Farmers of North America (FNA) says with harvest delays it needs another six to eight weeks to pitch its plan for farmers to buy CWB from the federal government.
But FNA president and CEO James Mann fears CWB will be sold first — probably to a foreign multinational grain company.
“I would say I don’t have high hopes currently, but we’re definitely doing everything we can to get farmers the time they need to look at this,” Mann told reporters during a teleconference Oct 16.
Agriculture Minister Gerry Ritz didn’t directly respond when asked if FNA will get more time.
“The CWB will assess all potential bidders and then submit a plan for commercialization to the government, in accordance with the legislation,” Ritz said in an email.
In April CWB president and CEO Ian White said CWB intends to provide a privatization plan to Ritz before the 2016 deadline, which also requires CWB to be privatized or wound down by 2017.
That means CWB’s sale is imminent, said Bob Friesen, FNA’s vice-president of government relations.
Ritz supports a farmer-owned CWB but the matter goes beyond Ritz’s office, Mann said.
“I think this is a deeper political question,” Mann said. “We’re not that far away from the election.”
FNA wants to create a new farmer-owned company called Genesis Grain and Fertilizer Limited Partnership to handle and market western grain and distribute fertilizer.
(FNA is also trying to create a $1.7-billion, farmer-owned nitrogen manufacturing plant at Belle Plaine, Sask.)
FNA is a privately owned company that describes itself as “a business alliance of farmers dedicated to maximizing farm profitability.” Farmers pay a fee for FNA services.
In its offering memorandum issued Oct. 10, FNA asks farmers to invest a minimum of $10,000 (10 units of $1,000 each) to establish Genesis, which will try to buy CWB’s assets.
Money stays with CWB?
Should the CWB purchase fail, FNA will continue to create Genesis if it raises at least $20 million. The maximum to be raised is $380 million.
If CWB isn’t purchased farmers can get their money back, said Derek Penner, chief financial officer of AgraCity, a privately held firm that supplies products to FNA customers.
Mann said western Canadian farmers have the money to buy CWB and is convinced they’ll do just that if they have time to consider the deal. It makes economic sense to handle grain and fertilizer at the same facilities, he said.
Moreover, whoever buys CWB gets the money back to reinvest in the company, Friesen said. That’s what federal officials told an unnamed farm organization, he said.
The Winnipeg Free Press quoted CWB’s chief strategy officer Dayna Spiring as saying much the same.
“The government wants a strong and viable CWB,” Spiring is quoted as saying. “That was its goal when it removed the monopoly. To take away assets or to take a purchase price away would not be consistent with the goal of a strong and viable CWB going forward.”
The wide price discounts grain farmers received last crop year relative to port prices were akin to “a great grain robbery,” Mann said.
“The only solution they (farmers) have to protect themselves from excess margins is to be involved in the business and capture those margins,” he said.
At more than 100 recent farmer meetings across the West 1,000 producers said they would invest almost $50 million in Genesis, although their pledges are not binding, Friesen said.
FNA first approached CWB in 2012 and has since sent a letter of intent demonstrating its serious, he said.
CWB was created Aug. 1, 2012 after the federal government ended the Canadian Wheat Board’s monopoly. CWB has never made its financial report public, despite operating for two crop years.
When asked if FNA has seen CWB’s books Penner replied: “Based on our best estimates, using publicly available information, we put the value of those (CWB) assets at between $250 million and $300 million.”
FNA and AgraCity have put up the capital to kick-start Genesis. To recover its costs FNA will own shares in Genesis, Mann said.
“The first portion is to cover costs, the second portion is to a subordinated position to farmers having received their capital back in the project,” he said.
Other strategic partners, including grain customers, are also being sought, he said.
The company is being set up so farmers retain ownership, he added.
“They (farmers) do not want to see a situation like SaskWheat Pool where their shares were available to be picked up by other entities that aren’t farmers and as a result lose their ownership interests,” Mann said.
If as few as 3,000 farmers commit to delivering 1,000 tonnes each for a total of three million tonnes, Genesis can succeed, but the goal is to handle 20 per cent of Western Canada’s grain or five million to seven million tonnes a year, Friesen said.
Work has started on West Coast port access for the company, he added.
“We’re not proposing to resurrect the wheat board,” Friesen said. “We’re not proposing to buy the CWB for nostalgic or ideological reasons. We’re proposing that the farmer buy the CWB’s assets purely for commercial reasons…”
CWB assets include its Winnipeg office building, around 3,300 hopper cars and two new lake freighters, port terminals at Thunder Bay and Trois-Rivières and a small elevator at Alexander, Manitoba, acquired when it purchased Mission Terminal.
CWB has also purchased Great Sand Hills Terminal and Prairie West Terminal, both in Saskatchewan and is building new concrete elevators at Bloom and Ste. Agathe, Man. and Colonsay and Pasqua, Sask.