Background to the CWB Deal:

[TOM4CWB]

Stronger CWB increases competition in grain sector
Deal marks final step in Marketing Freedom

April 15, 2015 – Winnipeg, Manitoba – Agriculture and Agri-Food Canada

Today Agriculture Minister Gerry Ritz announced Government of Canada approval of a deal reached between CWB and G3 Global Grain Group which ensures CWB becomes a fully private and global competitor in the Canadian grain sector. With this deal, the Government has fully delivered on its commitment to Marketing Freedom by increasing marketing choice for Western Canadian grain farmers.

The deal will see the investor, a new Canadian company headquartered in Winnipeg, invest $250 million in CWB, with plans to develop a coast to coast grain processing and shipping network across Canada. Once fully realized, the growth associated with this deal is expected to increase Canada’s grain export capacity and add hundreds of jobs and hundreds of millions of dollars of economic growth across the Prairies.

The stronger CWB will offer farmers the opportunity to build significant equity in a growing grain company by delivering their grain. Canadian farmers have the opportunity to financially participate in CWB through the continuation of the Farmer Equity Plan.

This deal will benefit Canada through increased competition in the Canadian grain market and significant Canadian ownership through the farmers trust.

Marketing Freedom and the commercialization of CWB is part of the Government’s broader modernization of Canada’s grain sector supporting the creation of jobs and economic growth for farmers and Canadians. It includes an aggressive trade and market access agenda, grain transportation and supply chain improvements and investments in science and research.

Quick Facts

• The Marketing Freedom for Grain Farmers Act, which received Royal Assent in December 2011, allowed the CWB until August 2016 to present a plan for commercialization to the Minister of Agriculture.
• G3 plans to build a coast to coast Canadian grain enterprise that will lead to increased job creation and economic growth across Canada.
• Farmers will benefit from this deal by having another major company competing for their grain.
• Canadian farmers will also have the opportunity to own equity in the CWB through the Farmer Equity Plan.


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Quotes

“Our commitment to Marketing Freedom and increasing marketing choice has always been about giving farmers the right to sell their own grain to a buyer of their choice. The removal of the CWB monopoly attracted numerous investors wanting to expand Canada’s grain capacity and supply chain. This investment deal offers Canadian farmers access to a new global player to compete for their grain and more delivery points for farmers to sell their grain. The result of these new investments and jobs will provide a huge economic benefit to the grain sector and Canada’s overall economy.”
ï€ Agriculture Minister Gerry Ritz

"This deal will enable the CWB to continue to expand its network. CWB's investments to date translate into hundreds of millions of dollars in new investment and hundreds of jobs across Canada. It also establishes a major new player in the Canadian grain industry well into the future, and we look forward to furthering our relationships with farmers across Canada."
ï€ Ian White, President and CEO, CWB

“It is a dynamic time for Canadian agriculture. As global demand for agri-products grows, consumers continue to demand the high quality grain produced by our Canadian farmers. Our vision is to establish a highly efficient coast to coast Canadian grain enterprise that provides stronger market access solutions for growers and delivers value to our stakeholders and the Canadian agriculture industry as a whole. We welcome the CWB team and farmer equity owners, and look forward to working together to build a new and dynamic company.”
ï€ Karl Gerrand, CEO, G3

Additional Links

• Marketing Freedom for Grain Farmers
• Initiatives Supporting Crop Producers
• Stronger CWB will increase competition in the grain sector and create jobs - Infographic
• The Path to Marketing Freedom - Infographic
• CWB

Contacts

Jeff English
Director of Communications
Office of the Honourable Gerry Ritz
613-773-1059

Media Relations
Agriculture and Agri-Food Canada
Ottawa, Ontario
613-773-7972
1-866-345-7972
Follow us on Twitter: @AAFC_Canada

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Media Information

• B-roll package for this announcement is available for media use
• Images are available for media use on AAFC’s Flickr page


Background – The Commercialization of the CWB

Marketing Freedom
CWB has been preparing for commercialization since the Marketing Freedom for Grain Farmers Act was introduced in 2011. The Act gave CWB a deadline of August 2016 to submit an application for continuance to the Minister. CWB led its own process to commercialization. CWB and its corporate advisors established a strategy and timeline for commercialization that aimed to beat that deadline. The plan was to attract investment and other resources, not only to become independent of government, but to grow as a strong competitive option in Canada’s grain sector.

CWB conducted an extensive worldwide search, engaging accounting and legal expertise to consider over 50 potential strategic investors. The successful bid offered the best price and alignment with criteria CWB set out for consideration to ensure the maximum benefit for farmers and the sector.

Modernization of the Grain Sector
Marketing Freedom is a key piece of the Government of Canada’s overall modernization of the grain sector. Two and a half years into the open market, Canadian wheat is finding new customers in Asia, Africa and South America; shipments to the U.S. are at all-time highs and wheat exports are up almost 20 percent.

Other actions include:
• passage of the Agricultural Growth Act to enhance global market opportunities and support innovation;
• passage of the Fair Rail for Grain Farmers Act which took immediate action to deal with rail transport issues and longer term steps to improve the performance of the entire rail supply chain to help farmers get their crops to market through the Canadian Transportation Act Review;
• an aggressive trade and market access agenda, including trade agreements with Europe and South Korea;
• introduction of the Modernization of Canada’s Grain Industry Act proposing changes to the Canada Grain Commission to improve grain quality and safety;
• regulatory modernization and cutting red tape;
• a modernized grain Variety Registration program, which along with improved Plant Breeders’ Rights delivered by the Agricultural Growth Act, to ensure Canadian farmers have the best varieties of grain and other crops; and
• research investments, including:
o a collaboration with the province of Manitoba in a $20 million Grain Innovation Hub in Winnipeg that will grow Manitoba as a centre of innovation, and
o over $73 million in grain-related research clusters, which build on earlier investments;
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o funding of $5 million to the Canadian International Grain Institute to create innovative applications and market-ready products developed from Canadian field crops including wheat;
o participation in the Canadian Wheat Alliance, with $85 million in cash and in-kind contributions by the Government of Canada to coordinate and support research that will boost profitability for wheat producers.

