Consolidation is happening more and more in the ag sector from farm input companies to equipment dealers and grain elevators.
Agricultural commentator and farmer Kevin Hursh thinks the farm reaction to the merger will be fairly muted as there are many delivery choices for farmers.
"I think from most producers' point of view, they look around and say, nothing has really changed. Those elevators are still going to be there. It's not clear exactly how G3 will relate to the merged entity of Bunge Viterra. So from a producer's point of view, they might look at it and say, I'm not sure a whole lot is changed.
Hursh says in his area for example there are a number of delivery choices for bulk grains.
"G3 is there, of course, Bunge is a major shareholder in G3. Viterra is out there as an option, grain can also go into Patterson Grain in Swift Current. It can go to Richardson Pioneer, it could go to South West Terminal. And then a lot of the grain that's grown here is specialty crops lentils, chickpeas, mustard that go to a bunch of specialty crop processors and don't go to the major grain handlers."
He points out that while the initial paperwork for the merger is done the agreement is still subject to the regular closing conditions including getting regulatory approvals.
"You can fully expect the possibility of the Competition Bureau saying the deal is only approved. If you divest of this, and this. We've seen that before in major deals that have happened."
Hursh says it could be a year or two before this all becomes clear.
Meantime, the National Farmers Union(NFU) is concerned with the international companies taking control of what was once farmers' assets.
The group's 2nd vice president Stewart Wells was involved in the farmer-owned cooperative Saskatchewan Wheat Pool when it initially went public and would eventually be a part of Viterra.
He finds the news of the merger of Bunge and Viterra quite distressing.
"It's no secret why these major companies like all this consolidation. It's just because it gives them more control in the marketplace, so they can extract more money from farmers which in turn enhances their cash flow."
Wells says it's extra distressing to see how what was once farmer-owned grain elevators have now become international assets.
"Bunge has its foot in the door there still with G3 and farmers that are hauling to G3 are essentially hauling to the Kingdom of Saudi Arabia. Now with Viterra and the old Wheat Pool assets, farmers that are still hauling to Viterra are now feeding into that same system, that same company"
The merger process will take some time as Bunge has to go through a shareholder vote, and receive regulatory approval for the deal not just in Canada, but also in Australia and Argentina.
Source : Pembinavalley online