A Southeast Asian agrifood processor and a U.S. commodity trading firm plan to pair up to stake a new claim in the deregulated Prairie grain and oilseed supply chain.
Singapore-based Olam International and Kansas City's Lansing Trade Group last week announced a new 50/50 joint venture, Lansing Olam Canada, to "originate and merchandise Canadian grains and oilseeds."
The reason for the new Prairie play couldn't be more clear: the two companies said their complementary strengths provide "a strong platform to establish a meaningful position in the liberalized western Canadian grains marketplace."
Olam, for instance, ranks among Singapore's top 40 companies by market capitalization and is already involved in direct-sourcing and processing in "most major producing countries" for products including cocoa, coffee, cashews, sesame, rice, cotton and wood.
Meanwhile, Lansing last year moved over 15 million tonnes of grain, feed and energy products and already owns or leases about 800,000 tonnes' worth of commodity handling facilities in the U.S.
The two companies didn't say in their release where Lansing Olam Canada will set up shop. Lansing maintains offices in Winnipeg and in Chatham, Ont.; Olam has no Canadian desk.
"The j.v. will leverage Olam's in-house milling demand in Africa, its rapidly growing global trading platform and customer base along with Lansing's deep knowledge of (the) North American market," said KC Suresh, president of Olam's grains business, in the two companies' release.
"This will enable the j.v. to become a valuable contributor in the liberalized market."
Lansing CEO Bill Krueger said the two companies believe they can "deliver innovative solutions from origin to destination for the western Canadian grain customers, much like Lansing has done in Ontario since those markets were opened up to free trade."
Lansing Olam Canada, which is expected to start operating next month, plans to focus on merchandising Canadian grains and oilseeds "to meet the food and feed demand in North America as well as international markets."
In the longer term, the new company's business strategies will largely be driven by changes in market dynamics after the deregulation of the Canadian Wheat Board's single marketing desk for Prairie wheat and barley on Aug. 1, said Weston Heide, Lansing's vice-president of business development.
Lansing Olam expects to be "actively engaged" in the market as a merchandising participant. working with farmers, commercial firms and end-users.
Any opportunities to buy into grain handling assets on the Prairies would be evaluated as they become available, keeping in mind the "evolving nature" of the post-CWB market, Heide said in an email.
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