Canadian Wheat Farmers Move Big to Vancouver

Farmer group to compete for Canada's grain exports
Friday, May 06, 2005 6:27:30 PM ET
By Roberta Rampton

WINNIPEG, Manitoba (Reuters) - A consortium of farmer-owned grain elevators will become the newest competitors in Canada's export markets this autumn by taking over a West Coast terminal, the group announced on Friday.

Five inland terminals that until now have focused on handling crops in the largest grain-growing province of Saskatchewan and shipping them to big grain export companies, will now start looking abroad for buyers.

"This deal allows us to have a window on the world to achieve our goal to become more competitive in exporting," said Garth Gish, who runs a terminal at Plenty, Saskatchewan, and is spokesman for the consortium.

The group, called Terminal One, is buying the 102,000-tonterminal in Vancouver, British Columbia, from Agricore United, Canada's largest grain company.

Agricore United was ordered to sell one of the three terminals it owns in Vancouver by the federal competition watchdog when the company was formed in a merger in 2001.

The Terminal One group plans to handle 1.5 million to 2 million tonnes of grain a year at first, Gish said, but hopes to expand over time.

By comparison, Agricore United handled 10 million tonnes in the 2004 fiscal year and Saskatchewan Wheat Pool, the second-largest player, shipped 6.4 million tonnes.

"Collectively, we're much more significant than we have been," Gish said. "We're not yet the biggest, but we're working toward it."

Canada's big grain handlers have incurred massive losses in recent years, the result of too much capacity and too little grain during years of drought.

But the inland terminals have fared much better because of loyal farmer shareholders who like receiving dividends from hauling grain to the facilities and value the service they receive, Gish said.

"We've all been very, very successful in a tough marketplace the past few years," Gish said. "I think farmers getting control of their destiny at the next level is going to be important to them."

The financial terms of the deal were not disclosed, but the agreement was expected to close before Aug. 1, Agricore said in a release.

Agricore said it will put the proceeds toward debt or capital reinvestment.

The company said it expects to continue to handle the same amount of grain through Vancouver after the sale.

(Additional reporting by Mervin Brass in Saskatoon)