Glencore bid for Viterra 'not that big of change' for farmers, small food companies
The future landscape for Canadian
grain producers and small food companies will virtually be unchanged, an
agricultural economics professor said of the $6.1-billion bid by Glencore
International PLC to purchase Viterra Inc.
Farmers will no longer have the option of purchasing input products such as seeds and fertilizers, and selling their grains from the same company, Richard Gray said but "it's not that big of a change in what farmers do."
If Tuesday's deal is approved by shareholders and passes regulatory reviews, Canada's largest grainhandler will be purchased by the Swiss conglomerate for $16.25 per share in conjunction with Canadian-owned Agrium and Richardson International.
Agrium will acquire the bulk of Viterra's retail business for $1.8-billion while Richardson will purchase 23 per cent of Viterra's Canadian grain handling assets for $800-million.
On the food company side, Gray said the deal should be viewed as non-threatening by small and mid-sized groups.
Richardson International has moved into the canola processing market with the construction of a plant near Yorkton, Sask. so "this is more of a move from a mid-size plant," Gray said.
He added that Viterra was arguably a larger firm to begin with so he doesn't foresee any changes in the industry.
"We don't know what the details of the arrangement are but there's nothing in the big print that is of particular concern."
From a historical trend perspective, however, the Glencore bid does not bode well for local farmers, said a local activist.
"If you look at the entire food chain, farmers have basically lost money over the last 30 years since the beginning of privatization. You see corporations making a lot of money off of these (deals) and they're almost always the beneficiaries," said Peter Garden, owner of Turning the Tide Bookstore.
Co-operatives are beneficial for the local economy because control lies in the hands of the community and therefore the interests of the local people are served, Garden said.
"Some individual farmers might benefit from the Viterra deal but farmers as a whole won't benefit."
Glencore, however, has assured the bid will deliver significant overall benefits to grain farmers
"The transaction will give farmers access to Glencore's unparalled global distribution channels and increase their ability to export their product into international grain and oilseed market. Glencore's global reach and expertise will provide farmers with strong protection from market volatility, more options to market their grain and oilseeds and more competitive pricing resulting from Glencore's wider market access," the publicly traded commodity supplier said in a press release.
Viterra shareholders will be asked to vote on the bid in May. The acquisition is expected to close during Viterra's fiscal third quarter.
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