avenue site looks like a white elephant, not even competitive within its owner’s network. Arguably, if a buyer can be found, farmers would benefit from having the old elevator operational, rather than a shuttered relic on Viterra’s books serving mainly as the canvas for some admittedly impressive graffiti. But if Ottawa’s goal is to preserve competition within range of Bunge’s Altona crush plant, it could have done better.
‘De facto’
Besides, Prairie farmer groups have a bigger concern. “The divestment of six grain elevators is a token gesture in the face of a company that maintains a 25 per cent stake in G3, greatly reducing competition across the Prairies and in Quebec,” Kyle Larkin of Grain Growers of Canada said in that organization’s statement. “These conditions do little to offset the $770 million annual cost this merger will impose on farmers.”
That dollar figure comes out of a University of Saskatchewan report weighing the expected effects on port terminal services, elevator service and canola crushing capacity — including the potential loss of a major new crush plant on Viterra’s drawing board, not even to mention other companies’ now-shelved crushing plans. And the U of S report also operates on a “minor behavioural assumption” that G3, under partial Bunge control, would have “strong incentives” to use the merged Bunge/Viterra’s assets to “strategically co-ordinate” marketing of grain through Vancouver.
Bunge’s CEO last year contested that assumption, saying G3 and a merged Bunge/Viterra would remain strong competitors with each other, and any other outcome would “violate G3’s fiduciary obligations to its shareholders and likely violate Canadian competition law.”
With respect, though, farmers are a cynical bunch with good reason, and want more assurances than the feds have now given them. If one assumes G3 to be a “de facto Bunge asset,” the National Farmers Union says the government’s conditions, which include “a paper firewall between Bunge and the directors it will appoint to G3’s board,” won’t counter Bunge’s resulting overwhelming market power in Canada.
At this stage the federal government seems to have no appetite to just order Bunge out of G3 — an asset the U.S. company was granted about 10 years ago by a different federal government in the first place. It’s safe to say we didn’t all foresee this exact outcome on the horizon back then, but the disappointment today appears solid across the board.
Correction
At this desk, not murdering anyone is both personal and professional policy, so I’m more than pleased to report Dr. Ismail Cakmak, an expert in plant nutrition at Sabanci University in Istanbul, is very much alive.
Near the end of the column “Let’s close the circuit on what leads to ergot” in the Jan. 14, 2025 edition (page 20-21), he was incorrectly referenced as “the late Dr. Ismail Cakmak.” I’ll be very sure to fix that error before the column appears online, and in the meantime we apologize to Dr. Cakmak as well as for any alarm caused to his friends, family and colleagues.
As always, drop me a line with your questions, comments or concerns.
