Opinion
Bunge's takeover of Viterra is a done deal as of this week. While more than two years have passed since it was announced, there are still some big questions to be answered regarding the integration of the company with the most grain elevators in Canada into the company that owns the most oilseed crushing facilities in the country.
Grain companies — especially publicly-traded ones such as Bunge and Viterra — are traditionally tight-lipped when it comes to discussing internal business plans.
The newly-combined company has more than 37 thousand employees in over 50 countries, so integration will likely take a while. Answers may only come with time or from the market, but as the ink dries on the July 2nd marriage, here are some questions that come to mind:
- What's the status of Viterra's plan to build what would've been the world's largest canola crush plant in Regina, Sask.? No official word has been given to say the project is cancelled, but there's been no sign of progress on the facility that was supposed to boost domestic crush demand by 2.5 million tonnes annually.
- How well will the firewall between Bunge and G3 hold up, both in reality and perception? Farm groups wanted the Canadian government to force Bunge to divest its 25 per cent stake in G3, which has its own country elevators and port facilities that compete directly with Viterra's. Approval was granted on the condition a firewall be established to prevent Bunge from influencing G3's pricing or investment decisions. Much of whether this merger results in reduced competition at the farmgate hinges on this requirement.
- Who's going to buy the six elevators that Bunge/Viterra must sell? The Canadian government is requiring the sale of six grain elevators that purchase canola seed near Bunge's canola crush plants at Altona, Man. and Nipawin, Sask. (Altona vicinity — Viterra elevators at Fannystelle, Tucker, Beausejour, and Winnipeg “Coulter." Nipawin vicinity — Viterra elevator at Valparaiso and Bunge elevator at Dixon). The deadline for the sale of these assets is part of a confidential agreement with the federal transport minister and has not been announced publicly. Will a small to medium-sized grain company scoop up these somewhat older and smaller facilities? It's a tough market, so a new entrant seems unlikely, but not impossible.
- How will Bunge spend the $520 million the Canadian government says it must in the next five years? At least $500 million is to be spent on capital, such as port terminals and grain elevators, with $15 million going to not-for-profit or charitable causes, and another $5 million to be spent on regenerative agriculture programs.
- Will there be noticeable changes in the market for canola, especially in Manitoba, where Bunge now owns two crush plants within 75km of each other at Altona and Ste. Agathe?
- What happens to the Viterra name and brand? The merged company is operating as Bunge, but how quickly will they move on from the Viterra name that was established in the 2000s when the Saskatchewan Wheat Pool bought Agricore United? Some Viterra elevators have already made the switch to calling themselves Bunge as July 3.
- How will the merger affect industry organizations, such as Cereals Canada and the Canola Council of Canada? Corporate members have been reviewing their participation in these supply chain organizations, and that membership cost is under scrutiny. It's also one less entity for these associations to collect membership dues from.
- What's the long-term plan for Viterra's head office in Regina? The Canadian government is requiring Bunge retain the office with a head count of at least 200 for five years. There's a growing list of examples of multi-national corporations involved in Canadian agriculture moving their decision-making about the Canadian market to U.S. head offices, and that trend may apply in this case as well.
Of course this is a non-exhaustive list, so feel free to send other big questions you have about the deal this way — [email protected].
