Agrium sees gains for farmers in retail expansion

With Agrium’s Crop Protection Services (CPS) arm poised to take over 232 of Viterra’s Agri-Products centres, many farmers have concerns about future competition and pricing in the farm input market.

Kevin Helash, CPS’s regional manager for Canada and the Pacific Northwest, sees only upside.

Glencore’s planned takeover of Viterra, as announced in March, includes an arrangement in which Calgary-based Agrium’s CPS would acquire about 90 per cent of Viterra’s retail facilities in Canada, all of its retail sites in Australia and a 34 per cent stake in a nitrogen plant at Medicine Hat.

With this expansion, Helash said in an interview, "we get to lever 1,250 North and South America and Australia retail locations."

CPS retailers, he said, will be able to exchange information around the globe and bring new solutions to Western Canadian farmers. "There are very few bugs we haven’t had experience with."

Customers stopping in at many former Viterra locations will notice very little change, he said. "We will do everything we can to minimize any disruption to our customers. The intent is business as usual."

But what about prices? "We need to retain 100 per cent of the business that Viterra currently has. We don’t want to send customers to our competition," Helash said.

Two-thirds of the crop input market will still be supplied by CPS’s competitors, he emphasized. "There will be lots of competition and lots of choice."

These days, farmers using smart phones and Twitter can find out what retailers are charging from the comfort of their tractor seats. In this environment, Helash said, "it’s very hard for any retailer to sell product outside of the market price."

If input prices do rise in the future, Helash said, new competitors could easily enter the market, increasing competition and bringing prices back down. He calculated that a new seller could get into business with an investment of about $150,000. "There’s no barrier to anybody coming into the market."

There will be a formal examination of market consolidation, he noted. The federal Competition Bureau, which has already said it won’t oppose Glencore’s bid for Viterra, still must review Glencore’s plans to sell Viterra assets to Agrium and Richardson International.

"All the players in Western Canada can rest assured that the deal will be looked at by the Competition Bureau," Helash said, adding that CPS welcomes the upcoming review. "We love competition because we think it makes us better."

— Leeann Minogue is editor of Grainews at Griffin, Sask.

Related stories:
Farmers ‘likely to benefit’ in Viterra carve-up: Sask. study, May 11, 2012
Glencore confirmed as Viterra’s six billion dollar suitor, March 20, 2012

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