National | Media Release

Desire for grain price control drives G3 port plans

By Jan Slomp

G3 has announced it may build a new grain terminal at the West Lynn terminal on the North Shore of Vancouver’s Burrard Inlet. G3 is the joint venture of US-based multi-national grain company, Bunge Ltd., and the Saudi Agricultural and Livestock Investment Co. (SALIC), owned by the Saudi government. It was given the assets of the now-privatized CWB in early April in return for a promise to invest $250 million in the company. While some are cheering the news of another port facility, in fact, it is more evidence that ending the farmer-directed single-desk Canadian Wheat Board (CWB) has made our grain system less efficient and has allowed grain companies to become more powerful and profitable.

The single-desk CWB co-ordinated transportation from country elevator to port vessel so that the existing port facilities were well-utilized and grain moved on time, even ahead of schedule. For example, the CWB co-operated with different terminal owners to achieve efficient loading of 50-60,000-tonne Panamax vessels, since no single elevator company was, or is, big enough to load them in one shot. Single-desk efficiency often resulted in despatch payments, the bonus paid by vessel owners for fast service. Because the single-desk CWB sold grain on behalf of farmers, we also received the dollar benefit thus earned.

The 2013-14 bottlenecks were not caused by lack of terminal capacity, but resulted from the lack of co-ordination due to the destruction of the Wheat Board’s single-desk. The grain companies actually benefited immensely from the logistical problems by using transportation delays to justify devaluing farmers’ grain with wide basis charges, while pocketing millions in excess profits.

More terminal capacity, whether inland or port, worsens farmers’ position when the added storage capacity is under the control of the grain companies instead of farmers. G3 and the “Big 3” – Cargill, Richardson and Viterra – would all benefit from the proposed West Lynn facility, as it enables them to store larger quantities of grain, which increases the buffer between farmers in the countryside and their end-use customers. This “holding tank” creates room and time for grain companies to widen their margins by buying from farmers as low as possible, then controlling the outward supply to maximize the selling price to customers. Like captive supply in the beef sector, expanding grain company storage capacity just helps depress the price paid to farmers.

No doubt G3 can afford to build an expensive new terminal. It was just given the assets of our CWB, is partly owned by the one of the worlds’ wealthiest governments, and stands to make billions selling land-locked prairie grain to the former customers of the single-desk CWB.

Agriculture Minister Ritz promotes high yields and trade volumes that benefit multinational corporations, yet we know from our single-desk CWB experience that prosperity for prairie farmers comes from efficiently moving and selling “enough” volume for premium prices, while putting the money into farmers pockets. It is painful to hear our government talk about adding value and developing export markets for grain companies after unilaterally destroying an institution that did exactly that on behalf of farmers — especially after handing its remaining assets to a company jointly owned by the state of Saudi Arabia, a country notorious for human rights abuses.

Jan Slomp is the President of the National Farmers Union.