CWB Rejects Bid by Farmers
SASKATOON – Farmers of North America (FNA) and AgraCity Crop & Nutrition have learned their bid to acquire the CWB was rejected by CWB management.
The decision is disappointing because farmers have clearly told us in over 100 town hall meetings and thousands of one-on-one conversations that they want to acquire majority interest in the CWB, but most needed time after harvest to fully assess the opportunity. Unfortunately, the deadline for raising capital passed before harvest was completed, denying farmers adequate time.
Despite this great opportunity having been taken from growers, Genesis Grain & Fertilizer Limited Partnership is still going ahead. It is clear, now more than ever, that farmers need to own their own grain company, coupled with fertilizer distribution facilities.
“If farmers can’t acquire the CWB, we believe they will build their own efficient, globally competitive business with the grain they own and the fertilizer they buy, as farmers have done in many competitor countries,” says FNA President James Mann.
“We started the grain project to build on the synergies with fertilizer distribution,” continues Mann. “It’s a much more efficient use of farmers’ capital to build both facilities on one site. Why would farmers pay for fertilizer distribution on one site, and someone else’s grain handling facility at another site?”
Producers have shown overwhelming support for a farmer acquisition of the CWB and have been keenly interested, especially since they learned the successful buyer will assume ownership of CWB assets in addition to keeping the capital raised for the purchase to build grain handling infrastructure for the new company.
“The CWB’s behaviour is puzzling,” says Mr. Mann. “First, they reject an offer by farmers that would have facilitated farmer delivery loyalty through deferred delivery commitments to ensure volume for financial sustainability. Then, when the dust settles after majority ownership acquisition by another company, potentially foreign, they will expect farmers to come back and deliver to the CWB anyway.”
The tendering process for the CWB was confirmed in an October 17 online article for The Western Producer, which quotes Minister Ritz on the fact that a process is indeed underway.
“It appears that CWB management is not giving the Minister accurate briefings. We did not have eight to ten months to reach out to farmers,” says FNA spokesperson Bob Friesen. “Clearance on what we could say to farmers was not given to us by CWB management until the beginning of September. That gave farmers just over one month, during a very difficult harvest, to look at the opportunity and make a decision. Coupled with that challenge, we were given significant restrictions on how we were allowed to reach out to farmers, and what information we were able to give them.”
FNA’s quest for the CWB was to build a farmer-majority owned grain company with farmer ownership as high as 90 percent, depending on the strategic partner. The acquisition of the CWB was not pursued to resurrect the wheat board or for the sake of nostalgia. It was done purely for commercial reasons to build Genesis Grain & Fertilizer into a farmer owned, globally competitive grain company without reliance on government money, now or in the future.
“We are determined that farmers capitalize on opportunities provided by owning part of the value chain,” says Mr. Mann, “and FNA — as a farmers business alliance — is the only national organization with the ability to spend the time, energy and resources that have gone into this exercise.”
FNA goes on to say there is a lot of concern the Farmers Equity Plan as implemented by the CWB has very little known value. According to the CWB’s public disclosure document (see pdf link below), which was released when they implemented the plan: there can be no assurance of the value, if any, or an Eligible Producer’s interest in CWB at the time of privatization or thereafter.
FNA will continue consulting with farmers about their interest in the CWB and working with government, despite being told they are not in the running.
“If enough of us respond with sufficient dissatisfaction with the CWB position there is always a chance they will change their mind,” says Mann. “However, it is clear that if we are silent on who the majority owner should be, the final decision on a new majority owner, according to media reports, may imminently be made by the CWB. And it will not be farmers.”
“Thousands of farmers have told us they want us to pursue a solution to allow farmers to be involved in some capacity in the acquisition of the CWB. The opportunity cost for farmers is just too great for us to simply walk away,” explains Mann. “After the difficulties last year when farmers were held to ransom by grain companies — being offered discounted prices far below the true world price of their grain — farmers want to own part of the value chain to accrue grain company margins.”
“We call on Minister Ritz, within the spirit of ‘Farmers First’, to instruct CWB management to give farmers an equitable opportunity to acquire the CWB, allowing them to hit the ground running in building a farmer owned grain company.” says Mann.
Farmers of North America is a member based farm business alliance with the single mission of “Maximizing Farm Profitability.”
SOURCE Farmers of North America
PDF available at: http://stream1.newswire.ca/media/2014/10/27/20141027_C1143_PDF_EN_7149.pdf
For further information: Bob Friesen, VP Government Relations, Tel: (613) 230-2222, Cell: (613) 852-9711, firstname.lastname@example.org