Last week grain handling company Viterra apparently became the focus of a takeover bid. This triggered an early Friday morning suspension of trading in its shares and a later share price jump of around 25%. Earlier in the week Ritz’s version of the Canadian Wheat Board announced it had signed a handling agreement with Cargill one of the largest grain companies in the world.
Many supporters of Minister Ritz’s attempts to wreck our Wheat Board have claimed the end of its single desk would result in more choices for farmers. Yet from the beginning supporters of the single desk Wheat Board pointed out these were statements of faith which ignored the reality of an international grain market owned and controlled by a few large companies.
Without our single desk Wheat Board, those who own the port terminals effectively control grain exports from Canada. Originally the major terminals were built and operated by the Federal Government as public utilities. Later they were sold to the cooperative grain handling companies owned by farmers. When those were sabotaged by the Government of Alberta in its pogrom against farmer-cooperatives, ownership went to private companies, with Cargill getting the second largest capacity terminal at Vancouver and Viterra taking over the largest, Saskatchewan Wheat Pool’s Cascadia terminal. Either one of these terminals have more storage capacity than the entire port of Prince Rupert.
Now that Cargill, with its strategic ownership of essential deep water terminal elevator space has the ability to broker the grain produced by Wheat Board permit book holders, those who spent so much time over the past two decades fending off just this type of change must be feeling vindicated in their predictions, if a little depressed.
The only remarkable thing about all this is that so many anti-Wheat Board types seem to think it heretical to observe that private companies are profit oriented and most of those profits come out of farmers’ pockets. The more dim-witted among them like to pretend, as a former American President liked to say, that private companies can “make the pie higher.” Unfortunately the grain marketing pie can only be divided up so many ways, and with these recent events, farmers will surely see their share get smaller. The only real questions are how quickly and how much?
As happened with the end of the Australian Wheat Board, in western Canada we can expect to see smaller companies like Viterra with strategic assets, taken over by larger firms. Friday’s stock market activity would indicate this is starting. The results for farmers will be just as predicted: fewer choices, much less market power, and lower prices as our position as a premium supplier of grain disappears with the single desk.
The CWB’s audits always showed it returned at least 98% of sales revenue back to farmers. Claiming farmers will see more money by inserting private companies, with their need for return on investment, executive bonuses and other costs, between the Wheat Board and our foreign customers is less than intelligent.
Minister Ritz and his vocal minority of supporters braying about the market working and efficiency ring hollow as we see the predicted consequences of ending the single desk borne out by these announcements. Apparently even arithmetic has escaped their notice.