Bunge CEO: Bunge-Viterra merger is a good deal for Canada

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Opinion

This op-ed was submitted to RealAgriculture by Gregory Heckman, CEO of Bunge

Prairie farmers, stakeholders and communities – the teams from Bunge and Viterra have met with many of you directly or through your industry associations in recent months. We’ve listened to your concerns and have answered your questions about what the complementary combination of Bunge and Viterra will mean for you. You want to know about the future combined organization’s commitments to Canadian farmers and workers. And you want to know how and why this deal would be a good thing for Canada.

I want you to hear the answers directly from me.

The new company will be committed to Canadian workers and the transaction will not result in the closure of any Bunge or Viterra facilities in Canada. That commitment means we are keeping our important office presence in Regina and will continue to employ thousands of Canadians with well-paying jobs across the country. In keeping with this commitment, we’ve announced that current Viterra North America CEO Kyle Jeworski will lead the combined company’s Canadian operations and will remain in Regina. Kyle has a deep connection to Canadian farmers, a proven track record of leading great teams and history of working closely with Canadian producers and communities.

Simply put, this combination represents a major, multi-billion-dollar investment in the future of Saskatchewan, and Canada, and their rightful place in the global agricultural industry.

We disagree with the findings of a March 27 report from three academics at the University of Saskatchewan. They acknowledge their work is based on assumptions and incomplete data, which they refuse to share. Using that flawed foundation, the report makes numerous unfounded and erroneous economic claims about the supposed negative impact of the proposed transaction.

For example, the authors state: “the model is used to simulate the Bunge-Viterra merger by assuming that the merged enterprise (BV) will operate the G3 (Bunge) and Viterra grain export elevator capacities as a single firm. The latter requires a minor behavioural assumption.”

This “minor behavioural assumption” is foundational to the report’s conclusions – and it is objectively false. It would violate G3s fiduciary obligations to its shareholders and likely violate Canadian competition law. It simply doesn’t make sense, and it’s plain wrong.

The truth is, G3 and Viterra are competitors today and G3 will be a strong competitor to a combined Bunge-Viterra after the merger.

The combination of Bunge and Viterra will compete with dozens of grain handling companies that operate hundreds of elevators and numerous terminals in western and eastern Canada. We’ll continue to buy the same crops as we do today and help Canadian farmers export more of their products to more places around the world, keeping Canada at the forefront of a competitive agricultural industry where success is increasingly defined by global reach. We’ll provide Canadian producers with more certainty and economic security by increasing resilience to supply chain disruptions.

We are working closely with the Canadian government authorities, who are examining this transaction as part of their regular and rigorous review process, to address any concerns and to highlight the benefits that Saskatchewan and Canada will gain from the combined company.

As for the University of Saskatchewan academics’ report, it flies in the face of both history and market reality, where we are now seeing unprecedented growth in canola demand. It appears to place no faith in the competitive ability and dynamism of Western Canada’s farm producers and the grain handling and processing sectors.

The history speaks for itself. In 2007, Viterra was created, and Saskatchewan’s GDP increased nearly $3.2B the next year, with agricultural GDP increasing by over $1.3B. In 2012, Glencore acquired Viterra, and the following year Saskatchewan’s GDP increased by over $4.4B, with agricultural GDP rising by nearly $2.2B. Since 2007, farm crop receipts in Saskatchewan have increased by over 228%. We can debate the trends of a globalizing agricultural market, but Saskatchewan, and Canada, are clearly in position to thrive.

A combined Bunge and Viterra will only fuel this growth. We can’t wait to get started.

Related: Bunge-Viterra deal expected to require approval in more than 25 countries

 

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