Federated Co-op (FCL) on Monday announced a memo of understanding has been signed with Regina grain and pulse crop processor AGT Foods on a joint venture that will “look to construct” a canola crush plant.

The joint venture, to be majority-owned by FCL in a 51-49 split, will see a $360 million plant built to supply about 50 per cent of the feedstock for a one billion litre-per-year renewable diesel operation, the companies said.

The j.v. crush plant facility is expected to use about 1.1 million tonnes of canola seed to produce 450,000 tonnes of oil, the Saskatchewan government said in a separate release. The balance of the feedstock would be contracted from other canola crushers.

FCL on Monday described the joint-venture plant as part of a bigger $2 billion investment it plans to make in building what it called an integrated agriculture complex (IAC) at its chosen Regina site, just north of the Co-op Refinery Complex (CRC).

The IAC would include both the crush plant and the renewable diesel plant, the latter of which has been on FCL’s drawing board since before April 2021, when it bought the assets of Calgary-based True North Renewable Fuels.

Before the sale, True North had been doing preliminary work toward development of a biofuel plant in Regina and its assets are expected to allow FCL to speed up its own planning timeline.

FCL in November 2021 locked in an option to buy the land north of the CRC and said it would begin “formally assessing” the feasibility of a renewable diesel project. If approved, the renewable diesel plant would be scheduled to start operating by 2027, FCL said at the time.

FLC said Monday that both IAC investments remain “subject to continued due diligence” as well as environmental, regulatory and board approvals.

Monday’s announcement also doesn’t include a timeline for construction or the start-up of the j.v. crush plant — but it’s expected that a renewable diesel facility in Regina in 2027 wouldn’t need to look far for canola oil either way.

Cargill and Viterra last April separately announced plans to build their own canola crushing plants in the Regina area, and Ceres Global Ag in May announced plans for a crush plant near its grain terminal at Northgate, Sask., about 60 km southeast of Estevan near the U.S. border. Also, Winnipeg-based Richardson International in March announced plans for a major expansion of its existing canola plant at Yorkton, about 185 km northeast of Regina.

The FCL/AGT venture “demonstrates Saskatchewan’s leadership in plant-based foods, fuels and feeds and brings together two Saskatchewan companies with the shared goals of decarbonizing our economy and adding value to western Canadian crop production,” AGT CEO Murad Al-Katib said Monday in FCL’s release.

“We believe that AGT’s capabilities in grain logistics and plant protein ingredients combined with FCL’s strong history in energy and farm inputs creates a powerful partnership that will benefit the communities in which we operate.”

FCL’s Co-op Retailing System is believed to be “well-positioned to integrate and capture the full agricultural value chain in the production of fuel and value-added products,” FCL CEO Scott Banda said in the same release.

An FCL-AGT crush plant would “ensure” Saskatchewan beats the target laid out in its 2030 Growth Plan of processing 75 per cent of the canola grown there, the province said in its release Monday.

With an estimated gross economic output of $4.5 billion across “all economic realizations” connected with the facility, the proposed IAC also “supports the Growth Plan goal of increasing agriculture value-added revenue to $10 billion,” the province said. — Glacier FarmMedia Network

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FCL spokesperson Cam Zimmer did not comment on the reason for offering to sell the production business but said the co-op is committed to owning its Regina refinery long-term.

FCL, which made $7.9 billion in sales last year from energy, crop supplies and food, is offering to sell its crude unit, which includes a production base of 3,000 barrels of oil equivalent per day, mostly liquids, and 550,000 hectares of land across Saskatchewan, Alberta and British Columbia, according to the document issued on Monday by Bank of Montreal.

The bank is handling the sale.

Also for sale is FCL’s stake in a carbon capture project at Weyburn, Sask. operated by Whitecap Resources.

The assets may be worth $80 million to $100 million, an industry source said.

In May, FCL said it planned to cut an undisclosed number of jobs at the refinery, after pandemic lockdowns hit its energy revenues in 2020.

More than half of FCL’s revenue came from energy last year, according to its annual report.

— Rod Nickel is a Reuters correspondent in Winnipeg.

