Grain and canola in plans | Company says the expansion in Dafoe, Sask., is just the beginning
BroadGrain Commodities Inc. is putting the final touches on an expansion project at its pulse and special crops processing plant in Dafoe, Sask.
The trading company bought the plant from Lakeside Global Grains Inc. in 2011 and has invested $2.9 million over the last four months to double the plant’s storage and handling capacity and make it more efficient.
The expansion will be operational by the beginning of October.
It is the first phase of what the company has planned for the site. The second phase will be to expand the product line to include cereals and oilseeds.
“It’s probably something that will happen over the next year or so, that we will be able to handle canola at a large scale,” said BroadGrain president Zaid Qadoumi.
The Toronto-based company entered the grain industry 10 years ago with the purchase of a soybean processing facility in Seaforth, Ont.
Today it has four operating divisions, trades two million tonnes of grain annually and generates $650 million in annual revenue.
Qadoumi said the company has aggressive growth plans that include expanding its presence in Western Canada, where it helps 5,500 growers market their grain.
Most of BroadGrain’s business in the West has been in pulses and special crops, but it is keen on expanding its scope by handling and marketing more canola and cereal grains.
“We are looking to grow into that now that the wheat board is no longer the only buyer or seller of wheat in the country,” said Qadoumi.
“Our interests are going to continue to be growing steadily in Alberta and other parts of Saskatchewan, adding to our product mix.”
BroadGrain operates a financial services division that offers growers free “exotic derivatives” that can help protect them against market volatility.
“We have created in-house products that help the farmer extract benefit out of that volatility,” said Qadoumi.
BroadGrain markets grain all over the world, with an emphasis on countries in the Mediterranean basin and on the Red Sea.
Some in the grain trade have ex-pressed concern that the military coup and violent protests in Egypt could disrupt trade with the world’s largest wheat buyer.
“This is an impossibility,” said Qadoumi. “The regime change is going to benefit wheat trade, not harm wheat trade. The financial status of the old regime that was ousted was not as strong as the one that is there now.”
It is a different story in Syria, where civil war is decimating food demand and making trade troublesome.
“Syria is a tougher situation. It’s very difficult to ship to Syri,”
It’s hard to secure trade documents, there is extreme foreign exchange volatility, banks are reluctant to facilitate deals and it is difficult to find vessel operators willing to make the trip.
“The same thing happened when Libya went into war. What happens is most companies will say, ‘you know what? I’d rather just not ship here, ’” he said.
BroadGrain is looking to secure more grain, oilseeds and pulses to meet growing global food demand .
The expansions at the Dafoe plant will be the immediate focus for the company, but in two to three years Qadoumi hopes to acquire additional grain handling facilities in Saskatchewan and Alberta.
In the meantime, BroadGrain wants to continue forging relationships with growers in those two provinces.
“We look at the farmer as a partner rather than as an entity we buy grain from,” said Qadoumi.