CWB inks grain export deal ahead of looming privatization
CWB deal to bolster grain exports through East Coast, paves way to privatization
The former Canadian Wheat Board has reached a deal to bolster grain shipments through the East Coast in a move that will help pave the way toward its privatization.
CWB announced Tuesday that it will buy all issued and outstanding shares of Mission Terminal, Les Elevateurs des Trois-Rivieres, and Services Maritimes Laviolette from Upper Lakes Group Inc.
CEO Ian White said the purchase is a first step in securing the federal marketing agency a stronger position in the grain marketing supply chain.
"These acquisitions provide the starting point for a network of strategic grain-handling assets for CWB-marketed grain and they are another critical step in CWB's strategy to transition towards an operating model independent of the government," the agency said in a release.
The purchase price was not disclosed.
The CWB said the deal would be financed through a combination of retained earnings and commercial borrowings. The purchase is to be completed by Dec. 31.
A CWB official said no federal government money is involved.
Mission Terminals Inc. markets crops such as wheat, durum, barley, canola, rye, flax, peas and oats around the world.
It operates grain-handling facilities in Western Canada and Thunder Bay, Ont.
"The flexible, efficient handling and transportation operations of Mission Terminal will let CWB source grain directly from farmers and move it right on to the ships docked at the East Coast," White said.
The CWB said Les Elevateurs des Trois-Rivieres in Trois-Rivieres, Que., has loading and storage facilities than can handle 110,000 tonnes of grain per year.
Services Maritimes Laviolette is also in Trois-Rivieres and offers ship-loading services.
Dayna Spiring, the CWB's chief strategy officer, said the deal is the first part of a plan to have grain-handling facilities across Canada.
She said the CWB ships about 30 per cent of the grain it deals with through the East Coast to customers around the world.
More acquisitions in other parts of the country are to follow.
"We are looking at a bunch of other opportunities right now," she said from Winnipeg. "We are looking at a network across Western Canada."
The federal government passed a law in 2011 that stripped the Canadian Wheat Board last year of its monopoly on western wheat and barley sales.
Farmers can still market their grain through the board, but now it is a voluntary decision.
The CWB has not said when it will be privatized.
Under federal law, the CWB is to present a plan for privatization to the government by 2016. The plan is to be completed no later than 2017.
The CWB has said it wants to fast-track privatization and beat that deadline.
"We are moving along and the Mission announcement today is the first step on that pathway to get ourselves in a position to privatize," she said.