From farmers’ perspective, the two companies say their combined technology offering is expected to offer “seamless integration and connectivity across geographies, equipment brands and the crop life cycle.”

The structure of the deal announced Thursday will see Trimble receive $2 billion cash and a 15 per cent share in the new joint venture, for total pre-tax value of about $3 billion accrued to that company (all figures US$).

Agco, whose machinery brands include Massey Ferguson, Fendt, Challenger and Valtra, contributes its JCA Technologies business to the new j.v. and will hold the 85 per cent majority stake in the venture.

The deal is expected to close in the first half of 2024, pending the usual approvals and other closing conditions.

The new j.v. won’t include Trimble’s Global Navigation Satellite System (GNSS) or guidance tech, but Trimble will provide those to the new venture under a new long-term supply agreement and technology transfer and license agreement — along with an agreement making the new venture a “channel partner” of Trimble’s positioning services in the ag market.

Winnipeg-based JCA, which Agco bought last year, makes systems and software including the Vireo precision ag system, the Eagle autonomous equipment system and the Falcon and Oriole controller systems.

JCA also developed the control system supporting the Canadian-made DOT autonomous ag equipment platform, now owned by Agco’s OEM rival CNH Industrial.

Trimble and Agco said the new venture is meant to “better serve farmers with factory-fit and aftermarket applications in the mixed fleet precision agriculture market” and to be “a global leader in mixed-fleet smart farming and autonomy solutions.”

The deal “accelerates Agco’s growth ambitions around autonomy, precision spraying, connected farming, data management and sustainability,” Agco CEO Eric Hansotia said in a release.

It also “significantly enhances Agco’s technology stack with disruptive technologies that cover every aspect of the crop cycle, which ultimately helps us better serve farmers no matter what brand they use,” he said.

“We believe a joint venture with Agco, complemented by the successful mixed fleet approach that they have developed with their Precision Planting business model, can help us better serve farmers and OEMs (original equipment manufacturers) together,” Trimble CEO Rob Painter said.

From Trimble’s perspective, the deal streamlines its asset portfolio and allows it to increase its focus on “priority growth areas” — while reducing its direct exposure to the “hardware-centric” ag market but still maintaining its “ongoing participation in a leading precision ag asset.”

The “commercial synergies” the new joint venture will get from direct access to Agco’s OEM, aftermarket, other OEM and retrofit channels — along with “modest” run-rate cost synergies — are expected to roughly double the new venture’s earnings before interest, taxes, depreciation and amortization (EBITDA) by year five after the deal closes, Agco said.

GSI under review

In its release Thursday announcing the new joint venture, Agco also said it has placed its “grain and protein” business segment under “strategic review.”

That business segment includes Agco’s grain handling systems brand GSI, as well as grain processing equipment brand Cimbria and three livestock housing systems brands: Cumberland, AP and Tecno.

While Agco didn’t give any examples of the options it’s considering for those businesses, it said it will “assess all strategic options to ensure the Grain and Protein customers are serviced in the best way possible, and that the business is best positioned to maximize its full potential.” — 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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Merchants have been grappling with lower profits from sourcing and shipping commodities such as grain and oilseeds, prompting cutbacks in trading teams, investments in food processing activities and acquisition speculation.

Investor pressure has centred on Bunge, which has drawn interest from both Glencore and Archer Daniels Midland for a potential mega-merger.

But LDC CEO Ian McIntosh is unconvinced on the merits of wholesale tie-ups.

“Each of the participants — the ABCDs, Gs, Cs, all the various acronyms — are becoming increasingly different businesses,” he said in a telephone interview, referring to the so-called ABCD quartet of ADM, Bunge, Cargill and Dreyfus, along with Glencore and Chinese-owned COFCO International.

“Which means that consolidation at total-company level is, I think, increasingly difficult to execute because the business fits have become less obvious.”

ADM CEO Juan Luciano is another who has played down the prospect of major consolidation, telling Reuters in January that he didn’t see the need for his company to enter “monster” transactions.

Privately held LDC expects consolidation to happen more locally, with more-focused tie-ups to speed its own shift further along the food chain, McIntosh said.

“I think you will see consolidation at a regional level,” he said, arguing that some struggling niche players would be taken over or exit some businesses.

