otherwise Posted April 19, 2015 Share Posted April 19, 2015 The federal government's move to privatize the Canadian Wheat Board is generating heated debate between farm groups, just as its earlier move to end the wheat board's monopoly over western wheat and barley sales did. A company partially owned in Saudi Arabia is buying a controlling interest in the CWB. G3 Global Grain Group is a joint venture between Bunge Canada, a subsidiary of Bunge Limited (a global agribusiness and food company headquartered in the U.S.) and SALIC Canada Limited, a wholly owned subsidiary of Saudi Agricultural and Livestock Investment Company. G3 is buying 50.1 per cent of the CWB for $250 million. That doesn't sit well with the National Farmers Union. "The work of generations of prairie farmers went into building that CWB brand, that Canadian Wheat Board brand, and now it's been given away for a pittance to a foreign-controlled interest," said Matt Gehl, an NFU board member in Saskatchewan. Three years ago, the CWB was valued at $1 billion. However, its worth today is a matter of debate. "(The federal government) commissioned an audit of the CWB's assets in the lead-up to privatization, and has refused to release the results," the NFU said in a written release. But Sylvain Charlebois, Professor in the College of Business and Economics at the University of Guelph in Ontario, said the $250 million purchase price was a lot more than he expected to see. G3 has power to force buy-out Meanwhile, the remaining 49.9 per cent of the CWB will be kept in trust for farmers who deliver grain to the board. Individual farmers will be allocated $5 in equity per tonne of grain delivered. However, in seven years or when the trust reaches $250 million, G3 can buy it out at market value, and farmers have no right of refusal. That part of the deal is even giving pause to the group that fought for an end ot the wheat board's monopoly. "I think there's producers out there that genuinely would have wanted the opportunity to maintain that equity share, and they're not going to have that opportunity," said Cherilyn Nagel, past president of the Western Canadian Wheat Growers Association, and currently one of its directors. Nagel said she hopes farmers will have a chance to state their case. As for the overall deal, Nagel said her group will watch to see how it works out. "We're really interested in having the Canadian Wheat Board be a major player in terms of competition," Nagel explained. "We're interested to see who they're going to do business with." G3 comes with 'deep pockets' for infrastructure The president of the Agricultural Producers Association of Saskatchewan, Norm Hall, said he knew the sale would happen, but was surprised by who the buyer turned out to be. "(The CWB) will need their deep pockets to invest in infrastructure, to make them truly competitive, so I guess that's one positive that we're looking at," Hall said, adding the CWB had been financing its infrastructure investments with debt and debentures. Hall agreed the CWB issue continues to divide farmers. Some want to bury any memory of the organization it once was, while others want to restore it. http://www.cbc.ca/news/canada/saskatoon/cwb-privatization-divides-farmers-1.3035293 REGINA — When announcing the sale of the former Canadian Wheat Board to a U.S.-Saudi joint venture, Agriculture Minister Gerry Ritz couldn’t resist getting one parting shot in at supporters of orderly marketing. No longer would Canadian farmers go to jail for selling their own grain, Ritz said. The only problem is, like many of the other statements Ritz made on Wednesday in Winnipeg, it’s not entirely true. In fact, Canadian farmers (a few of them anyway) went to jail for refusing to pay fines for breaking the Canadian Wheat Board Act. So their crime was not only flouting the law of the land, but also the judicial system that enforces the law. As the “final step in marketing freedom,” Ritz said the sale of 50.1 per cent of the CWB to G3 Global Grain Group for an investment of $250 million will lead to “increased competition in the Canadian grain market and significant Canadian ownership through the farmers trust.’’ Does selling the CWB (albeit stripped of its ‘single desk’ marketing power and most of its staff) to Bunge Canada, a subsidiary of the U.S. conglomerate Bunge Ltd., and SALIC Canada, a unit of Saudi Agricultural and Livestock Investment Co., increase competition in the grain sector? Since the number of competitors in the grain trade remains the same, there’s no increase in competition. Moreover, the new CWB will have far less market clout than the old CWB, which was the world’s largest marketer of wheat and barley until it was dismantled by the Harper government. Will the new CWB have “significant Canadian ownership’’ by dint of the 49.9 per cent of the company held by in trust for farmers through the Farmers Equity Plan? The plan would give farmers $5 worth of shares in the new CWB with each tonne delivered. But can these “shares” be traded on a stock exchange, or voted, or sold to anyone beside G3? No. As Stewart Wells of the Friends of the Canadian Wheat Board observed wryly, at least with Canadian Tire or Monopoly money, you know what you’re getting. In any case, the majority owners, G3, can buy out the minority shareholders after seven years, effectively ending any vestige of producer control of the CWB. What about the $250 million “investment’’ by G3 in CWB? On the face of it, $250 million for controlling interest in an enterprise with $3.4 billion in assets in 2011-12, including thousands of hopper cars, inland and port terminal facilities, Great Lakes ships, etc., seems like a sweet deal. Who knows if G3 will have to invest $250 million or any money at all? As Winnipeg NDP MP Pat Martin noted: the promised $250 million is no more than that, “a promissory note that they’ll invest $250 million in the future.” For his part, Ritz maintains the post-monopoly CWB was virtually bankrupt and had to be supported by $177 million from the federal government in 2011-12, part of $349 million in federal money earmarked for ‘restructuring costs’ due to the loss of the monopoly. But since fiscal 2011-12 — the last year the CWB operated under the single-desk — no annual report has been issued by the CWB, leaving taxpayers to guess at what they have at stake. What will become of that $177 million or $350 million from taxpayers, or the countless millions of dollars that western farmers had in pool accounts or invested in assets acquired by the Canadian Wheat Board? Who knows? But we do know this. Many of the promised benefits of marketing freedom have failed to materialize. The bonanza of higher grain prices, the value-added investments, and the more responsive grain handling system promised by the proponents of marketing freedom have come a cropper. Instead, western farmers have lost more $5 billion thanks to a grain backlog caused, in large measure, by lack of logistics co-ordination, excessive “basis” charges by the grain companies and poor performance by the railways. Arguably, the real winners in marketing freedom have been the grain companies and railways. Farmers, not so much. So when Gerry Ritz promises the CWB deal will “provide a huge benefit to the grain sector and Canada’s overall economy,’’ take it with a large dose of salt. http://www.leaderpost.com/Johnstone+deal+more+questions+than+answers/10982463/story.html tl;dr 50.1% of the CWB has been sold to a US-Saudi partnership, the rest is placed in a trust which will most likely be bought out in 7 years. Canadian grain handling has been set back at least 75 years because of this deal. Link to comment Share on other sites More sharing options...
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