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FEATURE
lesser extent Dreyfus, they have not had extensive
ownership of grain-handling facilities in the
GHTS so, they will now have to secure Canadian
wheat through either a trading relationship
with a Canadian supplier (necessarily one that is
not a competitive threat internationally), or, the
acquisition of a direct source of supply.
Trading relationships are not unheard of, though the
majors have previously shown a strong tendency
towards acquisition of direct supply. Following the
deregulation of the Australian industry in 2008 (which
had a wheat board – the AWB – very similar to the
CWB) the bulk of the marketing business was taken
over by multinationals, including Bunge, Cargill and
Swiss-based Glencore International PLC (a mining
giant with 2011 revenues of $182bn that is seeking to
expand its footprint in the global grain trade).
The world’s grain and oilseed trade is dominated
by a tiny handful of huge multinationals, the four
biggest of which have recently been estimated to
control 90 percent of that trade. The so-called “ABCD”
companies are: Cargill, $119.5bn in revenues in
2011 and operating in 66 countries; ADM, $80.7bn
in 75 countries; Louis Dreyfus, $59.6bn in 55; and
Bunge, $58.7bn in 40 1. Far and away the biggest
Canadian company, Viterra, Inc. (with 91 elevators
across the Prairies and port access on both coasts),
had revenues of $11.8bn CAD in 2011 and operated
in four countries outside of Canada. The next tier of
Canadian companies, Richardson/Pioneer, Paterson
Global Foods and Parish & Heimbecker are all
privately held, family businesses. Their revenues are
not published. Although two of them have small
trading offices in fewer than a half-dozen other
countries, none of them has any foreign operations.
The remaining companies are almost all one- or twofacility
entities with only a local reach.
Building assets to source grain isn’t likely; the Prairie
GHTS already has excess handling capacity and the
construction of port facilities is cost-prohibitive. That
leaves buying existing companies as the most likely
option. The moves in Canada have already begun. In
March of this year Glencore commenced a takeover
bid of Viterra. Federal regulators approved the deal
in July. According to the Financial Times, that is
not the end of the restructuring of the global grain
trade. 2 Although to date the current generation of
Canadian owners has expressed no interest in selling,
policy-makers and others involved in, or affected
by this industry must accept the prospect that this
may change. If it does, there could be significant
implications for the Prairies generally and for the
communities that would experience the loss of head
offices in particular. It is highly unlikely – as evidenced
by the recent federal approval of the Glencore/Viterra
deal that the government would intervene to prevent
foreign acquisition of Canadian grain companies.
What else can or should be done to prepare
for the possibility?
The world needs Canadian wheat. Until August 1 st
of this year the major grain traders sourced all of
their Canadian wheat through the CWB. For various
business reasons, other than Cargill and to a much
1 All amounts are in U.S. dollars and all are renue estimates for 2011
2 March 30, 2012, Financial Times, “Grain traders set for wave of
takeovers”.