For LDC, such deals could take the form of acquisitions or joint ventures, McIntosh said, noting that his group had reinforced its acquisition last year of an oilseed processing factory in Tianjin, China, by forming a joint venture to produce fish feed at the site.

McIntosh was talking after LDC reported a 12 per cent jump in group net profit last year, supported by a strong oilseed performance linked to demand for Brazilian soybeans during a U.S.-China tariff battle.

Profit was also helped by a very strong year in cotton and improved returns in other businesses, he said.

This year looks similar to last in terms of market conditions, but a settlement between Washington and Beijing would change the outlook, McIntosh said, adding that it is too early to talk about LDC’s performance this year.

McIntosh took the helm last September at a turbulent time for the 168-year-old company that also changed its finance chief, reported lower first-half profit and was burdened with an acrimonious buyout of minority shareholders and a bailout of Brazilian sugar business Biosev.

— Reporting for Reuters by Gus Trompiz in Paris.

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The Regina-based grain handling arm of commodity firm Glencore announced Thursday it has closed a deal to buy U.S. food processor General Mills’ 50 per cent stake in the two companies’ grain terminal at Northgate, N.D.

Viterra didn’t disclose any terms of its deal with General Mills Thursday, other than to say the sale has already “received all necessary approvals.”

“We’re pleased to take on full ownership of this facility, and to continue building our presence in the U.S.,” Kyle Jeworski, Viterra’s CEO for North America, said in a release.

The two companies’ joint venture dates back to 1997, when they agreed to build the terminal at Northgate, just south of the Canada-U.S. border and about 60 km southeast of Estevan, Sask.

Saskatchewan Wheat Pool, as Viterra was then known, was in its first year as a publicly traded company and in the midst of an aggressive capital spending plan to build higher-capacity inland terminals on the Prairies.

The Northgate terminal, which opened in November 1998, was expected to be a “key marketing facility for north- and southbound grains, particularly oats, as changes occur in market dynamics, the rail regulatory framework and global market demand,” the company said at the time.

During fiscal 1999, the steel bin terminal moved over 45,000 tonnes of grain, SaskPool said at the time.

Viterra’s assets in North Dakota today also include special crops facilities at Minot and at Ray, about 150 km west of Minot. The company in 2017 also bought Gavilon Grain’s former Peavey Co. grain elevator at Grand Forks. — Glacier FarmMedia Network

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Regina-based Input, which trades publicly on the TSX Venture Exchange, announced Wednesday its board has launched a “comprehensive review of strategic alternatives to enhance shareholder value.”

The review, which will include GMP Securities and Cormark Securities as advisors, is expected to look at “the full range” of potential alternatives for the business including, among others:

• a potential sale of the company,
• business combinations or joint ventures,
• acquisitions of other companies,
• moving into “emerging” crops such as cannabis and/or hemp,
• scalable mortgage debt financing, or
• a “go-private” transaction.

Wednesday’s announcement follows the company’s decision in December to renew its share repurchase plan, aimed at buying back up to 10 per cent of its public float.

Input on Dec. 14 said its management believes the company’s shares have been trading in a range that “does not adequately reflect their value” and buying and cancelling shares under a normal course issuer bid “will enhance shareholder value in general.”

The company in December said its previous such plan, launched a year earlier, resulted in the repurchase of about 1.65 million Input shares at an average price of $1.23 each by the end of fiscal 2018. Input shares (TSXV: INP) traded early Wednesday afternoon at 96 cents each.

Input emphasized Wednesday there “can be no assurances” that this review will result in any transaction.

Input, in business since 2012, bills itself as a “non-operating farming company” which currently deals in canola, obtained from Prairie farmers by way of “multi-year streaming contracts,” including capital streams, marketing streams and, more recently, “mortgage streams.”

The company’s canola purchases, from growers in all three Prairie provinces, generally involve up-front payments in return for agreed-upon tonnage over a specified number of years.

“To canola buyers, Input is like a large virtual farm which produces and sells canola over a large geographically diverse footprint, but does not own the land, or equipment or operate the farm,” the company says on its website.

At the end of fiscal 2018, Input reported 388 streaming contracts in its portfolio, up from 301 at its previous year-end.

Its mortgage streaming option, soft-launched in January last year, yielded 42 mortgage stream contracts by year-end, the company said.