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The federal Competition Bureau on Wednesday announced an agreement with Federated Co-operatives (FCL) and the ag retail arm of the Saskatchewan-based Blair’s Family of Companies toward approval of their proposed joint venture.

Blair’s and FCL in February had announced the joint venture to own and operate the seven Blair’s ag retail outlets at Lanigan, Nokomis, Watrous, Liberty, McLean, Lipton and Rosthern.

The joint venture will now start operating effective July 31, the companies said Wednesday.

The bureau said Wednesday its agreement with FCL and Blair’s will “preserve competition for the sale of crop inputs in the area of Lipton,” about 90 km west of Melville.

If it were approved with no conditions, the proposed venture would “likely substantially lessen competition” in retail crop inputs such as fertilizers, ag chemicals and seeds, leading to “higher prices and lower service quality for local growers” in the rural municipalities of Cupar, Kellross, Lipton and North Qu’Appelle, the bureau said.

Melville-based Prairie Co-op, a member of the FCL group of co-operatives, also operates ag retail centres in the area, including one at Lipton and others at nearby communities including Ituna, Cupar and Kelliher, as well as at Melville and Strasbourg.

Other ag retailers in the Lipton area are not “vigorous competitors” to Prairie Co-op or Blair’s, lack the “infrastructure and ability to effectively serve anhydrous ammonia customers,” and aren’t likely to expand services in reaction to the FCL/Blair’s venture, the bureau said.

Thus, FCL and Blair’s must sell the Blair’s site at Lipton, along with Blair’s anhydrous satellite sites at Lipton and nearby Balcarres, once they find a buyer acceptable to the federal Commissioner of Competition.

Until then, the Lipton site will operate under “an expanded preservation order, including an information firewall, in order to protect and preserve the divestiture assets.”

In its ruling, the bureau said the joint venture was otherwise “unlikely to result in a substantial lessening of competition” at the six remaining Blair’s sites. It sees “effective remaining competition in those areas” and/or a “low degree of competitive rivalry” between Blair’s and nearby Co-op stores.

The sites operating under the new joint venture “will offer a broad range of crop input and animal nutrition products and services to continue to meet the business needs of local area farmers and ranchers,” FCL and Blair’s said in February.

The six sites will continue to operate under the Blair’s banner and Blair’s staff will “continue to manage the day-to-day operations.”

The retail businesses going to the new venture include Blair’s AgIntelligence ag consulting services, its proprietary PerforMax line of beef cattle nutrition products, and other feed products for the poultry, hog, sheep, horse and dairy sectors and companion animals.

Other Blair’s-owned businesses — such as its Texcana Logistics fertilizer terminal near Hanley, Sask., and its farming operations, including Blair’s Ag Cattle Co. — are not part of the joint venture. — Glacier FarmMedia Network

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Blair’s and Federated Co-operatives (FCL) announced last week they’ve reached an agreement to set up a joint venture which, pending regulatory approvals, will own and operate the seven Blair’s ag retail outlets in central and southeastern Saskatchewan.

The seven locations, at Lanigan, Nokomis, Watrous, Liberty, McLean, Lipton and Rosthern, “will offer a broad range of crop input and animal nutrition products and services to continue to meet the business needs of local area farmers and ranchers.”

The retail business includes Blair’s AgIntelligence ag consulting services, its proprietary PerforMax line of beef cattle nutrition products, and other feed products for the poultry, hog, sheep, horse and dairy sectors and companion animals.

Other Blair’s businesses, such as its Texcana Logistics fertilizer terminal near Hanley, Sask., and its farming operations including Blair’s Ag Cattle Co., will not be part of the joint venture with Saskatoon-based FCL, the companies said.

Blair’s management and staff will continue to lead the day-to-day operations of the ag retail business, the companies said Feb. 3 in a release.

Financial terms of the deal weren’t released, though the companies said the new venture will be subject to closing conditions including Competition Bureau approval and other clearances.

The bureau must be notified of transactions when the involved assets in Canada, or revenues from sales in or from Canada generated from those assets, are valued at $93 million minimum. That threshold for 2021 was announced Thursday and is expected to take effect Saturday.

