The president of Richardson International Ltd. says the oat milling business is the most intriguing of its new collection of Viterra assets.
“(It) is one that we’ve been interested in and attracted to for quite a number of years,” said Curt Vossen.
On May 1, Canada’s largest privately owned grain company officially acquired more than $800 million of Viterra’s assets.
Included in the purchase are the assets of Can-Oat Milling, one of the world’s largest independent oat milling firms.
The deal includes oat processing plants in Portage la Prairie, Man., Martensville, Sask., Barrhead, Alta., and South Sioux City, Nebraska, and a wheat mill in Dawn, Texas.
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Vossen is excited about the company expanding its value-added activity beyond the canola processing business.
“Most of the oats in North America are grown on the western Prairies. That’s why we like this fit with oats.”
Vossen believes there is a “sweet spot” for oats in the expanding market for healthful foods and is excited about the crop’s future despite steadily declining oat acres.
“We’ve got to give oats the kind of attention and the kind of value that makes farmers want to continue to grow it, and I think we can do that,.”
Randy Strychar, president of Ag Commodity Research, laughed at the notion that Richardson can get farmers growing oats again.
North American oat acres have been in a freefall for decades and there is no end in sight, largely be-cause of retreating demand from the equine industry.
“I don’t think (Richardson) is going to make any difference in the oat industry unless they can come up with alternative markets for the oats,” he said.
Growers have no problem selling good quality oats, but the market for No. 3 CW and No. 4 CW is limited, and Richardson can’t do anything about that.
Strychar said the company made a shrewd decision in picking up Viterra’s profitable oat milling assets.
“It was a great move taking the mills, and I think they’ll do an excellent job running those mills,” he said.
Richardson also acquired 19 country elevators and 13 attached crop input centres in the deal. Those assets will add more than 3.5 million tonnes of grain and oilseed origination and $100 million of crop input sales to the organization.
Vossen said the company plans to spend millions of dollars adding storage, improving rail capacity and optimizing processing speed at the elevators.
Richardson believes in an integrated approach to the grain business and intends to immediately address the absence of crop input centres at six of its newly acquired Viterra assets.
“Right off the bat, we’ve already made plans in the very near future, and I’m talking weeks and months, not months and years, to make some significant investment in some of these locations that don’t have crop inputs right now,” said Vossen.
The company has already started the process of rebranding its newly acquired assets with the Richardson name.
“Within two months they will all be rebranded Richardson. They won’t be repainted obviously in two months. That will take a much longer period of time,” said Vossen.
The 19 former Viterra grain elevators give the company a presence in parts of the Prairies where it wasn’t formerly represented, such as west-central Saskatchewan, east-central Alberta and the Peace River region of northern Alberta and British Columbia.
Vossen said the company is now bigger and better equipped to meet the needs of domestic and international customers.
Richardson has acquired a Viterra terminal in Thunder Bay but is still hashing out details with Glencore about its partial ownership of terminals in Vancouver and Prince Rupert.
The company is getting a 25 percent share of the Cascadia Terminal in Vancouver. Glencore will own the remaining 75 percent.
“We’ve got to finalize discussions with Glencore on issues relating to how we operate the terminal together,” said Vossen.
Richardson is also increasing its stake in Prince Rupert Grain, a terminal jointly owned by Glencore, Richardson and Cargill. The company owns 24 percent of that facility and wants to increase its share to be consistent with its one-third share of Western Canada’s grain handling industry.
“We’ve just got to work out the details,” said Vossen.
The Can-Oat assets in Nebraska and Texas are Richardson’s first foray into the United States.
“We like the U.S. marketplace. We’re not shy about saying it,” said Vossen. “We think this is a good beachhead, but it’s certainly one that we would look to expand over the course of the next period of time.”
The company figures it has expanded almost as much as it can in the Canadian grain handling business.
“It would be fair to say that you’ve got to look elsewhere in those areas to expand your business.”
That doesn’t mean Richardson is done investing in Canada. The company is spending $150 million improving its rail receiving capacity and building 80,000 tonnes of annex storage at its wholly owned grain terminal in Vancouver, $30 million expanding the capacity at its crush plant in Yorkton, Sask., and another $150 to $200 million doubling its Lethbridge canola plant.
“We’re not finished in Canada by a long shot,” said Vossen.
Richardson has extended job offers to all of the 500 to 550 Viterra employees associated with the new assets, and 99 percent of them have accepted those offers.
