Ross Johns remembers when the idea first occurred to him. It was in the heart of China about eight years ago. He was there on a trade mission, representing Australian farmers through his work as a director of ABB, the former Australian Barley Board.
Late one afternoon, the Australian farmer and his colleagues happened on another group of westerners and a conversation was struck up.
As it turned out, the other group were representatives of the Canadian Wheat Board, including western Canadian farmers who were in China on a similar tour, and their chance meeting led to dinner and a long conversation about the grain industry and agriculture in their respective countries.
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“It was like meeting your long-lost family,” Johns recalls. “There were just incredible similarities between the countries, the industries, the farms and the individuals. Canadians are like the cousins you’ve never met.”
Johns left that impromptu gathering with an inkling that the two nations had far more in common than he’d previously realized and an intuition that the path forward for both industries should lay more in co-operation and co-ordination than in cut-throat competition.
Even so, when Country Guide reached Ross Johns this winter at his farm near Warracknabeal, just north-west of the city of Horsham, Victoria, it was hard not to think about the differences and distance between the two countries.
The telephone transmission wavered and crackled occasionally, and Johns discussed the excellent recent harvest. At
8:00 a. m. (i. e. 3:00 p. m. the previous day back in Canada) it was already 26C in Australia, with a high of 37C forecast for later that day. Meanwhile, Winnipeg was locked in the freezer with temperatures showing little if any ambition to break out of a brutal chill that had hung on for weeks.
But as Johns spoke, the distance shrank, the accents faded and the differences disappeared, and the picture that emerged was of two countries and industries with such incredible similarities and shared interests that it would be impossible to ignore them.
“Our legal systems, our ethics, our business climate, the similarities in our grains industries, both countries share so much and are so similar — at times it can be like looking in a mirror,” Johns says. “They might be coming from opposite ends of the globe, but there’s lots of logic in their coming together.”
Shared strengths, challenges
There’s no arguing that Australia and Canada share plenty in common, right back to our founding as countries. Both are children of the British Crown and, along with New Zealand, they form a trinity of former UK colonies with shared history, shared common law, and a certain unspoken understanding of each other.
“In many ways we’re like three brothers,” Johns says. “We sort of ‘get it’ in terms of the way we do business.”
In the corporate world, this is known as the kind of undefinable but extremely important ‘cultural’ issue that can make or break the best-laid plans of merger and joint venture. Canada and Australia come by it naturally from our shared heritage, Johns insists, and he goes on to catalogue a list of more nuts-and-bolts business and strategy criteria for the grain industry in order to make an even more compelling case.
Home Away From Home
As Ross Johns begins to talk about the region, you can hear the excitement build in his voice. The wide-open spaces. The productive farms. The hardworking and resourceful farmers.
When you get to know farmers, you say, that kind of talk is hardly unexpected when they’re talking about home. Well, there’s a catch here. The Australian farmer isn’t talking about his home patch in the north-east corner of the state of Victoria. He’s talking about the Canadian Prairies.
Johns might drive a “ute” not a pickup truck and he may call his combine a “header” — but he says every time he’s visited Western Canada he’s felt right at home.
“They are just incredibly similar,” he says. “The space, the communities, the families — relative to each other there are just so many similarities.”
During the ABB/Viterra buyout talks Johns had repeated occasions to visit Western Canada and he says every time he did, he became more convinced that the move was the right one. It made good business sense and, just as importantly, it made good sense from a people perspective. In the Canadians he sensed good business partners for Australian farmers.
“Every time I’ve been there I’ve enjoyed the place and the people,” Johns says. “I really like coming to Western Canada.”
Both Australia and Canada are based on the same handful of grains, oilseeds and pulse crops that they grow extremely well. Both sectors are highly efficient, highly mechanized and on large-acreage farms. Both were even early adopters of the zero-tillage production system, perfected here in the 1980s and early 1990s.
“We buy a lot of zero-till equipment from Canada,” notes Johns.
Once the crop is off the field, the similarities don’t end. If anything they’re magnified. Both sectors export the vast majority of their crop. Australia ships about 80 per cent of its crop overseas most years, while about 70 per cent of the Canadian crop heads to port.
Both nations are also widely known as premium quality suppliers throughout the global marketplace, something that has meant long-standing alliances and arrangements with international buyers. They even share many key markets throughout Asia, which is how Johns participated in that first and fateful informal meeting of the minds.
The two nations also share some of the same farm challenges, as average farm size increases, smaller communities falter, and the rural population falls. The remaining larger farms frequently find themselves stuck in an ever-tightening cost-price squeeze.
In short, the two industries are in many ways reflections of each other from opposite sides of the globe.
But among those similarities and challenges can be found opportunities, says Johns. Not least of those are opportunities for the grain buying and handling companies. Both jurisdictions are home to plenty of former farmer-owned grain handling cooperatives and until recently both had single sales desks through the ABB and Australian Wheat Board in Australia and the Canadian and the Ontario wheat boards in Canada.