Input last May was the plaintiff in a high-profile court case against a Saskatchewan farmer, alleging breach of contract over unmet canola delivery obligations against several upfront payments by the company.

A Queen’s Bench judge in May ruled the farmer was “unjustly enriched” by the upfront payments and must repay that money. However, the judge also ruled the farmer’s various agreements with Input “must be set aside as unconscionable” and described the contractual relationship as “substantially unfair.”

Input said in May it would appeal parts of the Queen’s Bench decision “with respect to the interpretation of the streaming contracts and security.” — Glacier FarmMedia Network

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Privately-held Louis Dreyfus had previously earmarked dairy as one of several activities to be sold or turned into joint ventures in order to focus on core products like grain and oilseeds.

“The (dairy) business accounted for roughly one per cent of our revenues in 2018 and demanded substantial working capital resources,” chief financial officer Federico Cerisoli said.

“The exit will have practically no impact on our global sales… and is expected to have a slight positive effect on our working capital from 2019 onwards,” he said in a statement.

Like rival agricultural commodity groups, Louis Dreyfus has reorganized operations amid declining margins in traditional merchandising while also planning to develop higher-margin food processing and ingredient activities.

Its biggest divestment has been the sale of its profitable metal trading business for US$466 million last year. It has also sold fertilizer distribution activities in Africa and Australia.

The orange juice division had also previously been earmarked for a sale or to be turned into a joint venture. A spokeswoman said Louis Dreyfus considered juice a core business and it was looking for partners to support growth plans requiring “significant investments.”

Louis Dreyfus last month announced the creation of a new role of head of food innovation, mirroring efforts by other agricultural traders to into higher-margin areas.

The firm has been trying to revive profits after they slipped to a decade low in 2015.

It suffered a sharp fall in first-half earnings, blaming a hedging effect relating to soybean crushing, but new CEO Ian McIntosh pointed to a improved performance in the second half.

The group, which dates back to the mid-19th century, has also been wrestling with family shareholding issues.

Majority shareholder Margarita Louis-Dreyfus, who inherited control of the group when her husband Robert died in 2009, said in November she had secured financing to cover a requirement to buy most of shares in the holding firm held by other family members.

— Reporting for Reuters by Gus Trompiz.

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Calgary-based GrainsConnect Canada, itself a joint Prairie grain handling venture between Australia’s GrainCorp and Japan’s Zen-Noh Grain, announced Wednesday it now has a formal 50-50 partnership agreement with P+H to build and operate the Fraser Grain Terminal at Surrey, B.C.

The deal, pending approval from federal competition regulators, calls for GrainsConnect to buy shares in P+H subsidiary Fraser Grain Terminal Ltd. The deal’s specific financial terms weren’t disclosed.

P+H executive vice-president John Heimbecker said Wednesday the new partnership “helps ensure (FGT) is ready for service in 2020.”

FGT, when launched in 2016, was billed as a joint venture between P+H and another privately-held Winnipeg grain firm, Paterson Grain.

P+H said it had explored involvement with Paterson early in the FGT project’s development but applied independently for the project permits; FGT remained wholly owned by P+H throughout that process, the company added.

FGT in November received its project permit from the Vancouver Fraser Port Authority. P+H then said it expected to start construction work on Dec. 3.

The new port terminal’s construction is now expected to take about 24 months, expanding an existing terminal with capacity for about 500,000 tonnes of annual throughput. Demolition of old buildings at the site was approved in June last year.

The expanded terminal is to include about 70,000 tonnes of storage capacity, for combined throughput of over four million tonnes per year, the companies said.

FGT will also have capacity to “rapidly” handle and discharge 120 rail cars and include three ship loader towers, which are expected to cut ship loading times by allowing “simultaneous” loading of multiple holds at about 2,000 tonnes per hour.

Crops loaded into the terminal’s silos would go mainly onto cargo ships, though the site will also have an “integrated” loading facility and container storage site to load rail cars and trucks to move grain to Fraser Valley customers, and containers for export via container terminals such as Deltaport.

FGT is expected to load about 80 bulk vessels a year, or about one to three vessels a week, including Panamax, Supramax and Handy-size vessels.

