Louis Dreyfus sees steady growth in Western Canada

Tue Nov 22, 2011 3:08pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Rod Nickel

OTTAWA (Reuters) - Global commodity trader Louis Dreyfus is gradually expanding its Western Canada grain-handling capacity, but is not looking to be active in mergers and acquisitions as the rich grain-growing region moves to an open market, said the head of its Canadian office.

The Canadian government plans to pass a law next month to end the Canadian Wheat Board's decades-old grain marketing monopoly in Western Canada, setting off a potential reorganization of its grain-handling and processing sector.

Privately held Louis Dreyfus, based in France, is a major global grain trader but holds just six percent of Western Canada's grain-handling market share, far behind the region's dominant players Viterra VT.TO, Richardson International Limited and Cargill CARG.UL.

Still, despite the lure of a bigger stake in the world's top shipper of spring wheat, durum and malting barley, Dreyfus is unlikely to make any big acquisitions, said Brant Randles, president of Louis Dreyfus Canada.

"(Company) valuations are very rich in Western Canada," Randles said on the sidelines of the Canada Grains Council conference in Ottawa. "In terms of (Louis Dreyfus) being a buyer of another company, I think that's unlikely. It's a mature basin in terms of production and the buildout of capacity."

The end of the Wheat Board's monopoly, scheduled for August 2012 if government legislation passes as expected, will allow grain handlers to buy directly from western farmers and let millers and maltsters build processing plants without buying supplies through the board.

Louis Dreyfus is adding storage space to two of its 10 Western Canada grain elevators and will look "selectively" to fill holes in its grain-handling network, but is not contemplating more sweeping moves, Randles said.

U.S.-based agribusiness company Bunge Ltd (BG.N: Quote) has said it plans to bolster its presence in the region after the monopoly ends.   Continued...