“Blair’s is a trusted and well-respected local family business with history of serving farm customers and communities for generations, and whose values match our own,” Ron Healey, FCL’s vice-president for ag and consumer business, said in the companies’ release.

“The joint venture is an opportunity for FCL to expand our presence in central and southeastern Saskatchewan, which will ultimately benefit our local Co-op member-owners and the entire Co-operative Retailing System.”

“We believe the joint venture with FCL, which shares the same core values and long-term commitment to agriculture as us, will ensure that we continue demonstrating value to our customers, employees and communities in the future,” Blair’s chief operating officer Darren Blair said in the same release. — Glacier FarmMedia Network

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FCL announced Monday it has budgeted $5 million to add 9,000 tonnes of capacity at the Co-op Fertilizer Terminal at Brandon, bringing its maximum storage to 36,500 tonnes.

Work began at the site in late October and is projected to be complete early next summer, the Saskatoon-based co-operative said.

The Brandon facility and its 45,000-tonne capacity sister site at Hanley, Sask., about 55 km south of Saskatoon, were opened in April 2017, followed by a third Prairie terminal in October this year at Grassy Lake, Alta., about 80 km east of Lethbridge, with capacity for 34,400 tonnes.

“Since we opened the (Brandon) terminal three years ago, customer demand has really exceeded our expectations,” Patrick Bergermann, FCL’s associate vice-president of ag and home, said in a release.

“Growers and truckers alike have really appreciated the incredibly fast service at this terminal which typically sees them safely loaded and back out on the road within 15 minutes.”

The Brandon site warehouses, blends and distributes fertilizer products for Co-op locations and farmers in Manitoba and eastern Saskatchewan. It also provides warehouse storage for liquid micronutrients and nitrogen stabilizers, “ensuring farmers have access to the latest in fertilizer technology,” FCL said.

When it announced its plans for the high-throughput Brandon and Hanley terminals in 2016, FCL said each would be able to load a super-B trailer with blended fertilizer in 10 minutes.

The new expansion is expected to allow the Brandon site to store more specialty products to support 4R nutrient stewardship, Bergermann said.

“4R” refers to a group of best management practices for sustainable fertilizer application — the “right” source, rate, time and place — in a manner that matches nutrient supply to crop requirements and limits nutrient losses from fields.

The stewardship program calls for fertilizers to be applied in forms that are “plant-available” or convert readily to plant-available forms in soil; that suit the properties of the soil; that complement other available or applied nutrients; and that blend in a compatible way. — Glacier FarmMedia Network

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The deal, if ratified in an employee vote, would end the lockout at Federated Co-operatives’ (FCL) Co-op Refinery Complex (CRC), a major bulk fuel supplier to farmers and rural co-ops across the West.

The Regina refinery will “begin the process of welcoming hourly employees back to work” when or if a new contract is ratified, FCL said Thursday.

Details of the proposed deal weren’t released in statements from FCL or the workers’ union, Unifor 594. FCL said the deal “balances an appreciation for our unionized employees with the fiscal realities of the refining sector.”

Unifor 594 said it “worked to ensure the ‘return to work’ protocol protected members and local union leaders from retribution from Co-op.”

The union’s 730-odd members at the CRC were locked out Dec. 5 after serving 48 hours’ strike notice, mainly over FCL’s proposals to move employee pension plans from a “defined benefit” to a “defined contribution” model.

The labour dispute and related picketing have weighed intermittently on Prairie farmers, such as when affected fuel stations briefly imposed volume caps on purchases in February.

Last month, Unifor published a notice saying it was “in a position where disrupting the flow of fuel to farmers during seeding is the only option we have to get back to work.”

FCL said Thursday it’s “optimistic that an agreement can be reached as the union bargaining committee has tentatively accepted the deal and will recommend it to their membership.”

“This deal, if accepted by bargaining unit employees, along with the operational efficiencies our team has recently realized, will go a long way towards ensuring a sustainable CRC for generations to come,” Gil Le Dressay, FCL’s vice-president for refinery operations, said in its release.

