The Agri Post
October 31, 2014
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FNA Still Optimistic Where’s the Beef Going? About CWB Acquisition By Les Kletke Bob Friesen stated that Farmers of North America (FNA) is disappointed by the rejection of his organization’s offer to purchase the Canadian Wheat Board (CWB) yet, by no means defeated. “FNA had made the decision to get into the grain business before (the CWB was available for sale) and the decision is a sound one. Purchase of the CWB would have allowed us to get into the business quicker and to hit the ground running. The rejection of our offer means that won’t be possible but this in no way impacts of intention to get into the grain business.” Friesen said the decision to enter the grain business was never about saving what remains of the CWB or trying to revive it in another form, “This was not a nostalgic or philosophic decision; it was business decision that came about as we moved ahead on the plans to establish a fertilizer plant.” He said it became obvious that there were synergies to be had by owning both a fertilizer plant and grain business.
“Farmers are aware of those benefits and with recent changes in the industry we felt that there were times existing grain companies were benefiting from the difference in world prices and what they could obtain farmers grain for,” said Friesen. He explained that if anything, the process that FNA went through to raise the capital for the purchase of the CWB has strengthened the resolve to get into the industry. “We conducted a series of 100 town hall meetings at the worst possible time for farmers, when they wanted to be on the combine, and still had a tremendous response. We had the commitment of $50 million,” said Friesen. The matter of acquisition is not dead and Friesen asserted that while he does not understand the rejection of the offer from the CWB, FNA would continue to speak with Federal Agricultural Minister Gerry Ritz about the acquisition and see if the company may still be successful although it is not placing all its eggs in the CWB basket. “We have plans to move ahead with entry into the grain business and will pur-
sue that,” stated Friesen. “It is too early to tell what structure the company with take but we are considering the options.” The organization is well aware of the requirement to have experienced people in management roles in any form the company takes, whether it is for a better return to shareholders on their investment or to grain producers for the product they market through the new structure. “We might look at some form where there is equity for ownership, as a return for grain handled,” said Friesen. He admits being puzzled at the rejection from the CWB but says FNA must move on with its plan to establish a fertilizer business and have a grain company that can work alongside it. Friesen did not offer a time line for the company to be a participant in the grain industry saying only, “It was aware of the requirements of good management with experience in the industry and would consider the options as they became available.”
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Cattle prices have rebounded after a decade at are setting records at auction marts this fall. Photo by Les Kletke
By Les Kletke Tom Goertzen has no beef with cattle prices; in fact, he said they make for tough choices. “I consider selling out and then I think about buying a few more cows,” the southeastern Manitoba farmer said. “It is a tough call.” After more than a decade of reduced beef prices, the market is hitting record highs as he brings his calves to market. Goertzen has a 300-
commerical cow operation and the calves coming off pasture are bringing record prices, which he said, would allow him to play catch up to recent tough years. “We have not done much for improvements in the past couple of years and now there will be some money to upgrade some equipment, but I don’t know that I want to invest a lot of money in this industry, prices will go down again when the cow herd is built up.”
He knows the cycles of the beef industry and sees that the last down cycle was longer than most, “Almost twice as long with BSE, the drop in the Canadian dollar and a few other things.” Those factors all contributed shrinking cowherds across the continent. Cowherd numbers are down in the US as well and that has fuelled the market for feeder cattle along with the demand for cows.
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