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SASKATOON, Nov. 6, 2014 /CNW/ - Farmers of North America (FNA) today responded to comments made by CWB in recent media reports. "It's unfortunate that rather than working together with the CWB to build the best farmer-based grain handling and marketing and fertilizer distribution solution for farmers, FNA is left providing clarity on farmers' position to the CWB through the media," says FNA President, Jim Mann.
The CWB bid process from which FNA was rejected at the end of October, 2014, was to establish the value of the farmer trust, together with the establishment of the level of majority ownership for an outside bidder. FNA championed the importance of farmer majority ownership of the CWB, knowing that it is worth far more to farmers than to anyone else because of what farmers could do with that ownership and the benefits that they could accrue from owning that part of the value chain. FNA's bid reflected that, including a proposal to add that value to farmers' individual net worth, in return for flexible delivery commitments. It would do so by continuing to allocate $5 per tonne to non investor farmers, and $5 plus a significant premium to investor farmers. In other words, maximize farmer ownership by distributing the asset value of the CWB to farmers' net worth in addition to the farmer's share value from their initial equity investment. The FNA proposal further included using the equity raised from farmers (transaction value) to build out the company and to protect farmer ownership from any future potential dilution. These are elements that FNA believes are important to understand, and that differentiate the FNA vision for the CWB from that of the CWB itself, and other potential bidder(s).
"Farmers have told us in no uncertain terms that they want to be the majority partner, and they do not want to be diluted from ownership or majority ownership in the future. In fact, on November 6, in a farmer meeting, we were told bluntly by a large group of farmers in Red Deer, Alberta to push harder, engage more farmers, and get the federal government involved," explains FNA Vice President of Government Relations, Bob Friesen. "This supports what we've been hearing over thousands of conversations and well over one hundred town hall meetings."
The FNA plan would see the value of the CWB assets allocated immediately to a farmers net worth through commitments to very flexible deferred delivery contracts. FNA believes that the stated CWB plan of $5/tonne based on future deliveries is not adequate, is not the best strategy, and could easily be bought-out or rendered worthless by the majority partner.
"The track that the CWB is currently on is not good enough for farmers," comments Friesen. He goes on to say, "FNA has a vision for a farmer-majority owned grain handling and fertilizer distribution company that does more for farmers."
As part of its vision, FNA believes that: the majority of the earnings of the grain handling and marketing margins should go to farmers; the efficiencies from the Genesis Grain & Fertilizer offering, combining fertilizer distribution and grain handling are too significant to ignore, and are the best use of farmer capital; the CWB rail car fleet should be in farmer control; and that farmers should to be closer to the ultimate customer, while having opportunities from being further up and down the value chain.
While acknowledging the CWB is not speaking directly to FNA, Mann is also questioning the importance that is being placed on this by the federal Government. "It's also disappointing that FNA and farmers are unable to get a meeting with the Minister of Agriculture at this critical juncture on something that is so important to the national economy," says Mann.
Mann asserts that, "the assets of the CWB and the vehicle, even if not combined with Genesis, should belong to farmers, as these assets were accumulated through the business of marketing farmers' grain, and rightfully belong to them. It is not a gift, as stated by Dayna Spiring, Chief Strategy Officer of the CWB."
Mann points out that the CWB plan to minimize farmer ownership will do nothing to address the major challenges farmers face in excess grain handling margins nor the lack of transparency of the industry to farmers.
Mann also cautioned that if farmers do not have control over the CWB hopper fleet there is a risk that it could be sold, or it could be reassigned to the U.S. market because a premium is being collected on freight rates in the U.S. rail industry.
FNA continues to insist that farmers be given the opportunity to take a majority interest in a private CWB, and insists that farmers are willing to contribute with their capital, given enough time, to become the majority partner of the CWB, and to build it into a highly competitive global grain company.
Farmers of North America is a member based farm business alliance with the single mission of "Maximizing Farm Profitability."
SOURCE: Farmers of North America
For further information: Bob Friesen, VP Government Relations, Tel: (613) 230-2222, Cell: (613) 852-9711, [email protected]