CWB privatization divides farmers
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.
It's been given away for a pittance to a foreign-controlled interest- Matt Gehl, 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.