Figuring Out FNA's Proposal to Acquire CWB

Farmers of North America is urgently seeking farmers willing to invest in acquiring a majority stake in CWB (formerly the Canadian Wheat Board.) The “farmer business alliance” has hosted dozens of farmer meetings across Western Canada over the last few weeks — right in the middle of harvest for most potential investors.

While the plans that are being presented to farmers in-person at these meetings include a fair amount of detail regarding CWB and how it could fit into FNA’s proposal, confidentiality obligations are limiting the amount of information reaching farmers who are unable to attend. FNA’s advertisements speak of an opportunity to invest in a farmer-owned grain company, but they do not refer to CWB, and project spokesperson Bob Friesen is avoiding references to the wheat board in media interviews.

After attending one of these meetings in Morden, Manitoba this week, here are a few of the main points in FNA’s pitch to start a grain company:

1.) FNA wants to start a farmer-owned grain, fertilizer and crop input company called “Genesis Grain and Fertilizer.” This company would build or acquire a network of “super centres” across Western Canada. This distribution network would complement the ProjectN nitrogen fertilizer plant that FNA plans to build at Belle Plain, Saskatchewan.

2.) They don’t specifically refer to it in media ads or in interviews with reporters, but acquiring CWB with its grain handling and port facilities is a key part of the Genesis plan. If they fail to acquire “existing assets,” Friesen says they still intend to go ahead with starting a farmer-owned grain company. CWB owns port capacity through the Thunder Bay and St. Lawrence shipping corridor, but FNA is telling farmers it is also working on acquiring West Coast port capacity.

3.) It’s implied by FNA that the timeline is tight for making an offer to acquire CWB. Friesen says they realize fall is the worst time of year for asking farmers to attend meetings, but circumstances beyond their control meant they could not wait until the end of the year. The legislated deadline for CWB’s privatization is in 2017.

4.) They’re aiming to raise $380 million from farmers, which would be used to make an offer for CWB and its assets. A minimum of $20 million would be enough to start construction of fertilizer distribution centres. Details on how farmers can invest, which would include options to deliver grain against promissory notes and to acquire equity in exchange for deferred delivery contracts, will be outlined in the offering memorandum, which FNA says will be distributed to prospective investors in the near future.

5.) The sale of CWB and its assets will not be a typical business transaction, according to FNA; the seller will accept an offer on the condition that the bid amount will be reinvested in the business in Canada. FNA is telling farmers that means the value of CWB’s assets would be added to the investment made by farmer investors.

Here’s an interview with FNA project spokesperson Bob Friesen discussing plans for Genesis Grain and Fertilizer, including whether this would be a new version of the old wheat pools, where the expertise for running a grain company will come from and why they’re operating on a tight timelines:

Or listen to audio-only:

Related: FNA Pursuing a Majority Stake in CWB

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