AGFINANCE
THE WESTERN PRODUCER | WWW.PRODUCER.COM | MAY 23, 2013
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VITERRA | GRAIN HANDLING UPGRADES
Viterra upgrades Sask. facilities to speed handling Four locations | Projects to increase rail capacity and improve grain handling are scheduled for completion by the end of 2013 BY BRIAN CROSS SASKATOON NEWSROOM
Viterra is spending $20 million to upgrade four grain terminals in Saskatchewan. Facility upgrades at White Star, Humboldt, Waldron and Ituna will result in increased rail capacity at all four locations and improvements in grain receiving and handling systems, said Kyle Jeworski, Viterra’s president and chief executive officer for North America. Rail car spots at White Star, Waldron and Ituna will accommodate 50 hopper cars after the expansions. The Humboldt facility will have a 100-car spot. The upgrades will also see on-site storage capacity tripled to 27,000
tonnes at White Star and doubled to 31,500 tonnes at Humboldt. White Star is located 15 kilometres north of Prince Albert, Sask. Humboldt is 100 kilometres east of Saskatoon. Jeworski said the upgrades will result in improved receiving and shipping speeds and enhanced operational efficiencies. Handling times, throughput capacity and automation will be improved at each location. “We’re always evaluating our infrastructure and ‌ we’ve identified that these are four very important locations for us that we’ve had to improve the efficiency at,â€? Jeworski said. “As they’ve advanced and they’ve progressed, farmers’ demands have increased so we’ve had to look at
KYLE JEWORSKI VITERRA
these facilities and ask how do we match them (to farmers’ needs)?â€? All four expansions are slated for completion before the end of 2013. “We’re at various stages with the different projects, some ‌ have just commenced ‌ and others ‌ we’re just in the process of final contractor selection,â€? Jeworski said. “For us, the big thing is the completion dates and having everything operational for the next crop year.â€?
In a May 15 news release, the company said facility upgrades are consistent with Glencore’s commitment to increase Viterra’s projected capital expenditures in Canada. As part of its $6.1 billion deal to acquire Viterra, Glencore pledged to increase Viterra’s projected capital expenditures by more than $100 million over five years. Jeworski said additional enhancements to Viterra’s North American assets will be announced as they take place. “Our focus is obviously on expanding our North American business so we are evaluating our current asset network and also other opportunities within North America,� he said. Before acquiring Viterra, Glencore also pledged to:
• Maintain Viterra’s head office in Regina and make it the headquarters for Glencore’s North American operations. • Invest an additional $8 million in research and development initiatives, over and above Viterra’s projected expenditures. • Contribute toward unspecified grain industry initiatives in Manitoba. • Work with the Saskatchewan government to develop a Global Institute for Food Security and contribute to the project should the province initiate it. Corporate restructuring is ongoing, and relocation of staff and positions from the Calgary office to Regina is expected to continue in the coming months.
MEGA FARMS | RESOURCE SHARING
Farm amalgamation enables management specialization
change too. By looking at farming in a new way, western Canadian producers have the opportunity to explore amalgamation and perhaps develop a competitive
edge over other jurisdictions. Griffith is an agricultural business advisor and partner with MNP in Brandon. Contact Griffith at grant.griffith@mnp.ca
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oday’s grain growers face a multitude of challenges, from increasing land values and machinery costs to labour shortages and the need to have a variety of specialized skill sets to effectively manage farming operations. Adapting to and managing these challenges as an individual- or family-run business is becoming increasingly difficult for farmers across the Prairies. As farms continue to grow, staying competitive requires thinking in a new way about farming and, in particular, the business model under which farms operate. An interesting model to consider is amalgamating with a number of other farmers to form a mega farm. The mega farm would then oversee all the farming operations, with participating farmers sharing ma nag e m e nt, e q u i p m e nt a n d labour. There are benefits to such a model, including reducing outputs in t e r m s o f ma c h i n e r y c o s t s a n d allowing for sharing of labour. If the members of the mega farm are spread out geographically, perhaps across the province, it also allows each member to diversify in that the member farms will grow different crops, have different crop rotations, and experience different growing conditions. But the biggest benefit is in the ability to strengthen overall management. Effectively managing a farming operation requires the individual grower to be skilled not just in farming but in marketing, operational issues, finance and human resources.
and they need to become more specialized if they are going to succeed. The game has changed and as a result business models need to
GRANT GRIFFITH
In sharing management, there is the opportunity to determine the roles required and establish the skill sets that are necessary to carry out those roles. The members of the mega farm can then be matched to the roles that suit their unique skill sets. This will improve success in the various areas of farm management and reduce the stress on each individual farmer. Setting up such a mega farm would have to be done properly to ensure that the structure maximizes tax benefits. Just as importantly, the variety of components the business w ill require — capital and human resource planning, buying inputs, selling commodities, day-to-day operations — must be identified, and the roles and job descriptions of the management team must be clearly defined. Farming is a strong and vibrant industry and it will continue to be so. Evolving with a different business model will help growers manage the challenges they now struggle with on their own. Amalgamation can also help address one of the biggest challenges on the western Canadian land base today — the aging population. Many farm families do not have children who want to take over the farm once the parents retire, but the families might still want to maintain ownership of the land. To do that, they need a good rate of return. Renting the land to a mega farm that is able to reduce the cost of farming could provide that rate of return and allow families to keep the land in the family name. MNP has been working with the agriculture industry for more than 65 years. Through my own work with farmers, I know that amalgamation can be a challenging idea to entertain because operations have been run by individuals and families for so many years. But as farms grow, producers find themselves dealing in big business
MANAGING THE FARM
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