WINNIPEG, Manitoba (Reuters) - U.S. agribusiness Cargill Inc CARG.UL expects the merger of its flour mill operations with those of ConAgra Foods Inc (CAG.N) to be finalized in six to eight weeks after it clears a longstanding regulatory hurdle, Cargill Executive Chairman Greg Page said on Tuesday.
The combined entity, to be called Ardent Mills, would join ConAgra’s milling operations with Horizon Milling LLC, which is a joint venture of privately held Cargill and U.S. farm cooperative CHS Inc (CHSCP.O). The deal was announced in March 2013 and was initially expected to be finalized late last year.
But the U.S. Justice Department’s antitrust division has been investigating the merger, which would result in Ardent Mills controlling about a third of U.S. flour mill capacity.
“We hope everything will be resolved in the next six to eight weeks,” Page told reporters on the sidelines of the Canadian Global Crops Symposium in Winnipeg. “It took longer than we would have hoped, and I’m sure that our employees would have hoped, but there’s been continuous attention given to it by the Justice Department.
“I think we’re in the very final chapter of having it resolved positively.”
Page also said the mortality of young pigs from the PED (porcine epidemic diarrhea) virus has abated significantly within Cargill’s herds, which account for about 30 percent of the hogs it processes.
“But the impact will last a long time because the death loss was in very young pigs,” he said. “This will have a long tail on it through the end of the summer.”
Cargill has lost hours of pork processing time and seen “multimillion-dollar losses” due to the shortage of hogs caused by the virus, Page said.
“We lose the ability to grow that animal out, and we lose the opportunity to process and merchandise it. It’s had a notable impact.”
The United States should make it mandatory that animal owners and veterinarians report the presence of PEDv, Page said.
“It isn’t about government interference, it’s about acknowledging that we’re all interdependent on every other participant in our industry, so my answer would be unequivocally, ‘yes’” to mandatory reporting.
Cargill, one of the world`s largest beef processors, last year banned, at least temporarily, cattle raised on the controversial feed additive Zilmax, made by Merck & Co Inc (MRK.N), due to reports of lameness in cattle.
“We were religious in (following) withdrawal periods and dosages and we did not observe some of the things that were observed by others,” Page said. “It leads us to wonder if the administration of some of those compounds were exactly per the requirement.
“It’s a reminder to all of us there are labels for a reason.”
Page said he did not know if Zilmax will recover from the stigma attached to it.
Cargill Ltd, the company’s Canadian division, has struggled along with other grain handlers to move record-large Western Canadian crops to ports after a harsh winter.
Western Canada grew an overall crop of 76 million metric tonnes (83 million tons) last year, which has strained the ability of Canadian National Railway Co (CNR.TO) and Canadian Pacific Railway Ltd (CP.TO). Millions of tonnes of crops such as wheat and canola are stored on farms and in commercial bins, awaiting railcars to move them to port.
Page said the handling and transportation system needs to expand to handle crops on that scale again in the future. But he said it is too soon to judge the railways’ performance.
“The grade that the railroads get is going to be determined in the next five months, not the last five months,” he said.
Cargill is working to increase the company’s ability to move crops quickly through its Port Metro Vancouver terminal, said Cargill Ltd President Jeff Vassart.
($1 = $1.10 Canadian)
Reporting by Rod Nickel in Winnipeg, Manitoba; Additional writing by Christine Stebbins in Chicago; editing by Peter Galloway and Matthew Lewis