Frontier Agriculture is in exclusive negotiations with Fengrain directors to take over the grain trading and grain marketing activities previously carried out by the Fengrain Services subsidiary. The business markets around 800,000 tonnes of crops each year.
If agreed, the change would happen from the end of March. It would not affect the independent Cambridgeshire co-operative’s grain storage and grain handling activities, which will remain owned by its farmer members.
A proposed merger between Fengrain and the Centaur Grain co-operative was rejected by its members in 2005, with Centaur subsequently merging with Grainfarmers to form Openfield Agriculture. Fengrain agreed a five-year procurement and supply arrangement with Glencore Grain in 2010, to meet the rising UK bioethanol demand with new plants coming onstream.
Three years ago, Fengrain opened a trading office near Canterbury in Kent, in direct competition with Frontier’s presence in Wingham in the same county. Frontier acquired the Grain Harvesters business there in 2014, and has since invested a further £2 million in improving the site’s infrastructure.
Ongoing consolidation in the UK grain trade saw Dalmark Grain move its grain book to Cefetra last year, followed by the sale of Yorkshire’s Campbell & Penty to Saxon Agriculture. Frontier has provided marketing services for storage co-operative Camgrain since July 2015.
“Global and domestic markets remain volatile and unstable, making grain trading increasingly more challenging,” notes Fengrain chairman Paul Wilkinson. “By concentrating on our core storage activities we can subcontract our grain trading and marketing to Frontier which has the scale and financial capacity to trade through market volatility to the benefit of their grain marketing customers.
“I am excited by this new business model which I believe will add value to our members and serve all our stakeholders well into the future.”
Frontier managing director Mark Aitchison adds that Frontier was pleased to have reached agreement. “Frontier has a well proven track record of providing grain marketing, risk management and grain trading services to farmer-owned grain businesses.
“With our complete understanding of the farm gate and our wide access to upstream markets, we can bring something unique to Fengrain members and farmer customers – helping to maximise their grain marketing performance and protecting their storage investments.”