Study Reveals Heavy Producer Cost to Bunge-Viterra Merger

Apr 30, 2024

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.

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Video: The 15-Year Bet Behind Every New Variety!

Canada is trying to decide how much agricultural research capacity it can afford to lose. Brian Rossnagel believes the better question is whether the country can afford to rebuild it.

The longtime barley and oat breeder makes the case with a simple fact about his profession: the consequences of today’s decisions may not become visible for 10 or 15 years.

“Pick the right parents. That’s the biggest thing,” Rossnagel says. “If you pick the wrong parents, you’re not going to get anywhere—and you don’t know that until 10 years, 15 years later.”

That warning carries particular weight as Agriculture and Agri-Food Canada moves to reduce spending and streamline parts of its science operations. The department’s 2026–27 plan anticipates the loss of approximately 665 positions by 2028–29 and says some research will be reduced where capacity exists in academia or industry. AAFC says the changes will make its science operations more cost-effective over the long term.

For Canada’s seed industry, Rossnagel’s career illustrates what is at stake.

This fall, the retired University of Saskatchewan breeder will be inducted into the Canadian Agricultural Hall of Fame. During his 35-year career at the Crop Development Centre, he helped develop more than 100 barley and oat varieties, including CDC Austenson—one of Western Canada’s most widely grown feed barleys. His induction recognizes not only those varieties, but the collaboration and research system that made them possible.

Rossnagel is quick to emphasize that none of it was the work of one person.

“The first thing I thought about was all the other people who contributed to whatever success I and my program had over the years,” he says. “We know that it’s not an individual who does this. It’s a group—a team.”

That team extends well beyond the breeder whose name appears beside a variety. It includes technicians, pathologists, quality specialists, statisticians, regional testing sites, seed growers and industry partners. It also includes the breeders who came before and those who will carry the germplasm forward.

CDC Fraser barley, for example, moved through three breeding careers. Its parents came from Brian Harvey’s program. Rossnagel advanced the material after Harvey retired, and Aaron Beattie later guided it through registration and release.

That kind of handoff is normal in plant breeding. The person who makes the original cross may never see the resulting variety reach farmers.

It also explains why lost research capacity cannot simply be switched back on when budgets improve.

“If you shut it off, it’s very, very difficult—and particularly costly—to start it up again,” Rossnagel says. “If you have to start from scratch, it’s going to be at least 10 years before anybody notices whether you’re getting anything done or not.”

The concern is not simply how many experimental lines Canada can process. Modern equipment, statistical tools and genetic technologies allow today’s breeding programs to evaluate tens of thousands of lines—far more than Rossnagel could handle when he entered the field in the early 1970s.

But efficiency and automation do not generate every idea.

“If you pare back down, and instead of having six or seven individual scientists concentrating on wheat breeding, you go down and say three people could handle all this, well, that’s half the ideas gone,” he says. “Particularly if you happen to lose the three people who had the really neat and innovative ideas, boy, that’s a problem.”

It is a timely distinction for Canadian agriculture. Consolidating programs may preserve the volume of material moving through a system, at least initially. It may not preserve the diversity of thinking, regional knowledge or willingness to pursue unconventional crosses.

That regional knowledge matters because Canadian agriculture is not one uniform production environment. A variety suited to southern Alberta may face different disease, moisture and maturity pressures than one grown in Manitoba, Ontario or Atlantic Canada.

“Agriculture is applied biology,” Rossnagel says. “Biology, all around the Earth, moves from the poles to the equator. It does not move from Newfoundland to B.C. like politics do.”