“The labour disruption has been a difficult process for everyone involved, but we are hopeful that the membership will ratify the deal and our employees will return to work soon.”

“Nasty”

The union’s statement on Thursday implied hard feelings may linger regardless of the vote’s outcome. Unifor 594 local president Kevin Bittman on Thursday hailed workers as having “never wavered throughout this nasty dispute.”

The lockout, he said, was “union-busting from an employer that has made billions off of our backs and together we fought and defended our collective agreement.”

A tentative deal “would have been signed weeks ago but Co-op showed their true colours by punitively continuing the lockout,” Unifor negotiator Scott Doherty said in the same release.

FCL, he said, “will have to try and build back a dedicated and committed workforce that will not forget the disrespect they felt from this profitable employer.”

The National Farmers Union, a booster of the co-operative system, had called in January for FCL to end its lockout, saying the circumstances showed “it has become harder to see how (FCL) is different from other companies.”

The Agricultural Producers Association of Saskatchewan (APAS) had also raised concerns about the ongoing dispute, saying last month that “in many cases farmers replenish their fuel supply daily and traveling long distances to avoid picket lines is not an option.”

The Regina refinery can produce up to 130,000 barrels of refined petroleum products per day and ships up to 17 million litres of product per day, supplying over 650 retail co-ops operating fuel stations and cardlocks across the West.

The CRC operation in Regina dates back to 1935, when area farmers put up money to build what was billed as the world’s first co-operative oil refinery. — Glacier FarmMedia Network

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Unifor 594, whose 730-odd members at the CRC were locked out Dec. 5 after serving 48 hours’ strike notice on FCL, aired that warning in a “Dear Farmers” note posted May 13 on its website.

In its note, Unifor recapped its version of talks between the company and union, plus the recommendations from mediators appointed in February by the Saskatchewan government.

After the mediators’ recommendations were released in a report in March, CRC management said it was “unable to accept all aspects of the report’s recommendations in their entirety and will need to make modifications.”

“At that point, it was clear that FCL CEO Scott Banda didn’t want us back at work, even if they got what they wanted,” the union said in its May 13 note.

Unifor said it had been willing to accept the mediators’ recommendations, which it said would mean “collective losses of up to $20 million a year” for its members.

“We are in a position where disrupting the flow of fuel to farmers during seeding is the only option we have to get back to work,” Unifor said in the May 13 note. “We do not want to do that, but our options are limited when the company does not want a deal.

“We do not want the lockout and fuel production issues to stand in the way of farmers getting their seeding done but FCL doesn’t seem to care.”

Rather, the union in its note urged farmers to contact their provincial MLAs and “tell them this dispute must end.”

Specifically, the union said it wants Premier Scott Moe’s Saskatchewan Party government “to follow through and impose the mediators’ recommendations on both parties.”

Early delivery

In response to emailed questions, an FCL representative said Thursday that farmers “should not be worried by Unifor’s threat to disrupt their fuel supply from Co-op.”

FCL said its member Co-ops have “an all-time high inventory of fuel,” and are still supplying farm customers.

The company also said it’s “unaware of any disruption where our farm customers have been unable to receive the fuel they need to complete last year’s harvest or this year’s spring seeding.”

That said, Agricultural Producers Association of Saskatchewan (APAS) noted May 8 in a separate release that it was concerned about access to cardlock stations and rural fuel supplies, “after a recent picket line made it difficult to access a Co-op site in Moose Jaw this week.”

FCL, in a previous statement in late March, said it had already “proactively positioned fuel throughout our extensive fuel distribution network to be as close to our farm customers as possible, whether it be through bulk delivery or at our cardlocks.”

Co-ops have had an “active early delivery program going into spring as well as active usage of our just-in-time delivery through our facilities located across Western Canada,” FCL said Thursday.

The company added it’s tough to estimate how much fuel is still needed on-farm, given the “unique” spring with “both harvesting and seeding occurring.”

Crop progress

Saskatchewan’s agriculture department on Thursday reported spring seeding at 51 per cent complete as of May 18, matching the five-year average for the time of year. Dry conditions “allowed seeding to progress steadily” and for farmers to get into overwintered fields that were “previously too wet to combine.”

