Strategic Alliances and Joint Ventures under Nafta: Concepts and Evidence

Cooperative business relationships are dramatically changing the structure of the North American agri-food sector. An examination of recent events in the grain industry reveals the extent to which cooperative ventures are becoming integrated into international agribusiness. When Cargill decided to expand its presence in Canada it participated in several joint ventures, one with Hazzard Farm Services in a grain elevator business, another with Agricore in a Vancouver port terminal and several with retail level dealers. Competitor ADM entered into a joint venture with United Grain Growers (UGG) of Manitoba purchasing 40 percent of UGG. ADM provided an infusion of funds and secured access to 170 grain elevators in the Canadian prairie provinces in return. Among its myriad of other alliances, ADM has an alliance with Grupo Maseca (GRUMA) of Mexico, the market leader in wet corn milling, flour mills and soybean products, and it recently acquired 22 percent of the stock in GRUMA. Meanwhile, Saskatchewan Wheat Pool (SWP) entered into three joint ventures: a port facility in Manzanillo with Comercializadora La Junta (CLJ) of Mexico; a grain elevator in Northgate, North Dakota with General Mills; and a terminal in Gdansk, Poland with European partners. SWP was also involved in a long standing relationship with Canadian competitor, Agricore, to market grain internationally through a joint venture agency, XCAN.