Legumex Walker | The company calms fears about power concentration after recent acquisitions
Since merging to form a publicly traded company last summer, the managers of Legumex Walker have had a busy 14 months.
The Winnipeg-based processor of pulses, special crops and canola has gone on a buying spree, purchasing processing plants in the United States and Canada.
Despite its run of acquisitions and a trend towards consolidation in the industry, a spokesperson for Legumex Walker said growers don’t need to worry about a few players dominating the special crops industry in Western Canada.
“Really, the number of names out there hasn’t changed all that dramatically. So I would say there potentially will be some more consolidation, but I don’t think there has been a tremendous concentration of ownership,” said Anthony Kulbacki, chief operating officer of special crops for Legumex Walker.
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When Roy Legumex and Walker Seeds merged last summer, Legumex Walker announced it would pursue opportunities to acquire family-run processors of special crops and company executives have followed through on that plan.
In August, the company signed a deal to purchase Keystone Grain, a flax and sunflower processor in Winkler, Man. In February, Legumex bought a dry bean processor in Minnesota and sunflower processing facilities in North Dakota.
Assuming its purchase of Keystone Grain is finalized in September, Legumex Walker will own about a dozen facilities that process pulses and special crops on the Prairies and the Northern Plains.
In addition, the company also has an 85 percent share in Pacific Coast Canola, a crushing plant under construction in Washington state that is expected to open in 2013.
Although it remains neutral on mergers and acquisitions in the industry, the Manitoba Pulse Growers Association is paying attention, said interim executive director Michael Reimer.
“We are keeping an eye on these things. Right now it seems to be where things are headed…. It seems to be the reality of things right now (that) a lot of this consolidation is occurring.”
Reimer said the association doesn’t plan to be vocal about consolidation in the special crops industry, unless there are developments that “indicate our farmers will start losing value or being taken advantage of.”
Kulbacki said it’s unlikely that a few dominant players will emerge and reign over growers, because processors need producers to grow edible beans, flax, sunflowers and other specialty crops.
“From my standpoint, there’s no benefit to anybody to have (industry) concentration to a point that it’s detrimental to the grower,” said Kulbacki, who was chief financial officer at Legumex Walker before taking on a new role in special crops in August.
“Our success is very much linked to the success that (producers) see from growing specialty crops…. It’s got to be a symbiotic relationship.”
Nonetheless, special crop growers also need processors who are successful. And those companies must have the capital and the capability to market an array of crops around the globe.
“One of the explicit goals of our company is to provide… market opportunities to our growers,” Kulbacki said. “We’ve invested in a diverse sales force. We’ve got people from around the world who sell for us as employees, from Mexico to Argentina to Lebanon. So we know those markets very well so they (sales staff) can bring back the information and open up the opportunities for Canadian and U.S. farmers.”
Reimer concurred with Kulbacki’s comments, noting it’s difficult for a family-run processor in rural Manitoba to play in the global marketplace.
As well, if a small company processes one particular crop and relies solely on that crop for its livelihood, it can be a risky enterprise, Reimer said.
“For instance, we’ve seen our edible bean acres decrease. So if you have all of your eggs in one of those baskets and things start trending towards decreased production, then it becomes a huge issue.”
Looking back over the last decade, Kulbacki said there was a period in the early 2000s when the special crops industry went through a period of rapid expansion in Western Canada. As a consequence, there was a bit of over-capacity and a number of companies went out of business. Since that time the industry has become more resilient, he noted.
“As much as there has been a consolidation, there has (also) been a rationalization…. Stronger players, still family-owned companies and small public companies, like ourselves, have emerged. So I think it’s an exciting time.”
