Conditions attached to the federal government’s approval of the Bunge-Viterra merger do not go nearly far enough to address the deal’s ‘profound’ impact on market competition, says the Grain Growers of Canada (GGC).
“This is a missed opportunity to protect competition in Canada’s grain sector and prioritize the interests of producers who grow the food that Canada and the world rely on,” said Kyle Larkin, Executive Director of GGC. “We are urging the government to revisit these conditions, strengthen measures to foster competition, and take meaningful steps to support Canada’s grain farmers.”
As part of its approval of the $8.2-billion merger between agribusinesses Bunge and Viterra on Tuesday, the government set out several conditions, including that strict and legally binding controls are needed on U.S.-based Bunge’s minority ownership stake in G3 Global Holdings – a major competitor to Viterra - to ensure it can’t influence that company’s pricing or investment decisions.
Ottawa further said Bunge must divest itself of six grain elevators in Western Canada, which will “maintain competitive options for farmers in the region.”
Other conditions of the deal include a price protection program for certain purchasers of canola oil in Central and Atlantic Canada to safeguard fair pricing and market stability; retaining Viterra’s head office in Regina for at least five years to protect Canadian jobs; and a binding commitment from Bunge to invest at least $520 million in Canada within the next five years.
Larkin called the divestment of six grain elevators a ‘token gesture’ in the face of a company that maintains a 25% stake in G3, greatly reducing competition across the Prairies and in Quebec.
A study undertaken by the University of Saskatchewan on the proposed merger last year raised concern about the level of market concentration on grain export services at the port of Vancouver, B.C., the canola crushing sector, and competition at primary elevators. The university report calculated a $770 million loss in revenues for grain farmers annually.
Larkin said the government’s conditions would do little to offset those estimated farmer losses.
Additional concerns raised by GGC include the market concentration of grain terminals at ports in Quebec and the implications of the merger on Viterra’s announced canola crushing facility in Regina.
In its own statement Wednesday, the Agricultural Producers Association of Saskatchewan acknowledged Ottawa’s efforts in trying to blunt the potential negative impacts of the merger for farmers, but said only time and a close monitoring of the situation will really tell the tale.
"The government's decision has begun to address critical issues we've raised, particularly around the need for enhanced competitiveness and sustainability for farmers,” said APAS President Bill Prybylski. “However, achieving real progress requires these policies to move beyond initial promises towards practical and impactful outcomes."
