Grain trading firm The Scoular Co. is set to start feeding canola to Prairie special crop processor Legumex Walker’s crushing facility near the U.S. West Coast — and to market the plant’s production.
Winnipeg-based Legumex on Monday announced a “long-term strategic alliance” with Scoular, in which Scoular will procure all canola seed for processing at Legumex’s Pacific Coast Canola (PCC) plant at Warden, Washington, about 160 km southwest of Spokane.
The deal also calls for Omaha-based Scoular to market all canola meal and canola oil PCC produces at Warden.
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Privately-held Scoular will finance the canola seed as well as the meal and oil receivables “on favourable terms,” Legumex said in a release Monday.
The deal also gives PCC access to Scoular’s logistics network, which will “enhance the seed supply chain and add value to the marketing of meals and oils.”
Scoular staff will also work with PCC to drive local seed production in the U.S. Pacific Northwest, focusing on non-GMO and non-GMO high-oleic seed varieties. Focusing on such varieties will “differentiate PCC’s products from those of its competition,” the companies said.
The deal also calls for Scoular to invest C$16.5 million in a Legumex convertible debenture which is expected to help link Scoular’s marketing and transportation networks to Legumex Walker’s specialty crops business. Scoular gets an option to convert the debenture to Legumex shares at C$6.75 per share.
Legumex CEO Joel Horn said the deal with Scoular comes out of “extensive discussions in which we have found numerous synergies with our specialty crops business in the U.S. and Canada, as well as the PCC relationship.”
“Expanded origination”
Scoular senior vice-president Todd McQueen, in the same release, noted Legumex’s approach in working with specialty crop producers on both sides of the border, adding Scoular believes its “proprietary origination and extensive logistics network will bring immediate value to these efforts.”
Publicly-traded Legumex commissioned the PCC plant in late 2012, with annual crush capacity of 350,000 tonnes of canola, using expeller-press (“cold-press”) methods to produce food-grade oil for the food and biodiesel markets. The plant’s meal is sold into livestock feed markets, particularly for use on dairy operations.
PCC’s chief operating officer Matt Upmeyer said Monday that the plant hit its “highest production levels to date” in its third quarter at 78 per cent of capacity, despite “continued feedstock constraints and a temporary oversupply of meal that negatively impacted volumes and margins.”
The Scoular deal, he said, “should support even higher crush rates going forward as they help drive the production and availability of locally grown seed, which has the potential to grow significantly.”
Scoular, he said, “has already expanded seed origination to eastern and southern Idaho and will be reaching even farther into key growing regions.”
Also, Scoular’s regional market director Kevin Thompson said the company can create “substantial freight advantages for movements in and out of PCC’s plant, leveraging the Scoular facilities that surround the Idaho dairy shed.” — AGCanada.com Network
