The proposed takeover of Regina-based Viterra by European conglomerate Glencore has some positive aspects — but it could mean bad news for Saskatchewan farmers who buy fertilizer, a report to the provincial government says.

On Friday, the province received a 126-page report from Informa Economics, the company hired to look at whether the $6-billion deal would be good for Saskatchewan.

Glencore proposes buying all of Viterra's shares, then selling parts of the company to other Prairie agriculture-based firms.

Grain elevators to be sold

Under that part of the agreement, Winnipeg's Richardson International Ltd. would acquire 19 grain elevators as well as ownership in shipping facilities at Vancouver and Thunder Bay.

'One potentially significant negative effect on farmers from the transactions would occur if Agrium attempted to use the market power associated with its vertically integrated status to raise prices of crop nutrients.'—Informa Economics report

Meanwhile, Agrium, a Calgary-based fertilizer company, would get most of Viterra's network of retail fertilizer stores and some other properties.  It's this aspect of the deal that appears to concern Informa Economics most.

"One potentially significant negative effect on farmers from the transactions would occur if Agrium attempted to use the market power associated with its vertically integrated status to raise prices of crop nutrients, particularly nitrogen fertilizer," the report says.

Head office jobs discussed

The report discusses a number of pros and cons associated with the buyout, and on several fronts, it says the news is good.

It notes that many Viterra head office jobs have been transferred to Calgary in recent years, but Glencore says it will transfer jobs back to Regina and make the city the headquarters of its North American operations.

It also points out that Glencore doesn't currently have any agricultural assets in Canada, so by buying Viterra's properties, the ownership will be changed but it won't affect competition in grain-handling.

To sweeten the pot, Glencore says it plans to increase capital expenditures for five years by $100 million over and above what Viterra had been planning.

Glencore happy with report

In  a news release, Glencore didn't mention the fertilizer issue, but indicated it's generally pleased with the report.

It said it particularly liked one section that suggested the changes will give farmers better access to global markets in a post-Canadian Wheat Board world.

The province wanted the report so it can advise Ottawa whether or not the deal is in Saskatchewan's interests and should be approved under the Investment Canada Act.

Agriculture minister weighs in

Saskatchewan Agriculture Minister Bob Bjornerud, who referenced concerns about the fertilizer changes in the legislature this week, said the report highlights both positive and negative aspects of the deal.  

"If the federal government approves this acquisition, we would want to see conditions put in place to hold Glencore to its commitments and address the concerns raised in this report," Bjornerud said in a news release.

Viterra, Canada's biggest grain-handling company, has a long history in the province, with roots as the farmer-owned co-operative known as the Saskatchewan Wheat Pool.