Grain Companies Get Down to Business
Organizations continue to invest in the future
September is here and it’s posed to be a big month. What the media is calling a “flash drought” is creeping through the Corn Belt and looks to make the coming harvest more difficult than anyone would like. The farm bill may get put on the back burner now that congress is back in session due to Syria, but we may finally have an answer to whether Smithfield gets sold later in the month. This week is all about company business as agriculture companies try to find new ways to increase revenue.
The top stories for the week of Sept. 2 are…
- Cargill Building $29 Million Feed Mill in Hedrick, IA
- United Cooperative Subsidiary will Merge with Hillsboro Farmers Cooperative
- Smithfield Foods Investor to Propose Rival Merger
- CHS Partners with Wyoming Frac-Sand Company
- Cargill Invests $48 Million in New Automation System
Cargill broke ground on a new facility in Hedrick, IA, that will be able to produce 350,000 tons of hog feed once fully operational. It is located near important transportation systems and is expected to be able to better supply Cargill operations in Iowa, Missouri and Illinois. The company cites growing demand and a more streamlined supply line for its buyers as motivation for expansion. The plant is expected to be complete near the end of 2014.
Members of Hillsboro Farmers Cooperative approved a merger with a United Cooperative owned subsidiary through a mail-in vote in late August. This merger continues a United Cooperative effort to continue to expand throughout Wisconsin, and will be the fourth merger the company has taken part in since 2011. The merger will be finalized Oct. 1.
The Smithfield merger with Shuanghui International has faced a lot of opposition and will more than likely continue to do so until its shareholders vote on the deal Sept. 24. But Starboard Value LP, who owns 5.7% of Smithfield, has already announced that they will vote no. In an open letter to other shareholders, Starboard Value LP claims that they’ve received interest from a group of companies that would like to make a bid to collectively own Smithfield. This new offer could potentially be higher than the one offered by Shuanghui International, and Starboard Value claims that it would offer a better value to shareholders. The issue is time. Starboard Value says it will need more time to put the proposal together. If unable to put a new proposal together, Starboard will change is vote to yes before Nov. 29, the last day the deal can be finalized.
Wildcat Minerals LLC has partnered with CHS to build frac-sand unloading facilities alongside its grain elevators. For now, the frac-sand facilities will be built next to a relatively small number of elevators near the Bakken oil formation, which covers portions of Montana and North Dakota and spreads into Canada. The two companies are looking into expanding the deal to other locations including Colorado and Oklahoma. CHS’s extensive shipping network, combined with only being truly busy during harvest season, makes them attractive to frac-sand operations.
Cargill continues to invest in improvements across its network. The company will invest $48 million in its Dodge City, KS, beef packing facility. The improvements will replace systems that have been in place since the plant opened and improve the plant’s capacity by 130,000 boxes. The upgrade will start at the end of this year and is expected to be finished by spring 2015.
The digital edition of August/September is now online! Check it out here. I want to remind you to email me if you have any story ideas, comments on what news you want to hear about, or just to say hey. Subscribe to Industry Watch, follow us on Twitter or like us on Facebook for all the latest news in the industry.