July 23, 2011

 

Bunge may further expand new rapeseed-crushing plant

 

 

Bunge Ltd. is cashing out more than US$100 million on a new rapeseed-crushing plant in Altona and could spend more millions on other facilities as it carves a place for itself in a post-Canadian Wheat Board world.

 

Soren Schroeder, the head of the global grain giant's North American operations, said in an interview Thursday (Jul 21) Bunge wants to start buying wheat and barley from western Canadian grain farmers if the federal government follows through with its plans to remove the board's marketing monopoly next year.

 

To do that, it would need to build or buy grain elevators on the Prairies, Schroeder said.

 

The suggestion that a global company like Bunge wants to enter the Prairie grain business is not a shock to industry players, but it would add a significant wrinkle to the changing dynamics of the industry.

 

"It would be surprising if they (Bunge) were not looking at this as an opportunity," said Kevin Hursh, executive director of the Inland Terminal Association of Canada, representing farmer-owned elevators.

 

Hursh estimated the 10 members of his association handle about 10% of CWB grain. The Big Three Canadian grain companies - Viterra Inc., Richardson International Ltd. and Cargill Canada - handle the lion's share of the rest. Paterson Grain, Parrish & Heimbecker Ltd. and Louis Dreyfus Canada also have inland terminals. They are represented by the Western Grain Elevators Association (WGEA).

 

A substantial restructuring of the inland terminal network took place about a decade ago, with scores of smaller, older terminals being closed, replaced by fewer, much larger and newer terminals. Few, if any, have been built in the last five years.

 

Some industry sources say there might soon be an active market for buying and selling terminals if Bunge is looking to get into the market. Some say they believe that Toepfer International, another international grain company, is also looking to become involved in handling Prairie agriculture production.

 

Bunge may also need to open a modestly sized Prairie regional office. Schroeder said Winnipeg would be the most likely location for such an office because it's a grain industry hub and the company already has a small office here.

 

Altona, Dixon, Saskatchewan, and Fort Saskatchewan, Alberta, would be logical locations for Bunge grain elevators because the company also owns properties in those communities.

 

Schroeder said an Altona elevator could be built on the site of Bunge's existing rapeseed-crushing plant, which will be demolished when a new plant opens in early 2013. It would be equipped to handle other kinds of crops, as well, including soy and rapeseed destined for the US and other export markets.

 

The expansion of its seed-crushing capacity in Altona - from 1,100 to 2,500 tonnes a day - is the first phase of a multi-phase expansion and upgrading of Bunge's four rapeseed-crushing facilities on the Prairies.

 

The company will replace its two older plants in Altona and Fort Saskatchewan and upgrade and expand its two newer ones in Harrowby and Nipawin, Saskatchewan, Schroeder said.

 

Canadian farmers could harvest a record 14 million tonnes of rapeseed this year. Bunge officials expect annual production to grow to 20 million tonnes by the end of the decade.