It’s meant less rationalization through mergers and buyouts than in other jurisdictions, where a handful of global giants rule. This means there remain Australian and Canadian companies that can take advantage of these opportunities and build a new foundation with a foot in either country.
An idea in action
It was this conviction that led Johns to be an early and vocal advocate of the recent buyout of the ABB by the Regina, Saskatchewan grain handler Viterra (formerly the Saskatchewan Wheat Pool). He says a few years ago it became obvious to the ABB board that a strategic alliance with another organization in another country was the right path forward for the company.
When the ABB management and directors began looking around for possible alliances, they quickly settled on two likely areas — the U. S. Pacific Northwest and the Prairies of Canada. While the U. S. probably could have worked, Johns says the Canada-Australia move made more sense to him, as did the fit between Viterra and ABB.
“It was a natural fit, putting ABB and Viterra together,” Johns says of the $1.6 billion buyout that saw Viterra purchase ABB and its elevator and port assets. “That followed on the natural fit between Australia and Canada. It was a very natural, pragmatic step — it’s not anything anyone should be surprised about.”
It was also a necessary move, given the relative size of the Canadian and Australian companies in the global marketplace. During a presentation this winter in Saskatoon, Johns told Canadian farmers gathered for a farm leadership conference that on their own Viterra or the ABB were small players, dwarfed by the major multinationals. When combined they’re still a bit smaller, but they now have additional market heft.
The company that is the result of this strategic acquisition is in an enviable position, Johns says. It now competes in two major grain-exporting markets, and is largely insulated from the weather woes that can take a bite out of the bottom line of a grain marketer operating in just one of the regions.
“When I looked back at the weather data for the past couple of decades, I couldn’t find an example of a drought here that coincided with a drought or frost in Canada,” explains Johns.
It is, in fact, such a natural fit that he suspects the ABB/Viterra deal is just the first, not the last, collaboration between Australian and Canadian grain companies.
“I think there may be further rationalization in both the Australian and Canadian industries and I think it would be an excellent move to keep this relationship growing,” Johns says.
Home Away From Home
As Ross Johns begins to talk about the region, you can hear the excitement build in his voice. The wide-open spaces. The productive farms. The hardworking and resourceful farmers.
When you get to know farmers, you say, that kind of talk is hardly unexpected when they’re talking about home. Well, there’s a catch here. The Australian farmer isn’t talking about his home patch in the north-east corner of the state of Victoria. He’s talking about the Canadian Prairies.
Johns might drive a “ute” not a pickup truck and he may call his combine a “header” — but he says every time he’s visited Western Canada he’s felt right at home.
“They are just incredibly similar,” he says. “The space, the communities, the families — relative to each other there are just so many similarities.”
During the ABB/Viterra buyout talks Johns had repeated occasions to visit Western Canada and he says every time he did, he became more convinced that the move was the right one. It made good business sense and, just as importantly, it made good sense from a people perspective. In the Canadians he sensed good business partners for Australian farmers.
“Every time I’ve been there I’ve enjoyed the place and the people,” Johns says. “I really like coming to Western Canada.”
Both Australia and Canada are based on the same handful of grains, oilseeds and pulse crops that they grow extremely well. Both sectors are highly efficient, highly mechanized and on large-acreage farms. Both were even early adopters of the zero-tillage production system, perfected here in the 1980s and early 1990s.
“We buy a lot of zero-till equipment from Canada,” notes Johns.
Once the crop is off the field, the similarities don’t end. If anything they’re magnified. Both sectors export the vast majority of their crop. Australia ships about 80 per cent of its crop overseas most years, while about 70 per cent of the Canadian crop heads to port.
Both nations are also widely known as premium quality suppliers throughout the global marketplace, something that has meant long-standing alliances and arrangements with international buyers. They even share many key markets throughout Asia, which is how Johns participated in that first and fateful informal meeting of the minds.
The two nations also share some of the same farm challenges, as average farm size increases, smaller communities falter, and the rural population falls. The remaining larger farms frequently find themselves stuck in an ever-tightening cost-price squeeze.
In short, the two industries are in many ways reflections of each other from opposite sides of the globe.
But among those similarities and challenges can be found opportunities, says Johns. Not least of those are opportunities for the grain buying and handling companies. Both jurisdictions are home to plenty of former farmer-owned grain handling cooperatives and until recently both had single sales desks through the ABB and Australian Wheat Board in Australia and the Canadian and the Ontario wheat boards in Canada.
It’s meant less rationalization through mergers and buyouts than in other jurisdictions, where a handful of global giants rule. This means there remain Australian and Canadian companies that can take advantage of these opportunities and build a new foundation with a foot in either country.
An idea in action
It was this conviction that led Johns to be an early and vocal advocate of the recent buyout of the ABB by the Regina, Saskatchewan grain handler Viterra (formerly the Saskatchewan Wheat Pool). He says a few years ago it became obvious to the ABB board that a strategic alliance with another organization in another country was the right path forward for the company.
When the ABB management and directors began looking around for possible alliances, they quickly settled on two likely areas — the U. S. Pacific Northwest and the Prairies of Canada. While the U. S. probably could have worked, Johns says the Canada-Australia move made more sense to him, as did the fit between Viterra and ABB.
