The sale of the AgPro grain terminal at Wilson Siding, Alta., does not mean Saskatchewan Wheat Pool has begun to sell off its core assets, says the company’s chief executive officer.
It’s simply a case of overcapacity in southern Alberta, said Mayo Schmidt.
“It’s a single siding. This isn’t indicative of our whole system,” he said last week after the company announced it had sold the facility to Parrish & Heimbecker.
“This was a business decision. It’s not a case where we’re selling a core asset to raise money.”
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The purchase price was not disclosed, but the deal includes the grain terminal and agri-products assets. The sale is expected to close at the end of April, and the pool will take a small after-tax loss.
Parrish & Heimbecker will close two facilities at Magrath and Raymond, Alta., because of the purchase and because of rail line problems last spring.
“The track wash-out between Raymond and Magrath and subsequent application to put the line on the three-year abandonment program placed the future operations of both our Magrath and Raymond elevators in jeopardy,” said P & H spokesperson Robert McNab.
P & H had already considered building a high-throughput terminal at Wilson Siding near Lethbridge.
Schmidt said it made good business sense to sell the pool facility to its competitor rather than add to the problem of overcapacity. Only about 60 percent of the current capacity is needed to handle an average prairie crop.
“We’ve got to get back to a healthy grain handling system,” Schmidt said. “This will improve both our opportunities.”
The Wilson Siding facility can load 100-car unit trains, clean to export standards and has a high capacity dryer. It was built as part of the pool’s Project Horizon campaign in the late 1990s.
The pool intends to service its Lethbridge area customers through its facilities at Vulcan.
Schmidt said the growing demand for feed grain in southern Alberta is affecting the grain handling business in the region. The pool has been handling low-margin feed grain at the terminal and trucking it to the feed market.
“It’s a very low-margin business,” he said.
Some, but not all, employees from Wilson Siding will be retained at the pool’s Vulcan terminal.
The company will also continue to operate AgPro facilities at Lavoy, Killam, Crossfield and Trochu, Alta.
Schmidt said the pool continues to increase its grain handlings overall and agri-product sales are brisk.
