WINNIPEG -- The federal government is moving to privatize the Canadian Wheat Board in a deal with a company partially owned in Saudi Arabia.
G3 Global Grain Group will get 50.1 per cent of the company in exchange for an investment of $250 million. G3 is a joint venture between Bunge Canada, and SALIC Canada, a subsidiary of the Saudi Agricultural and Livestock Investment Co.
The rest will be kept in trust for farmers who deliver grain to the board. They will get $5 per tonne in units controlled by the trust. In seven years, G3 Global Grain Group has the option to buy back the units from farmers at market value.
While the Opposition NDP called the deal "economic treason," Agriculture Minister Gerry Ritz said it will increase Canada's ability to export grain, create jobs and spawn economic growth on the Prairies.
"Every relevant farm group across Canada supports this move," he said in Winnipeg on Wednesday. "We see this as a great first step moving forward. We look forward to having another viable competitor."
Prairie farmers used to sell their wheat and barley to the board, which in turn exported it to foreign markets. Despite vocal opposition and several lawsuits, the federal government went ahead three years ago with a long-standing promise to abolish the monopoly.
A proposal that would have seen a farmer-owned entity acquire the wheat board was rejected by the board last year.
Karl Gerrand, president and CEO of G3, said the company will be based in Winnipeg and is an "independent Canadian agri-business." Canadian farmers who deliver to the board will have a stake and say in its future, he said.
"G3 will use the knowledge and expertise of these farmer equity holders to help guide our growth strategy, to help us stay focused and to create opportunities for all of our stakeholders."
Grain farmer Dan Mazier, president of the Keystone Agricultural Producers in Manitoba, said the prospect of new players with the infrastructure to move Canadian grain is exciting. But many were taken aback by the clause allowing G3 to buy back equity from farmers, he added.
"We didn't see that one coming at all. That's got everybody kind of concerned."
Ian White, president of the Canadian Wheat Board, said the deal will give the board a "world-class presence."
"We're creating a powerful new player in Western Canada," he said.
NDP critic Pat Martin called it "a day of infamy on the Canadian Prairies." The federal Tories legislated the most successful grain marketing company in the world out of business for ideological reasons and handed it over to "foreign entities free of charge."
"They thought it was communism for Canadian farmers to act co-operatively in their own best interests," Martin said. "Our worst fears are realized. This is the death rattle of a great Canadian institution."
Anders Bruun, lawyer for Friends of the Canadian Wheat Board, said the deal represents the largest transfer of wealth from farmers in Canadian history.
He said it's not clear how farmers will benefit from owning units in a trust rather than shares in the new wheat board.
"Some people will be asking if those units are really worth a lot," Bruun said. "We're flying in fog here and that fog goes all the way to the ground."