“It was a natural fit, putting ABB and Viterra together,” Johns says of the $1.6 billion buyout that saw Viterra purchase ABB and its elevator and port assets. “That followed on the natural fit between Australia and Canada. It was a very natural, pragmatic step — it’s not anything anyone should be surprised about.”
It was also a necessary move, given the relative size of the Canadian and Australian companies in the global marketplace. During a presentation this winter in Saskatoon, Johns told Canadian farmers gathered for a farm leadership conference that on their own Viterra or the ABB were small players, dwarfed by the major multinationals. When combined they’re still a bit smaller, but they now have additional market heft.
The company that is the result of this strategic acquisition is in an enviable position, Johns says. It now competes in two major grain-exporting markets, and is largely insulated from the weather woes that can take a bite out of the bottom line of a grain marketer operating in just one of the regions.
“When I looked back at the weather data for the past couple of decades, I couldn’t find an example of a drought here that coincided with a drought or frost in Canada,” explains Johns.
It is, in fact, such a natural fit that he suspects the ABB/Viterra deal is just the first, not the last, collaboration between Australian and Canadian grain companies.
“I think there may be further rationalization in both the Australian and Canadian industries and I think it would be an excellent move to keep this relationship growing,” Johns says.
Grassroots movement
While Johns can offer Country Guide readers a unique perspective on the boardroom calculus that led to the ABB/Viterra deal, he stresses that these natural alliances aren’t just limited to the corporate world. He says there’s plenty of evidence that farmers can benefit individually by working together through their industry organizations.
Since the ABB/Viterra merger Johns has left the board of that organization, but he’s filled up that time with a new position on the board of the Grains Research and Development Corporation, the body that administers Australia’s grains checkoff and determines research priorities for that money.
“I know the GRDC is certainly interested in what you’re doing in Canada,” he says. “In the research area (this co-operation) is probably already happening.”
Another obvious fit is the burgeoning pulse crop industries in both countries. Australia and Canada have both become major exporters in the past few years, and both share many of the same concerns about crop development work, say Murray Purcell, the farmer chair of Saskatchewan Pulse Growers (SPG).
“The SPG recognizes what they’re doing in Australia in terms of crop genetics,” Purcell says. “We may be able to partner with them worldwide. They have things we can use in Saskatchewan and we have things the Australians could use.”
That’s hardly surprising when you consider that the two industries not only grew up at roughly the same time, they share a unique history of being one of the first major mechanized production areas to grow the crops. That’s meant challenges that breeders in other locations don’t care as much about — like a lentil crop that stands tall enough to be harvested with the traditional grain equipment of the region.
What is clear is that the development of this special relationship between the two grain industries on opposite sides of the globe will be an incremental process that can’t be forced, says Johns. He says each possible merger, joint venture or partnership will have to live and die on its own merits.
“I don’t think it’s a case of there being a ‘rational endpoint’,” Johns says. “We’re all out to grow our businesses and we’ll expand the relationship as we see fit and we’ll go steadily about that.”
“I’m pretty confident it will continue. There are more opportunities out there between Canadian and Australian farmers.” CG
Grassroots movement
While Johns can offer Country Guide readers a unique perspective on the boardroom calculus that led to the ABB/Viterra deal, he stresses that these natural alliances aren’t just limited to the corporate world. He says there’s plenty of evidence that farmers can benefit individually by working together through their industry organizations.
Since the ABB/Viterra merger Johns has left the board of that organization, but he’s filled up that time with a new position on the board of the Grains Research and Development Corporation, the body that administers Australia’s grains checkoff and determines research priorities for that money.
“I know the GRDC is certainly interested in what you’re doing in Canada,” he says. “In the research area (this co-operation) is probably already happening.”
Another obvious fit is the burgeoning pulse crop industries in both countries. Australia and Canada have both become major exporters in the past few years, and both share many of the same concerns about crop development work, say Murray Purcell, the farmer chair of Saskatchewan Pulse Growers (SPG).
“The SPG recognizes what they’re doing in Australia in terms of crop genetics,” Purcell says. “We may be able to partner with them worldwide. They have things we can use in Saskatchewan and we have things the Australians could use.”
That’s hardly surprising when you consider that the two industries not only grew up at roughly the same time, they share a unique history of being one of the first major mechanized production areas to grow the crops. That’s meant challenges that breeders in other locations don’t care as much about — like a lentil crop that stands tall enough to be harvested with the traditional grain equipment of the region.
What is clear is that the development of this special relationship between the two grain industries on opposite sides of the globe will be an incremental process that can’t be forced, says Johns. He says each possible merger, joint venture or partnership will have to live and die on its own merits.
“I don’t think it’s a case of there being a ‘rational endpoint’,” Johns says. “We’re all out to grow our businesses and we’ll expand the relationship as we see fit and we’ll go steadily about that.”
“I’m pretty confident it will continue. There are more opportunities out there between Canadian and Australian farmers.” CG
