The head of U.S. grain-trading giant Bunge Ltd. welcomes Ottawa’s decision to dismantle the Canadian Wheat Board and says his company is preparing to jump into the market.
“I think pretty much every [country] has eliminated their board trade because it’s not always well managed,” Bunge chief executive Alberto Weisser said in an interview from Winnipeg, where he was visiting some of the company’s Canadian operations. “The concept is brilliant, but it’s how it is managed. And still the most efficient system is a free market, a complete free market.”
Getting rid of the Wheat Board will be good for Canada, he said, “because the efficient farmer will become even more efficient.”
The Wheat Board, a fixture in Western Canada for more than 75 years, markets all wheat and barley grown in the region. During its last fiscal year the Wheat Board generated $5.2-billion in sales.
The Conservative government has announced plans to remove the board’s monopoly next year, meaning Canadian farmers will sell their own grain. That decision has divided farmers and been opposed by the Manitoba government and the board’s chairman. Supporters of the board argue its size gives Canadian farmers clout in world markets. But opponents say that the board system is outdated and that wheat farmers can do better themselves.
Mr. Weisser agrees with the critics. “Normally the ones who are less efficient would like to hang on [to the board],” he said. Dismantling the Wheat Board “will play well for the country. But some government officials have to have the courage to let it go.”
While many other companies are also planning to move into the market once the Wheat Board loses its monopoly, including Viterra Inc. and James Richardson International Ltd., Bunge would be by far the largest.
The White Plains, N.Y.-based company is a dominant player in much of the world’s grain trade and has $50-billion (U.S.) in annual revenue. It operates in more than 30 countries and is involved in almost every area of agriculture from trading grains and oil seeds to producing biofuel and making finished products such as margarine.
Bunge has 15 facilities in Canada, mainly canola-crushing plants in Western Canada and port operations in Quebec City.
The end of the Wheat Board “will open up an opportunity for us in the West,” said Soren Schroder, who runs Bunge’s North American division. “It will allow companies like us to get in the chain from the farms to the overseas customers.”
It will also mark a huge change in Canadian farming, he noted. “The first thing that will happen is that the farmer will have to get a quick education in how to price wheat because they haven’t been used to that,” Mr. Schroder said.
Bunge isn’t waiting for Ottawa to act, he said. The company is already making plans. “We are absolutely planning to be part of it,” he said.
One obstacle for Bunge is a lack of infrastructure in Western Canada. The company doesn’t have extensive storage or transportation facilities and will have to either build them or form partnerships with existing players. “In reality our preferred way, probably, would be through some kind of partnership with existing operators,” Mr. Schroder said.
Bunge has seen its profits soar as a result of rising grain prices and Mr. Weisser expects food prices to keep rising over the long term. “Since 2000 [prices] are going up,” he said. “One of the reasons is there’s more demand. Why? It’s a very noble reason: because we have poor countries having more money and they are changing their diets and moving away from carbohydrates and adding protein. ... Everybody underestimated demand.”Report Typo/Error