Alberta officials reported seeding at about 20.7 per cent complete on average as of May 12, Out of last fall’s unharvested acres across the province, 14 per cent of spring wheat acres, 12 per cent of barley, 29 per cent of oats and 16 per cent of canola acres remained on fields as of the same date.

Manitoba agriculture officials on Tuesday reported seeding at about 42 per cent complete at the end of the second week of May, down from the three-year average of about 55 per cent. Leftover harvest work is ongoing in some regions and the “majority” is done in the province’s southwest.

Still, APAS president Todd Lewis, in the group’s May 8 release, warned that many producers rely on cardlock stations as their primary source of fuel.

“In many cases farmers replenish their fuel supply daily and traveling long distances to avoid picket lines is not an option,” he said.

As for FCL’s outlook on the labour dispute, the company reiterated Thursday it has “made our best and final offer. Despite a major deterioration in market conditions, the offer has not been withdrawn.”

Unifor “claims they don’t have any choice other than to try and disrupt the fuel supply to farmers, but that’s not true,” FCL said. “They have a choice to return to work by accepting our best and final offer, which provides a total compensation package that exceeds the CRC’s refinery competitors.”

“Saskatchewan producers are not in a position to weigh in on or resolve the dispute between union and management,” APAS’s Lewis said of the labour dispute. “But disrupting our essential fuel supply at a critical, time-sensitive period for agriculture is not to anyone’s advantage.”-– Glacier FarmMedia Network

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Federated Co-operatives Limited (FCL) announced Thursday it will close its Calgary food distribution centre in April, a decision it said will eliminate just over 200 jobs in the city.

The wind-down of the Calgary warehouse will begin “soon,” FCL said, and products for other co-ops in Alberta and B.C. will “gradually” be shipped by way of FCL warehouses in Edmonton and Saskatoon.

The closure follows Calgary Co-op’s announcement in August that it would halt its grocery procurement from FCL as of April 20 and will instead source groceries for its network of food stores from the Alberta distribution arm of Vancouver-based Save-on-Foods.

In a memo to member customers in August, Calgary Co-op said it’s “positioning our food business to further enhance our focus on Calgary with more local products and communications tailored specifically to you.”

Calgary Co-op, which by itself is one of the largest retail co-operatives in North America, includes food stores, fuel stations and convenience stores in Calgary, Airdrie, Cochrane, High River, Okotoks and Strathmore.

The co-operative said in August it plans to continue to source its fuel and convenience store products from FCL. Also, Calgary Co-op noted, its High River food store “will continue to be supplied by (FCL).”

“Our food stores operate in a very competitive environment under continuing challenging economic conditions in Calgary,” Calgary Co-op said in August, adding that the move “provides us with the flexibility to focus our merchandising, marketing and IT programs.”

Calgary Co-op grossed $1.3 billion in sales across its various business lines in 2018, including food, fuel, liquor, home centres, health care and cannabis products. Of that, $671.55 million was in food alone.

Calgary Co-op, in its 2018 annual report, said it holds about 10 per cent of the shares in FCL. Calgary Co-op’s total purchases from FCL in 2018, across all business lines, were valued at $720.5 million, representing about 70 per cent of the Calgary association’s total purchases that year.

“In a city that’s already experiencing significant economic challenges, Calgary Co-op’s decision has led to more jobs being lost, and more families facing challenges,” FCL executive vice-president Vic Huard said Thursday in a release.

“By aligning itself with a competitor, Calgary Co-op has directly and negatively impacted our employees, their families, and Calgary’s economy.”

Also, FCL said, Calgary Co-op’s move is expected to reduce FCL revenue by $400 million, which in turn is expected to have a “negative effect” on profit-sharing returns from FCL to the 170 Western Canada co-ops involved in the Co-operative Retailing System.

That includes Calgary Co-op, which FCL said has received $186.4 million in such profit-sharing over the five-year period ending in 2018.

Saskatoon-based FCL “will also continue to evaluate all aspects of our operations to determine if further steps need to be taken,” Huard said.

