The U.S. durum market is reacting with surprise, while the Canadian market welcomes new opportunities, with the announcement that Richardson International Limited's subsidiary, Richardson Oilseed (US) Holdings Limited, has entered into a purchase agreement to acquire Italgrani USA Inc., the single largest durum miller in North America.
Richardson International Limited, based in Winnipeg, Manitoba, is Canada's largest agribusiness and is recognized as a global leader in agriculture and food processing.
"Canadian producers will welcome Richardson's move into the North American pasta industry," said DTN Canadian Grains Analyst Cliff Jamieson. "This move could result in homes for Canadian production, while the Canadian agriculture industry has been longing for its first durum (processing) plant for a long time."
Canada is the largest exporter of durum in the world, while a net-importer of pasta.
"The end of the Canadian Wheat Board's monopoly in 2012 was viewed as the end of the barrier preventing value-added processing on the Prairies, while Richardson's involvement could one day lead to future expansion on the Prairies," Jamieson said.
Reaction in the U.S. durum market to the agreement was one of surprise, wondering what it means for buyers and end users. One buyer told DTN he purchases Canadian durum for his semolina mill; he said Richardson was one of his customers, but it was likely that may cease.
He said the purchase of Italgrani by Richardson is certainly a value-added destination for Canadian durum into the U.S., with Richardson expanding its footprint. He wondered if this purchase will compress semolina margins -- and compress the market overall -- but will wait and see what the impact will be after the dust settles.
"Richardson has an established precedent of strategic expansion and investment and this latest announcement is an extension of a long-term vision to diversify processing operations," stated Richardson in Thursday's press release.
Richardson said assets to be acquired include a milling facility in St. Louis, Missouri, specializing in semolina and durum flour products, storage and crop inputs facilities situated at Tolley, Powers Lake, and Benedict in North Dakota, and a commodity trading office in Minneapolis, Minnesota.
On its website, Italgrani USA boasts "A central location along the Mississippi River with direct access to all major railways uniquely positions us to source high-quality durum wheat at the best possible price for our customers and to obtain the best outbound freight rates. With the ability to receive shuttle trains, we're able to buy grain at more competitive rates, as well as move it more quickly and efficiently."
"This acquisition is fully aligned with our long-term strategic goals of diversification, geographic expansion, and an increased presence in food processing -- having gone from canola to oats and now to durum processing," Curt Vossen, president and CEO of Richardson International, said in the press release.
"The significant scale of processing capability of the Italgrani plant, combined with origination opportunities and crop inputs retail facilities, all included in this transaction, will further enhance the services we will be able to offer to our producer customers, both in Canada and the U.S.," Vossen stated.
The company said the purchase agreement will close immediately following receipt of all requisite regulatory approvals, adding that Richardson will own 100% of the shares of Italgrani USA. "Following successful completion, Richardson will retain the current workforce and looks forward to welcoming these employees to the Richardson group of companies," noted the press release.
Mary Kennedy can be reached at email@example.com
Follow her on Twitter @MaryCKenn
(c) Copyright 2021 DTN, LLC. All rights reserved.