Farmer Equity and G3’s CWB: Questions About Farmer Ownership Remain

Western Canadian farm groups are generally welcoming the increased competition that should result from turning the (incapacitated?) Canadian Wheat Board into a private grain company controlled by Bunge and a Saudi investment company, but producer groups are still seeking answers about the farmer ownership part of the deal.

The agreement announced this week will see farmers owning 49.9 percent of the equity in CWB for a minimum of seven years, or until the equity for that minority position has been fully allocated to producers.

As part of CWB’s Farmer Equity Plan introduced in 2013, farmers can receive $5 in equity for each tonne of grain they sell through CWB. With the G3 joint venture between Bunge and the Saudi Agricultural and Livestock Investment Corp. (SALIC) paying $250 million for a 50.1 percent stake in CWB, the total equity pool available to producers when the deal is closed will be worth just under $250 million. This farmer equity will be managed through a farmers’ trust, overseen by three independent trustees appointed by CWB.

Who is G3 and What are Their Plans for the CWB?

From a competition standpoint, until now, Bunge has primarily been involved in the canola market in the west, so this deal turns the global agribusiness into another buyer of cereal crops grown on the prairies. An investment of $250 million in the Western Canadian grain industry is also positive, notes Dan Mazier, president of Keystone Agricultural Producers in the video below.

“All the baggage aside, we have a new company that has built new state-of-the-art facilities and they want to do business with Canadian farmers — is that a bad thing?” asks Mazier in the video below. “That money could have been kissed away when the single desk was absolved.”

However, there’s still some uncertainty surrounding the Farmer Equity Plan and the clause that gives CWB the ability to buy out farmer equity in the future. What will this equity be worth? How will its value be determined? Can it be traded? How and when can farmers unlock this value? What if a farmer retires or dies before the buy-out option kicks in? These are some of the questions being raised.

Norm Hall, president of Agricultural Producers Association of Saskatchewan, echoes these concerns. “For a farmer who is, say, 30 right now — what if they don’t want to be bought out in seven years? What happens to those farmers who want to continue to take part in the upside?” he says.

The three trustees appointed by CWB will come up with answers to some of these questions, as CWB says the policies and procedures of the trust will be determined by the trustees once they are appointed.

“Whether farmers have the ability to trade their units or dispose of their units will be a decision made by the three independent trustees going forward,” noted Dayna Spiring, chief strategy officer and general counsel for CWB.



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