Some Calgary Co-op members, he said, “have contacted us asking how this decision to move to a competitor happened without Calgary Co-op’s members being consulted. That’s not something we can answer — it’s really a question they need to ask the CEO and board of the co-op that they, as members, own.” — Glacier FarmMedia Network

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Saskatoon-based FCL said Thursday it had received notice from Calgary Co-operative Association that it would “discontinue the procurement of all products for their grocery stores from FCL” at that time.

The Saskatoon StarPhoenix newspaper on Wednesday quoted a Calgary Co-op spokesperson as saying the grocery chain “operates in an increasingly challenging economic and competitive market” and will “reflect our members’ needs” by “positioning our food business model for unique differentiation.”

The Calgary association told the newspaper it plans to continue working with an increasing number of local producers.

FCL, which is owned by retail co-operatives across Canada’s West, said Calgary remains an FCL member co-op and its decision affects its grocery procurement alone.

Calgary Co-op, FCL said, continues to be part of the Co-operative Retailing System (CRS) and will continue to get its fuel supply from FCL.

The CRS serves member co-ops’ grocery stores, gas stations, convenience stores, agro centres, home centres and liquor vendors.

“Working together is at the heart of Co-op, which is why this news is so disappointing,” FCL CEO Scott Banda said in a release Thursday.

“It’s sad to see (Calgary Co-op) moving away from the co-op family they’ve helped build, and that has supported them in the past, but our senior leadership team and board of directors had prepared for this possibility and we’re now evaluating impacts and planning our next steps.”

That review will look at impacts from this decision on other local co-ops across Western Canada, FCL said, and at the “hundreds of positions” at FCL’s distribution centres in Calgary, plus the “business support positions (at FCL) that are largely dedicated to serving Calgary Co-op and its grocery business.”

Banda said Calgary’s move will have a “short-term impact” on the CRS, but FCL “remains committed to ensuring that local co-ops continue to provide high-quality food store services in their communities.”

Calgary Co-op grossed $1.3 billion in sales across its various business lines in 2018, including food, fuel, liquor, home centres, health care and cannabis products. Of that, $671.55 million was in food alone.

Calgary Co-op, in its 2018 annual report, said it holds about 10 per cent of the shares in FCL. Calgary Co-op’s total purchases from FCL in 2018, across all business lines, were valued at $720.5 million, representing about 70 per cent of the Calgary association’s total purchases that year. –– Glacier FarmMedia Network

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FCL announced Wednesday it will buy the Terra Grain Fuels ethanol plant in the RM of Pense near Belle Plaine, about 25 km east of Moose Jaw, for an undisclosed sum.

TGF, owned by local investors and producers, has capacity to produce about 150 million litres of ethanol per year, requiring over 400,000 tonnes of grains and “starch-rich” crops from over 400 growers and producing up to 160,000 tonnes of dried distillers grains (DDG).

Cal Fichter, FCL’s vice-president for energy, said the deal, expected to close by the end of the month, “prepares us to meet the incoming national Clean Fuel Standard” while allowing local co-ops to provide transport fuels to members to meet existing renewable fuels standards.

The Co-operative Retailing System, which provides central wholesale services to FCL’s 200-odd member co-ops, currently includes 780 gas bar and card lock locations across Western Canada.

FCL on Wednesday also pledged to invest in “making the (TGF) plant more efficient and pursuing carbon capture and storage technologies.”

FCL said it will continue to operate TGF with its current staff of 45 employees, and the TGF business will also continue “working directly with all of its existing clients and partners.”

“This is a big win for TGF, FCL, the province of Saskatchewan and all of our stakeholders,” TGF president Calvin Eyben said in the same release. “To our valued customers, suppliers and other business partners, it will be business as usual for TGF and we don’t anticipate any interruptions during this transition period.”

Built starting in 2006 at a cost of about $130 million, TGF has been producing ethanol since 2008, contracting mainly for high-starch, low-protein such as CPS reds and whites, soft white wheats and winter wheats. The company currently bills itself as the largest wheat ethanol plant in North America. — Glacier FarmMedia Network

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