Study Reveals Heavy Producer Cost to Bunge-Viterra Merger 

A new study commissioned by Prairie agricultural groups concludes the planned Bunge-Viterra merger could cost farmers more than $700 million annually. 

Undertaken by University of Saskatchewan researchers with support from the Agricultural Producers Association of Saskatchewan (APAS), Alberta Grains, SaskBarley, and Sask Wheat, the study found the merger is likely to cause “substantial economic harm” to grain producers. 

The results support the findings of the Competition Bureau’s review that the merger is likely to result in substantial anti-competitive effects and harm competition in markets for grain purchasing, an APAS news release said. 

The report examined the impact of the proposed merger on grain export services at the port of Vancouver, the canola crushing sector, and competition at primary elevators, and found worrisome levels of market concentration in all three scenarios. 

The merger would result in over 40% of Vancouver export capacity controlled by one firm, the report said, which would increase the export basis by 15%. For the canola crushing sector, concentration of market shares would increase canola crush margins by 10%, it added.  

“The increase in export basis and canola crush margins would reduce producer income by approximately $770 million per year,” said the release. 

The study suggested the merger may also reduce incentives for Viterra to build its proposed canola crushing facility in Regina, SK.  

“The proposed merger brings to the forefront concerns about market concentration and its potential ripple effects on grain producers,” said Tara Sawyer, Alberta Grains Chair. “Competition in the grain sector will directly influence concerns producers have raised regarding transparent, consistent, and efficient delivery contracts and market information.” 

The groups are urging Ottawa to consider the impact of the proposed merger on the profitability and sustainability of farmers. Given the lack of existing competition within the grain sector, further consolidation will lead to substantial economic losses for both farmers and the Canadian economy, the APAS release said. 

Last week, the Competition Bureau said the planned transaction between two of this country’s most significant agricultural companies “is likely to result in substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada.”   

More specially, the Bureau’s review determined that the transaction is likely to harm competition in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada.  

US agribusiness and food company Bunge Ltd initially announced plans to merge with Canadian grain handling business Viterra Ltd in a transaction valued at $34 billion in June 2023.  

Headquartered in St. Louis, Missouri, Bunge has almost 23,000 employees and approximately 300 facilities located in more than 40 countries. Viterra has more than 17,500 employees operating in 37 countries, with a network of agricultural storage, processing and transport assets. 

Source: DePutter Publishing Ltd.

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