Most vessels would be fully loaded at FGT, though larger-class Panamaxes would be loaded to the maximum capacity according to guidelines for river draft (depth) and may be topped up later at deepwater terminals.

P+H has previously said FGT, when complete, will “improve loading efficiency, reduce rail shunting and dramatically improve rail car cycle times between the Prairies and metropolitan Vancouver.”

GrainsConnect launched in 2015 and has since built and opened grain elevators at Maymont and Reford in western Saskatchewan, with two more under construction at Vegreville and Huxley, Alta. for opening in spring and fall 2019 respectively.

Klaus Pamminger, GrainsConnect’s board chairman, said in a separate release Wednesday that FGT will connect its four elevators “directly to global customers, providing a highly efficient, integrated end-to-end solution.” — Glacier FarmMedia Network

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The protests, a continuation of demonstrations that began on Sunday, were sparked by fears that land reform could allow foreigners to take over farmland, though some analysts say many Kazakhs turned up to express their general discontent.

Though relatively small, the rallies may worry Nazarbayev, 75, who has run the oil-rich Central Asian nation since 1989 tolerating little dissent but who now faces economic headwinds caused by the global slump in oil prices.

Reforms due to take effect from July 1 will allow the government to sell farmland to joint ventures, provided they are controlled by Kazakh residents.

Direct land sales to foreigners will still be banned, though they will be able to lease farmland for up to 25 years, up from 10 years.

Critics, who staged their first protest in the city of Atyrau on Sunday, see that as a threat to national security, especially after the government announced several agreements with neighbouring China on agricultural projects.

On Wednesday, protesters took to the streets of the western city of Aktobe where hundreds of people gathered at a square, according to photographs published by city newspaper Diapazon and videos posted online by activists.

According to Diapazon, police were present but did not try to disperse the rally even though it had not been approved by the city government, which made it illegal under Kazakh law. The city police could not immediately be reached for comment.

Another smaller protest attended by dozens of people took place in Semey, a major city in eastern Kazakhstan, according to several videos posted online by activists.

On Tuesday, Nazarbayev said concerns about foreigners scooping up local farmland were groundless and that “provocateurs” spreading such information “must be exposed and punished.”

Those comments, posted in a video on his press service’s Facebook page, were met with a torrent of negative comments and even insults late on Tuesday. Typically, the presidential office’s Facebook updates generate only a handful of comments each, all positive.

High oil prices in the past decade allowed Nazarbayev’s government to maintain relatively high living standards, but as prices plunged, Kazakhstan had to let its tenge currency slide 45 per cent against the dollar last year.

“This is the domino effect with the land issue serving as a trigger,” said political analyst Dosym Satpayev. “But many attended the rallies in order to express their discontent in general.”

— Reporting for Reuters by Olzhas Auyezov and Mariya Gordeyeva; additional reporting for Reuters by Denis Dyomkin.

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In December, Reuters reported the trade house had been seeking buyers for its juice and fertilizer units for some months, as it focused on higher-margin activities.

“Ring-fencing” refers to a corporation removing or separating a specific set of assets from its accounts.

“The company is actually in the process of ring-fencing four areas: fertilizers and inputs, metals, juice and dairy. For a couple of them, options could range from JVs to the sale of assets,” the source said.

The source pointed to the desire for a strategic partnership in its juice business.

“In the juice business, the company is looking for a partner for distribution who would have scale and focus on markets such as Asia and China,” the source said.

The firm is one of the world’s biggest juice processors by volume, with assets including seven processing factories in Brazil, the U.S. and China, as well as orange groves in top grower Brazil and a global trading network.

Dreyfus had plans to grow its operations in China, along with Russia, the source said.

“In Russia, major infrastructure investments are required to facilitate grain exports.”

Like many of its peers, Dreyfus — one of the “ABCD” quartet of traders that dominate global agricultural trading, along with Archer Daniels Midland, Bunge and Cargill — has been hit by falling prices and weak demand.

Dreyfus’ profits for the six months to June 30 halved from the same period a year earlier in what the company described as a “challenging environment”.

The company appointed Gonzalo Ramirez Martiarena as chief executive last year, previously the group’s Asia chief, and has subsequently implemented wider management changes including replacing some heads of units.

— Reporting for Reuters by Dmitry Zhdannikov, writing by Sarah McFarlane.

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