FNA seeks farmer capital to buy CWB

A Saskatoon company says it has not yet decided what form farmer equity would take if its plan to ac-quire a controlling interest in CWB goes ahead.

Farmers of North America, which wants prairie farmers to ante up hundreds of millions of dollars, says it is too early to share details about ownership structures, equity plans or business models.

FNA spokesperson Bob Friesen said the member based company is only gauging farmer interest in acquiring a controlling interest in a grain handling and marketing firm. 

“We’re not asking farmers for money at this time,” Friesen said.

“We’ve just been talking with farmers and asking them what their interest level is in a farmer-owned grain handling and marketing company.”

FNA made headlines last week when it confirmed it is hoping to raise as much as $500 million of farmer-furnished capital to acquire a controlling interest in a prairie-based grain handling company.

FNA’s website makes specific reference to acquiring a controlling stake in the former Canadian Wheat Board, which is to be turned over to the private sector within the next three years.

The website said FNA intends “to build a world class farmer-owned grain handling and fertilizer distribution business, starting on the grain side with the transformational move of attempting to take over a majority interest in the CWB.” 

The website also indicated that FNA will also explore other alternatives that give producers an ownership stake in prairie grain handling.

As of Sept. 15, CWB was declining to comment.

Friesen also declined to say whether FNA had discussed its plan with CWB.

Richard Gray, an agricultural economist at the University of Sask-atchewan, said high basis levels last year and the potential for similar conditions this year are likely to generate interest among potential producer-investors.

However, farmer participation will hinge on a few key issues, he added, such as whether the proposal in-cludes provisions that ensure farmer control of grain handling assets after growers have invested in the project.

“Even if you do get producers to (invest), if they (FNA) turn around and sell (the assets) again, then you no longer have a producer controlled organization.”

Gray said western Canadian farmers have a track record of building up assets in the grain industry, only to see them taken over by corporate partners.

“That (ownership) detail is pretty important,” he said.

Friesen said FNA’s proposal has generated “a lot of interest from farmers and a lot of questions.”

The organization is seeking “non-binding expressions of interest” from potential investors.

“We are asking somewhere be-tween 3,000 and 10,000 farmers to invest between $10,000 and $50,000 each,” Friesen said.

Based on those numbers, total farmer investment could range from a low of $30 million to a high of $500 million, or more.

FNA is also raising money to build a large farmer-owned fertilizer plant at Belle Plaine, Sask.

That initiative, known as ProjectN, will proceed regardless of whether FNA carries through with plans to acquire a controlling interest in CWB.

On its website, FNA said it foresees the construction of as many as four fertilizer handling facilities, or “supercentres,” per year, within each of three key regions.

With respect to grain handling, FNA believes one to four high-throughput elevators can be built a year, although the actual number will depend on FNA’s success in acquiring existing businesses.

Gray said FNA’s fertilizer plans give it added incentive to get into grain handling because of the distribution network it offers.

Friesen said FNA is considering acquisitions of existing grain handling facilities as well as capital investments in new ventures.

However, the organization’s web-site leaves little doubt that CWB’s assets are viewed as an ideal base on which to build a farmer-owned grain handling and fertilizer distribution network.

“We feel that sales of a block of assets like this, of sufficient quality, scale, interoperability and geographic position, are very rare,” said information posted on FNA’s website. 

“There are few public companies available to pursue in the grain handling industry in Canada, and many of the privately held companies are long-term, family owned organizations that have no apparent intention to sell.”