Commissions Grain industry ownership didn’t follow the ABCs

November 12, 2019 | Eastern Canada

Written by: Tom Steve, General Manager | Alberta Wheat and Barley Commissions

If you’ve been around the grain industry for any amount of time, as I have, you’ve probably heard of the ABCD companies. The acronym represents the multinational firms Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus.

The ABCD companies are thought to control about 70 per cent of the global grain trade, so when Louis Dreyfus recently sold its grain handling network in Canada to Parrish and Heimbecker, it made me think how much times have changed.

In the late ‘90s the grain landscape in Canada was shifting. Louis Dreyfus and the U.S. food processing giant Conagra announced plans to build grain terminals in Western Canada.

Coinciding with those investments, ADM acquired a 42 per cent interest in Winnipeg-based United Grain Growers (UGG), my former employer. With the prairie wheat pools in financial turmoil at the time, it was understandable that some predicted Canadian ownership of the grain industry would soon become a thing of the past.

While Canadian ownership has certainly declined, things didn’t quite unfold as predicted. The pools and UGG evolved into Viterra, which was eventually swallowed by the Swiss-based trading giant Glencore.

ADM exited the grain handling business in Canada altogether when it sold its interest in Viterra and while Bunge has a minority stake in G-3, the company formerly known as the CWB is actually controlled by the Saudi Arabian investment fund Salic. G-3 is building new elevators across the prairies and a massive port terminal in Vancouver which is scheduled to open next year.

What no one could have predicted, including me, is the survival and increasing presence of the Canadian family-owned companies. Winnipeg-based Richardson is now one of the two dominant grain handlers in Canada, along with Viterra. Cargill is a distant third.

Surprisingly, family owned companies Paterson Global Foods and Parrish & Heimbecker are not only surviving in the new environment, they are growing their footprint with new state-of-the art terminals. P&H is building the Fraser Grain Terminal in Surrey, BC in partnership with GrainsConnect, a joint venture of Australia based GrainCorp and the Japanese agricultural cooperative Zen-Noh.

Twenty years ago, I doubt a single person would have bet on P&H buying out one of the ABCD companies, or that Canadian companies would be thriving in the post-CWB world.

Just when you think the future is certain, it’s not.