Farmers of North America is asking the federal government to hold off on privatizing the Canadian Wheat Board to give the Saskatoon-based farmer business alliance more time to pitch its plan for turning CWB into a farmer-owned grain company.
FNA has held over 100 farmer meetings across Western Canada over the last month asking farmers whether they would invest in a new company known as “Genesis Grain and Fertilizer.” If sufficient funds are raised, this company would try to acquire a majority stake in CWB as it privatizes.
Although the federal deadline for privatization is only in 2017, FNA is concerned a foreign multinational grain company could acquire CWB much sooner, possibly in the next few months. That’s why FNA’s president James Mann was in Ottawa this week asking decision-makers to give farmers time after harvest to consider FNA’s plan.
“We believe that farmers, once they’re out of the field and have their fall work done, that six weeks to two months would be adequate to review the opportunity and make a decision,” said Mann on Thursday. “I’ve been trying to persuade government that that is not an unreasonable request.”
“I am very deeply concerned that a decision may be made prior to farmers having the time to make a decision,” he added. “I’m pulling out all the stops, because at the end of the day, this process needs to have farmers having the time to make that decision.”
A spokesperson for the federal agriculture minister would not confirm whether Mann or FNA representatives have met with the minister. When asked to comment on FNA’s proposal, a written reply from the minister did not refer specifically to FNA’s bid.
“The CWB will assess all potential bidders and then submit a plan for commercialization to the government, in accordance with the legislation,” said Gerry Ritz.
FNA believes CWB is worth between $250 million and $300 million. The offering memorandum sent to potential investors aims to raise between $20 million and $380 million.
“If we have time to talk to farmers about it, we are quite confident that we can raise the level of capital that we need,” said FNA vice-president and main spokesperson Bob Friesen on Thursday.
If FNA’s bid for CWB is unsuccessful, the funds (a minimum of $20 million) would be used to start a fertilizer distribution network to complement FNA’s plan for a nitrogen fertilizer plant at Belle Plaine, Saskatchewan.
“We are planning to build a world-class farmer-owned grain handling, marketing and input business. We’re moving ahead with that. We want to be able to acquire the CWB assets to hit the ground running,” said Friesen, noting farmers would have an opportunity to reconsider their investment if plans to acquire CWB fall through. “If we are unsuccessful, that results in a material change in the offering memorandum, so there is a rescission component in the OM that allows farmers to make a decision whether they want to keep their money in.”
In addition to farmers who invest in the project, FNA and its subsidiary AgraCity are also injecting equity into Genesis Grain and Fertilizer.
“We are taking a fairly minor position to start with to cover the costs. Over time, after farmers have received a return of their capital, you would see a subordinated position being added to that,” said Mann.