[TOM4CWB]

The only thing less politically correct the gov could have done... it to have sold the CWB to Israel!

Now that would have caused way more of an outcry!!!

Israel can produce food... lots of it. Saudi's need food... as do many others in the Middle East. AND they have Money!

For a small investor needed to back this new CWB... this showed imagination and political courage!

Thanks PM Harper for doing this right thing!

[dmlfarmer]

The CWB has been sold to a Foreign investment fund: SALIC for $250 million - the low end of the valuation put on it by FNA. (SALIC Canada is a whole owned subsidiary of SALIC.SA)

In checking out Salic's website: http://salic.com.sa/English/Pages/default.aspx I do have some concerns. For example, under the presidents message it states: "Saudi Agricultural and Livestock Investment Company (SALIC established in November 2011 inspired by Custodian of the Two Holy Mosques King Abdullah’s Vision. The humanitarian king wanted to maintain food supply and price. Saudi Arabia, which depends heavily on imports of its food needs, is badly in need of major agri- mega projects. Its food requirements are increasing year after year as a result of growing population. In 2010, its imports accounted for 45% of total Arab food imports of US$38.1 billion.
SALIC aims to establish a secured supply and a reservoir of food crops such as rice, wheat, barley and soybeans as well as meat. This is being achieved by broaden SALIC agri-investment activities to cover the globe."

So is this a grain company looking to sell grain for the benefit of the company and Canadian farmers, or is this a grain buyer looking to ensure cheap food for Saudi?

Second, this appears to be the first investment by SALIC and they only have between 11 and 50 employees according to their LinkIn page. No wonder Bunge needed to be involved to provide the actual expertise.

So if a private company is managing the purchased assests now owned by a foreign investment firm whose mission is to secure cheap food for one country, is this really a good deal?

Will this new firm provide the transparacy of operations that everyone on this list is demanding or will we see even less transparacny?

Are the CWB rail cars now under control of just BUNGE and SALIC

Amazing that governments are promising to review foreign ownership and fund ownership of farm land but have absolutely no qualms about selling the CWB to a foreign investment fund. And a Muslim one at that!!!

[TOM4CWB]

DML,

"And a Muslim one at that!!!"

WOW, what Muslims shouldn't be allowed to buy food and eat?

You want a peaceful world... yet would deny the opportunity to allow the same world... to supply good food to hungry people who deserve to eat... just as much as you do!

Think about what yoouuu have just said.

Cheers

[mustardman]

We used to receive 80 to 90 percent of port price for our grain under the CWB (original). Durum at port is $15.30 /bushel and at elevator its $ 8.30 !!!

Sounds like another company to fleece us under ritz's watch

[samhill]

Don't ya just hate it when people put their words in your mouth (post)?

[dmlfarmer]

Sorry Tom and Agriville: The Muslim comment was made tongue in cheek and was not meant to be critical of Muslims but rather of the stance this government has taken against the middle east.
Even you Tom acknowledge the same stance with your comment regarding the political correctness of selling the CWB to Israel. There is no denying there this government has a double standard in the middle east and that is what my comment referred to.

But at the same time, I do have reservations about selling the CWB to a private, country orientated, investment fund who publically states on its own website that "the Saudi government decided to invest in agricultural business internationally to meet the Kingdom’s growing food requirements and cut short expenditure on food imports. It established SALIC, which is a joint stock company fully owned by the Public Investment Fund (PIF), solely for the purpose of meeting the country’s food needs and addressing the global food security."

I question whether this translates into a grain company trying to market Canadian grains into a global market at the best possible price or if it means it is trying to purchase Canadian grains as cheaply as possible to meet Saudi needs.

And how can Governments tell funds and foreigners they cannot purchase farmland, but can purchase the essential infrastructure that farmers need to sell what they produce?

[farmaholic]

And what wrong with continuing on the previous thread?

[TOM4CWB]

DML,

Apology accepted!
You were just being;
"White and Nerdy"

[blackpowder]

Not too sure if Tom's manic responses allow for comment on competition and price fixing legislation.

[mustardman]

Tom your changing your name to Tom4Saudi right?
You never liked the cwb and now your happy it's been sold for only 250 million !!! To a foreign company . Shame on you

[mustardman]

Start eating Tom your running low on brain cells

[Integrity_Farmer]

Tom clearly has taken a page out of Duffy's book, lots of brown nosing here.

Here comes Senator Tom Jackson

I can just see the headlines now. "Harper Duffy in jail for fraud Senator Jackson goes on hunger strike".

[TOM4CWB]

BP;

We know how well price fixing legislation works on Fuel Stations...

It is near impossible to prove collusion...

Which is why we need fuel coops like federated which will sell at a decent price... and return the rest through dividends.

Same can happen with CWB...we own 49 percent... need to find out how to own shares if that becomes where much of our grain is delivered. There are new gen coops as well. many opportunities!

[Kodiak]

mustardman, you are a bitter bitter man. Take it somewhere else.