April 19, 2015

Saudi-Bunge Joint Venture Purchases Majority Interest in CWB

A state-owned Saudi Arabian company is joining U.S. grain trader Bunge Ltd to buy a majority stake in Canadian grain handler CWB for C$250 million ($201 million).

The joint venture of Bunge and Saudi Agricultural and Livestock Investment Co (SALIC), called G3 Global Grain Group, said on Wednesday it will buy a 50.1 percent stake in CWB. It said the minority interest will be held in trust for the benefit of Canadian farmers, and that G3 will be based in Winnipeg, Manitoba. The transaction is expected to close in July 2015.

Saudi Arabia began to scale back its domestic wheat-growing program in 2008, planning to rely completely on imports by 2016. SALIC was formed in 2011 by late Saudi King Abdullah to secure food supplies for the desert kingdom, mainly through mass production projects with other countries.

CWB, known as the Canadian Wheat Board until the government stripped it of its Western Canadian grain monopoly in 2012, has remained under the control of the federal government, which has been seeking a majority investor. CWB, meanwhile, has been attempting to reposition itself as an independent grain handler.

Canadian Agriculture Minister Gerry Ritz said the government has approved the deal, which he said would increase the country’s grain-exporting capacity.

CWB operates a network of seven grain elevators in Western Canada, along with port terminals in Thunder Bay, Ontario, and Trois Rivieres, Quebec. CWB is building four additional grain handling facilities in Bloom and St. Adolphe, Manitoba, and at Colonsay and Pasqua, Saskatchewan.

G3 said Bunge’s export terminal in Quebec City and four grain elevators in Quebec will be part of the transaction.

 

Courtesy of Reuters News

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Showdown Looming Between EPA And Congress

The House Transportation and Infrastructure Committee and Subcommittee on Water Resources and Environment Chairs introduced legislation this week to stop EPA from finalizing the clean water rule it sent to the Office of Management and Budget last week.

House Ag Chair Michael Conaway is an original sponsor of the bill. Conaway says the U.S. Supreme Court rebuked EPA twice for overstepping its bounds – but the Administration’s response was to double down. House Ag Ranking Member Collin Peterson says EPA’s proposed rule has the potential to regulate farmers and ranchers out of business – putting the entire rural economy in jeopardy.  Peterson says this new legislation is needed because EPA does not seem to grasp the real-world impact the rule would have on farmers and local communities.

EPA Administrator Gina McCarthy – however – says the agency will get the rule over the finish line – and the final rule will provide the clarity people want – ensuring not to overextend into agriculture.

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U.S. Grains Council Looks At Possibilities of Cuban Trade

The U.S. Grains Council recently traveled to Cuba. Council Director of Global Strategies Kurt Shultz says the first purpose of the trip was to prepare for a joint Council and National Corn Growers Association officer’s mission in June. The second was to look past the U.S.-Cuba trade embargo and determine what the Council can do to become engaged in the Cuban market to promote U.S. exports to Cuba and build future demand for U.S. coarse grains and co-products.

Currently – Shultz says the U.S. has about 20 to 30-percent market share for corn in Cuba. As a result of the embargo – he says Cuba is forced to purchase from U.S. competitors and currently supplies the majority of its needs from South America…

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 The Council had the opportunity to meet with Cuba’s Ministry of Agriculture – and Shultz says they were upfront about how the Cuban agriculture sector is decades behind the rest of the world…tape

 Schultz 2

 If the embargo ends – Shultz says there will be some obstacles in opening the Cuban market to U.S. coarse grains and co-products. For example – he says the Cuban government has expressed interest in having U.S. ag groups work with farmers to develop the ag industry – but a key challenge would be to clarify ownership and ensure investment for U.S. industry is safe. Adoption of technology is also a challenge…tape

 Schultz 3

 Shultz says the U.S. Grains Council wants to see the embargo lifted and will work with domestic producer organizations to educate American farmers to support the removal of the embargo…tape

Schultz 4

The Council hopes that will lead to a longer engagement with the Cuban people and government on agriculture development.

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