Bunge’s proposed acquisition of Viterra could cost farmers more than $700 million a year, according to a new report authored by researchers at the University of Saskatchewan.
the study, conducted by Drs. Richard Gray, James Nolan, and Peter Slade received research support from Agricultural Producers Association of Saskatchewan (APAS), Alberta Grains, Sask Barley, and Sask Wheat.
Using several models, the authors examine the merger’s impact on three key areas: the export base due to concentration in the Port of Vancouver, canola prices as a result of crushing consolidation, and the overall impact on major elevator competition across Vancouver. We predicted the impact on Farmgate’s revenue. Grassland.
Bunge owns 25 per cent of G3’s stock, so the marriage with Viterra would give Bunge a stake in Vancouver’s export capacity of more than 40 per cent, the report said. The authors hypothesize that G3, which has Vancouver’s largest port facility, and Viterra, the port’s largest grain carrier, would operate as a single entity if the merger goes ahead. They say this would increase the export base through Vancouver by 15 per cent, or $7 to $8 per tonne, and reduce farm income in Western Canada by $570 million annually.
Regarding domestic competition for canola, the report states that consolidation of the canola crushing sector would increase canola crushing margins by 10 percent, significantly reducing Viterra’s incentive to build its planned canola crushing facility in Regina, Sask. . The merger simulations used in the report show that the average price of canola would fall by $8 to $10 per tonne, costing canola producers a total of $200 million to $250 million per year by 2025. I predict that.
The authors’ analysis of major elevators owned by Viterra and Bunge/G3 across the Prairies shows that two areas of Alberta, the area north of Lloydminster and the area between Red Deer and the Saskatchewan border, are among the largest in the country. This indicates that the number of grain buyers will go from two to just one. 100km. They estimate that a general reduction in elevator competition across the prairie would reduce farm gate prices by an average of $1 to $2 per ton, or about $75 million to $150 million annually.
South American university report gets a lot of attention Some of the findings of the Competition Bureau report A paper published last week specifically cited concerns about increased competition for canola.
“The results of both of these studies raise concerns about the impact the proposed merger would have on competition in the grain handling industry and, ultimately, the returns to farmers that growers expect. This confirms our concerns.”
“The proposed merger brings to the forefront concerns about market concentration and potential ramifications for grain producers,” added Tara Sawyer, chairman of Alberta Grains. “Competition in the grain sector will directly impact the concerns raised by producers regarding transparent, consistent and efficient delivery contracts and market information.”
In response to the University of South Carolina report on Tuesday, a Bunge spokesperson said the authors were “working with sparse data and making inferences about the relationship between how port terminals operate and their actions.” ” he said.
They state that the Competition Bureau has “certain competitive concerns regarding the purchase of grain, the operation of port terminals, the sale of meals, and the sale of most downstream refined and specialty oil products in eastern Canada and much of western Canada. It concluded that “does not exist.” ”
“This new report from the University of Saskatchewan does not change any of these facts,” a Bunge spokesperson said. “We look forward to continued collaboration with Transport Canada and Transport Canada to provide further information that addresses these points.”
Transport Minister Pablo Rodriguez and his ministries have until June 2 to complete a public interest review of the deal.
As of last week, Bunge and Vitella both said they still expected the deal to close by mid-2024.
Editor’s note: This article has been updated with comment from a Bunge spokesperson.
Related:
Competition Bureau finds ‘serious competition concerns’ in Bunge’s proposed acquisition of Viterra
