Canadian Agriculture Minister Gerry Ritz announced the deal with the multinational G3 Global Grain Group. The G3 are actually paying not one cent for the 50.1 per cent share they will get in the company.
|+ Add Image||1 of 2|
To get that share, the G3 Group must invest a total of $250 million. The G3 Group is a joint venture of Bunge Canada and SALIC Canada, the latter a subsidiary of the Saudi Agricultural and Livestock Investment Co.The other 49.9 percent of equity will be held in trust for seven years but the G3 has the option to buy back the trust units from farmers after seven years at their market value.Ritz claims the new Wheat Board will increase the ability of Canada to export grain, as well as creating jobs, and promoting economic growth on the prairies:Jan Slomp, NFU president noted:The Canadian Wheat Board(CWB) has a long history in Canada but was established as a marketing agency for prairie-produced wheat and barley on July 5, 1935. The Board was the sole buyer and marketer of wheat and barley, although barley was removed a few years ago. It is sometimes called a monopoly but the proper term would be a monopsony or single buyer. It is often called the single desk system. Many farmers believe the Wheat Board allowed them to get higher prices for their products than trying to bargain individually with huge grain companies. However, other farmers have claimed that they could get better prices bargaining themselves.From the moment the Conservatives took power in 2006, the agriculture minister Chuck Strahl was determined to end the Wheat Board monopsony. In December of 2006 Strahl fired Adrian Measner. president of the Board, because of his vigorous defense of the the Board's monopsony.Some of the bitter history of the struggle can be found here and also here. A plebiscite taken by the Board showed that a majority of farmers supported the monopsony power or single desk selling. The CWB's monopsony was ended on August 1, 2012, as a result of the passage of Bill C-18, the Marketing Freedom for Grain Farmer's Act. While the CWB still functioned as a voluntary marketing organization, the bill also set a timeline for eventual privatization that has now been achieved ahead of schedule.The government touts 49.9 percent of the company as a "Farmers Trust." The farmers will be allocated $5 per tonne of grain they deliver up to $250 million or a period of seven years. After that G3 can buy them out. The Trust will be operated by a three-member appointed board, one of whom can serve on the company board as well. The farmer's equity will not be in shares but in "units" in the trust fund. Not only will farmers have no control of this equity, the equity will give them no control in the company. NFU board member Doug Scott from Alberta said:Last year a bid to buy the CWB by a farmer-owned group was rejected by the CWB. Of course Harper does not see any role for farmers in owning and controlling a marketing agency, that is for global traders and Saudi sovereign wealth funds. The main role of farmers is to faithfully vote for Conservatives, as most usually do.
"Every relevant farm group across Canada supports this move. We see this as a great first step moving forward. We look forward to having another viable competitor."Farm groups opposed to the government action, such as the National Farmer's Union(NFU), are apparently just not relevant.
"The CWB’s physical assets, its commercial relationships, and its good name have all been given away. The “buyers” of the CWB actually get to keep the $250 million pittance they are “paying” for it. Bunge’s 2014 sales totalled $58 billion and multi-billion dollar SALIC is a subsidiary of the Saudi sovereign wealth fund, PIF.”An NFU board member from the province of Manitoba, Ian Robson, said the deal was brokered in total secrecy and wondered about the financial accountability of the government. Robson discusses the benefits of the Wheat Board in this article After dismantling what is called the single desk selling feature of the Wheat Board, which gave it monopsonic power, the government has refused to release complete financial statements on the Wheat Board.
“This $250 million “Farmer Trust” 49.9 percent equity gimmick is an insult. Since they destroyed the single desk, farmers have lost more than $7 billion dollars in less than 3 years. We had an elected Board of Directors at the CWB that managed the business in our interests and earned premium prices in the world market for all western grain farmers, year after year. Now, the Bunge-Saudi partnership plans to bribe us with our money just to get us to do business with them.”Stomp also noted that at the very least $170 million in public funds were transferred to the CWB for the sole purpose of promoting its privatization. The result is that the Canadian Wheat Board is now majority owned by Bunge, an American-based multinational grain dealer and SALIC, a subsidiary of the Saudi Arabian sovereign wealth fund.