Four agriculture groups are raising concerns over the proposed Bunge and Viterra merger.
The Agricultural Producers Association of Saskatchewan (APAS), Alberta Grains, SaskBarley, and Sask Wheat raised concerns about the merger, believing it would result in economic losses for producers.
A recent study by Dr. Richard Gray, Dr. James Nolan, and Dr. Peter Slade from the University of Saskatchewan on the potential effects of the proposed merger on the grain sector in Western Canada found that the merger is likely to cause substantial economic harm to grain producers.
The results also 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.
“The results of both of these studies validate concerns producers have been raising about the impact of the proposed merger on competition in the grain handling industry and ultimately returns to farmers,” said Jake Leguee, Sask Wheat Chair.
The U of S report examined the proposed merger’s impact on grain export services at the port of Vancouver, BC, the canola crushing sector, and competition at primary elevators. They found worrisome levels of market concentration in all three scenarios.
According to the report, the merger would result in one firm controlling over 40 percent of Vancouver’s export capacity, increasing the export basis by 15 percent.
For the canola crushing sector, the concentration of market shares would increase canola crush margins by 10 percent.
The merger may also reduce incentives for Viterra to build its proposed canola crushing facility in Regina, SK. The increase in export basis and canola crush margins would reduce producer income by approximately $770 million annually.
“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 producers’ concerns regarding transparent, consistent, and efficient delivery contracts and market information.”
The groups strongly urge the Federal Government to consider the proposed merger’s impact on farmers’ profitability and sustainability.
