Ingredient business picking up

Alliance Grain Traders | Company secures new distributor for international markets

Alliance Grain Traders has landed a second major customer for its food ingredients business.

The company signed an agreement appointing Ingredion Inc. as the exclusive distributor of its pulse flours, protein and bran ingredients to the food industry.

The deal covers the United States, Canada, China, Europe, the Middle East and North Africa. It does not cover other important regions such South America, India or Southeast Asia, but there are provisions to expand the agreement if needed.

“We expect this alliance to be a major catalyst for our global food ingredients business, allowing us an increased and added value offering to our customers,” AGT president Murad Al-Katib said in a news re-lease.

AGT’s food ingredients and packaged food segment contributed $132.26 gross profit per tonne to the company’s first quarter 2014 results compared to $52.53 from the traditional pulses and grain processing segment.

This is the company’s second major customer for the products produced at its food ingredients production facility in Minot, N.D.

AGT signed a five-year agreement with Cargill last year to be its exclusive North American agent for pulse protein products for the pet food and animal feed markets.

Ingredion develops and markets ingredients used by food manufacturers in more than 40 countries. The company had global sales of $6.3 billion in 2013.

The pulse ingredients will be used in products such as baked goods, snacks, pasta and texturing applications.

“Gaining access to pulses as an additional solution in our toolbox in the form of flours, protein and semolinas aligns with a growing market interest for vegetable and non-GMO protein sources,” said Igor Playner, Ingredion’s vice-president of innovation and strategy.

The ingredients will be used to create protein-fortified and fibre-fortified snacks and gluten-free food.

AGT recently commissioned a second production line at its Minot plant and in-tends to announce a third line in the coming months.

“Then it’s time to start looking at where the next plant is, and Regina has been a big candidate for a food ingredients plant,” said Al-Katib in an interview.

The plan would be to use the surplus capacity at the red lentil splitting plant in Regina, which was AGT’s first pulse processing plant, and add on flour milling, semolina production and fractionation facilities.

Al-Katib said the company’s expansion into the food ingredient business should remove volatility from pulse markets that have been subject to the vagaries of macroeconomic trends in emerging markets.

“Nestlé is less concerned about the Indian rupee than normal emerging market pulse importers, and we like that,” he said.

It should also result in unique marketing opportunities for farmers.

“We’re going to be able to come with some very interesting grower contracting programs,” said Al-Katib.

A reliable and consistent buyer will eventually allow the company to offer growers multi-year fixed price contracts to match ingredient sales.

He believes a significant portion of the pulses produced in Western Canada will eventually be milled locally into ingredients for the food and feed markets.

“The pulse industry, we believe, is going to follow a path similar to the canola industry,” said Al-Katib.

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