In the coming weeks those watching the agricultural scene in Canada – farmers and transnational shareholders alike — will hear whether or not the Canadian government will allow the merger of Bunge Limited and Viterra Limited -The Agriculture Network, owned by Glencore.
You may recall reading my rabble.ca columns about the privatization of the Prairie Wheat Pools and the creation of Viterra, the dismantling of the Canadian Wheat Board, and the transfer of once publicly owned, farmer-led agencies, to corporate giants.
As we sit having lunch, we might want to ponder on the continued vertical integration of agricultural transnationals such as Bunge and Viterra, and the impact of such profit-seeking ventures on our farmers, our economy, and the food chain here at home and internationally.
In June of last year, Glencore, the owner of several companies, including Viterra, announced that it welcomed the proposed merger between Bunge Limited and Viterra Limited, a coupling that would include billions in dollars and Bunge shares for Glencore.
As is, the global agricultural commodity traders are down to four majors: Cargill; Archer-Daniels Midland; Louis Dreyfuss; and Bunge. If the Bunge-Viterra merger is approved, this merger would create a $25 billion dollar behemoth in agricultural commodity trading circles and restructure the grain buying and transportation sector in Canada, with Bunge over-riding competitors such as Cargill.
While Bunge had been hoping to finalize the merger by June of 2024, given the potential impact of this merger on several national economies, the regulatory authorities have been deliberating on whether or not to approve this “transaction”. As is, Canada, China, and the European Union, have had their anti-trust agencies digging through the intricacies to determine potential future impacts of Bunge’s proposed purchase in each country. The consequences of this merger go well beyond the territory of Canada.
If the merger is allowed in Canada the ramifications of an already highly concentrated industry, particularly in purchase, storage and transportation of grains in western Canada, but also in other agricultural sectors, will be far-reaching. While Transport Canada is particularly concerned with issues revolving around the transportation of grains both inland and at port, there are also several other sectors that could be negatively affected.
How would additional corporate concentration affect the price of grains and transportation for Canadian farmers? The evidence is mounting…
In April, Canada’s Competition Bureau provided its report to the Minister of Transport, outlining several areas where competition would be hindered because of the merger between Bunge and Viterra. The summary of the report notes, in particular, that canola sales, oilseed crushing facilities, and storage and transportation facilities could all be affected. The report states that the merger “…is likely to result in substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada”.
Since the merger involves port facilities the federal Minister of Transport must also review the proposed merger and make a recommendation. From there, the federal Cabinet must approve the merger, approve it with conditions, or deny it.
While valid, the concerns over transportation are just the tip of the iceberg. When you look at each of the primary websites of the transnationals involved in this purchase, you get an idea of the web of corporate control, both here and internationally: review Bunge; Viterra, which is owned by Glencore; and G3.
During the past year, the National Farmers Union (NFU) has been encouraging its membership to contact their Members of Parliament in an effort to halt the approval of the Bunge-Viterra merger. The NFU is urging the federal Cabinet to deny permission for the merger concluding that it is not possible to mitigate the negative impacts of this corporate fusion. In a statement on the issue, the NFU summarizes the issues, and points to the loss of key farmer-led organizations that have brought us to the point of an already overly concentrated agricultural trading sector.
Regarding Bunge, the NFU states:
“Bunge is incorporated in Switzerland, with headquarters in St. Louis, Missouri. It operates in 40 countries, with annual revenues over $USD 57 billion. It is the world’s largest oilseed processor, globally dominant in soybeans, canola and corn. In 2015 Bunge partnered with Saudi Agricultural and Livestock Investment Company (SALIC) to form G3 in order to take over the assets of the Canadian Wheat Board after its single desk authority was dismantled. G3 thus holds invaluable CWB business records detailing its sales with over 70 countries during its 77-year history.
And regarding Viterra the NFU states:
“Viterra was formed in 2007 when the former prairie Wheat Pool co-operatives controversially restructured as a private corporation. The company is now owned by the Canada Pension Plan Investment Board, the British Columbia Investment Management Corporation which invests for BC public sector pension plans, and Glencore, a multinational focused on mining. In 2009 Viterra purchased the assets of the former Australian Barley Board, in 2022 it acquired Gavilon, a US-based grain trader. It now operates in 38 countries with revenues of $USD 53 billion in 2023. It is dominant in wheat.”
What were once organizations that were created and worked closely with family farmers — the three Prairie Wheat Pool cooperatives and the Canadian Wheat Board, the single selling desk for wheat and other grains destined for export — were privatized and transferred to transnationals trying to increase market share and profits. Now Bunge wants to buy Viterra, and through this corporate union continue mining dollars from the very community of western farmers whose pooled assets they were allowed to acquire!
Viterra, as noted, is owned by our very own Canada Pension Plan Investment Board (CPPIB), the managers of our public pension funds!! Through Glencore, the CPPIB, along with the BC Investment Management Corporation control Viterra along with several other mining and resource corporations. Our pension fund managers through Glencore have endorsed the merger, stating in a release that the billions paid for Viterra in shares and cash, is just fine by them, along with a likely minority shareholding in the merged entity which will no doubt help boost the share values in Glencore. No mention of any negative impacts on the agricultural and farm community economy by those speculating with our pension plan premiums and public pension moneys.
In March, authors from the University of Saskatchewan released a 36-page report commissioned by four agriculture organizations: APAS – The Agricultural Producers Association of Saskatchewan; SaskWheat; SaskBarley; and Alberta Grains.
Authors Gray, Nolan and Slade conclude in The Economic Impact of the Proposed Bunge-Viterra (BV) Merger on the Grain Sector in Western Canada: A Preliminary Assessment that the merger will see prairie farmers incomes reduced by $770 million annually. The merger could lead to a 15 per cent reduction in prices at grain elevators, and canola producers seeking to crush the oilseed would lose up to an additional $325 million a year. The merger will drastically reduce the options for selling grain in prairie communities. And then there is the impact on communities internationally, considering that Bunge and Viterra operate in more than 40 countries. These transnationals will be applying the same trade principles to farmers here, as in countries throughout South America, Asia, Africa, and Europe.
In its statement the NFU concludes:
“With its expanded footprint of country elevators, processing facilities and port facilities, the merged corporation would be able to increase its profits at the expense of farmers… A Bunge-Viterra merger would significantly harm farmers, undermine Canada’s food sovereignty, and transfer billions of dollars out of the Canadian economy over time. For these reasons we call upon Cabinet to deny approval of this harmful merger.”
Still no word from our federal Cabinet, but the wait is on…
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