Canada has some conditions, but the aquisition deal between Viterra and Bunge has been greenlit, and Canadian agriculture has a lot to say about the controversial merger.
The approval of the deal was announced Jan. 14.
Why it matters: The deal has sparked concern from agriculture groups citing the shrinking competitive landscape between grain companies in Canada.
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The acquisition of Regina-based Viterra by global agri-business giant Bunge has been in the works for months and has been met with concerns from the industry.
Farm groups ranging from the Grain Growers of Canada to the National Farmers Union have voiced worries on the long-term harm of the deal on grain market competition.
After the acquisition was first proposed in 2023, researchers at the University of Saskatchewan were tapped for a study examining the potential impacts on the Canadian grain industry. The subsequent report highlighted several issues that echoed the concerns of industry.
“We are particularly concerned about the potential for escalated costs and diminished profits for farmers, which would jeopardize their livelihoods, devastate rural communities and erode the sustainability of Canadian agriculture,” then-president of the Agricultural Producers of Saskatchewan, Ian Boxall, said at the time.
Boxell’s organization was among the farm groups who had asked university researchers to look into the issue, along with Alberta Grains, the Saskatchewan Barley Development Commission and the Saskatchewan Wheat Development Commission.
Farm groups further pointed to a seperate report, put out by the Competition Bureau of Canada around the same time, which noted ““substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada.”
University of Saskatchewan researchers also estimated that the merger would cost Canadian grain producers $770 million annually in revenue loss due to the increased lack of competition in the market.
Bunge CEO Gregory Heckman published an op-ed shortly after the university’s report was released, denying the projected revenue loss and asserting that the move would be a positive one for the Canadian grain industry.
Heckman said Bunge will, “continue to buy the same crops as we do today and help Canadian farmers export more of their products to more places around the world, keeping Canada at the forefront of a competitive agricultural industry where success is increasingly defined by global reach.”
Conditions not enough?
In order for the deal to go through, Canada will require Bunge to divest itself of six western Canadian grain elevators, invest at least $520 million in Canada in the next five years and retain Viterra’s head office in Regina for at least five years, among other conditions.
Those aren’t enough to satisfy farm groups criticizing the deal.
“With the lack of existing competition within the grain handling industry, further consolidation through this merger will only harm producers,” said Saskatchewan Wheat Development Commission (Sask Wheat) board chair Jake Leguee in a press release.
“The conditions around the approval of the merger fail to address concerns regarding competition and consolidation of grain-handling industry that producers and researchers have raised repeatedly to the government.”
Much of the concern stems from Bunge’s minority ownership stake in G3 which, along with the acquisition of Viterra’s assets, would give Bunge control of nearly half of the export capacity at the Port of Vancouver.
The nation’s largest port is a critical hub for the grain industry, with about 70 per cent of Canada’s grain exports moving through Vancouver each year.
A statement from Saskatchewan NDP leader and agriculture and rural affairs shadow minister Carla Beck emphasized her disappointment in the announcement of the federal government approval.
“We’ve been clear since day one that this deal is bad for Saskatchewan. This large consolidation puts head office jobs, agriculture and value-added jobs across Saskatchewan and canola crush projects all at risk, and our world-class producers are going to take a hit on their incomes,” she said. “The federal and provincial governments should not have rolled over and let this anti-competitive merger go through.”
Grain Growers of Canada (GGC) also expressed frustration over the approval, calling on the federal government to impose more strict conditions on the transaction to further safeguard farmers.
“This is a missed opportunity to protect competition in Canada’s grain sector and prioritize the interests of producers who grow the food that Canada and the world rely on,” executive director Kyle Larkin said.
“We are urging the government to revisit these conditions, strengthen measures to foster competition, and take meaningful steps to support Canada’s grain farmers.”
Current APAS president Bill Prybylski said that, while he is cautiously optimistic that some producers’ concerns have been addressed with the conditions on the transaction, he believes more can be done to support farmers and ensure a competitive marketplace for Canadian producers.
“The government’s decision has begun to address critical issues we’ve raised, particularly around the need for enhanced competitiveness and sustainability for farmers. However, achieving real progress requires these policies to move beyond initial promises towards practical and impactful outcomes,” Prybylski said in a statement.
“While we acknowledge the government’s efforts in addressing the concerns raised by Saskatchewan farmers in its decision, it is essential that these conditions are more than just words on paper. Farmers need real action that translates into enhanced competitiveness and sustainability in the grain industry.”
Canadian Federation of Agriculture President Keith Currie also voiced his frustration on the matter, adding that Bunge retaining its stake in G3 raises eyebrows about fairness in the marketplace.
“We need to ensure that, at a minimum, the conditions set around this deal are being met. Our concerns from the beginning were that this deal would not be in the best interests of farmers and the fact that Bunge has maintained its minority ownership stake in G3 certainly furthers those concerns,” Currie said.
“Unfortunately, at the end of the day, it is the farmers who will pay.”
Approval from Ottawa was one of the final hurdles for Bunge to complete the deal, which is now expected to close sometime early in 2025.
