Value-added is one of the most over used words in the agriculture industry.
It’s a word thrown around by politicians, management specialists and agricultural gurus as what should happen, is going to happen, but rarely happens in the ag industry.
But a Calgary-based company has decided it will take the leap and create a company that will actually add value to grain.
“We decided a commercial entity should be formed that could walk the walk not just talk the talk,” said Patrick Durnin chair of Agri Partners International.
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Next month the company’s inaugural project, a grain fractionation plant, will open in Red Deer, Alta. The API Grain Processors plant will break wheat down from the kernel into more valuable parts.
The two main products from the plant will be gluten and ethanol. The gluten will be sold in the United States through Premier Cereals, a new marketing arm created by people involved in Grain Millers Inc., an American company that supplies oats and specialty grain products to United States and international markets.
Agri Partners wouldn’t disclose who is buying the ethanol.
Lou Normand, head of Alberta Agriculture’s industry development branch, said the province needs 50 more plants like API.
“This is the area that has to grow. The future is really that area, to develop that whole area of fractionation of grain,” said Normand, of Edmonton.
“We’re not doing anything unique in terms of processing or technology within the project. However, what we are doing is bringing players within the ag and food industry together that perhaps wouldn’t have met,” said Durnin, a grain producer from Kathyrn, Alta.
The board of directors of API reads like an Alberta Wheat Pool alumni newsletter. Durnin, chair of the company, and API director Jack Gorr are former pool delegates.
The president and chief executive officer is Don Heasman, former pool chief executive officer.
It’s no surprise the troika are no longer with the Alberta grain company, said Durnin.
“We were all fairly aggressive and forward thinking and visionary in our thought process when it came to the direction we thought the pool should go.
“We cumulatively didn’t feel Alberta pool was moving fast enough in the direction we thought the ag and food industry should be going, particularly on the grain side.”
In 1994, Sherwood, Heasman and Durnin incorporated the company and began approaching friends, family, businesses and organizations to create the value-added company.
The company has enticed several well-heeled companies and individuals to invest. They include Palliser Grain, former Grain Millers president Christian Kongsore, former Alberta pool chief financial officer James Sherwood, several farmers, private investors, friends and associates.
But so far the biggest investor in the Red Deer plant is the Edmonton Pipe Industry Pension Trust Fund, which has invested pension fund money to become a limited partner in the plant.
Durnin wouldn’t say how much it cost to put together the business and plant beyond “lots.”
“Within any project, to access the debt financing and significant amounts of equity, you have to show the marketplace you’re sincere and willing to risk some capital yourself. The high-risk money put into agri partners early.”
While searching for the first project, Durnin said they came across plenty of other worthwhile projects that “don’t require the tens of millions of dollars that our plant requires.”
He said until the grain fractionation plant is operating, the business will be limiting any work in the other projects that caught its attention.
“We have a few other interesting opportunities on the go. There are other types of projects, other types of grain processing facilities and not all the projects are in Alberta.”
Durnin said he doesn’t know if they will go the route of many other companies and raise money on the stock exchange.
“That all depends on how active we become. If we are discreet and careful and take our time, we’ll likely stay private for some time to come.
“If the activity really increases and pressures us to grow and develop, the public market is probably the way to go.”
