Business

Firm closes six grain elevators in southwestern Ontario, upsetting farmers

A Montreal-based firm is closing six grain elevators in southwestern Ontario, a transfer that impacts farmers within the area and raises issues about rising consolidation available in the market, business leaders say.

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A Montreal-based firm is closing six grain elevators in southwestern Ontario, a transfer that impacts farmers within the area and raises issues about rising consolidation available in the market, business leaders say.

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Sollio Agriculture says it has made the “tough, however vital determination” to stop operations in Ontario Grain and shut its elevators in Chatham-Kent and Lambton, Essex, Elgin, Oxford and Wellington counties.

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“The choice was made primarily as a result of we couldn’t generate a dividend or a revenue from this exercise,” Sollio CEO Casper Kaastra stated on Thursday.

The corporate’s monetary challenges had been compounded by “elevated volatility in commodity costs” lately, precipitated partially by the pandemic and Russia’s invasion of Ukraine, a significant grain producer, he stated.

“Not having that connection deeper within the worth chain put us ready the place we will not compete or make a revenue anymore,” stated Kaastra, who famous that Sollio doesn’t have Ontario amenities to export grain immediately.

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The agribusiness arm of Sollio Cooperative Group, Sollio turned the biggest shareholder within the Ontario Grain cooperative in 2018. The corporate plans to proceed serving clients throughout this yr’s harvest season with lowered capability and can “have a sale course of for its belongings with potential consumers,” it stated in a press release.

The elevators that shut are in Florence in Lambton County west of Bothwell, Staples in Essex County north of Leamington, Wallaceburg in Chatham-Kent, Talbotville in Elgin County north of St Thomas, Palmerston in Wellington County north of Listowel and Princeton in Oxford County east of Woodstock.

Ontario Grain’s sudden exit raises issues about having one much less participant in an already concentrated firm, some business observers say.

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“It’s unlucky that Sollio is shifting out.” We do not know who’s coming in in order that’s a giant concern proper now,” stated Gus Ternoey, Chatham-Kent director of Grain Farmers of Ontario, an umbrella group for producers.

Whereas he is hopeful it will likely be enterprise as typical for farmers who’ve contracts with Sollio, closing all the firm’s Ontario operations raises questions in regards to the fallout, Ternoey stated.

“Actually, going ahead, there’s lots of concern about what this can really imply,” he stated. “One participant much less. Does that imply it will likely be tough to ship grain? We do not know in the meanwhile.”

Phillip Shaw, a farmer and agricultural economist, sees the transfer as a “large blow to farmers” in Southwestern Ontario.

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“Any time you might have the potential to lose shops for grain and consumers for grain, it makes the business extra concentrated,” he stated, including that it may create extra issues for these supplying farmers.

As a significant participant in grain advertising and marketing, Ontario Grain’s exit might be felt most in Chatham-Kent, Essex and Lambton counties, Shaw stated.

Different massive operators embrace corporations resembling Andersons, Cargill, Nice Lake Grain and Parrish and Heimbecker.

Usually, when grain corporations shut, they shut down their amenities to keep away from promoting to rivals, Shaw stated. He’s not certain if Sollio would comply with the identical path.

If Sollio can promote its grain elevators, the hope is {that a} purchaser would offer the identical service to farmers, Kaastra stated. The power gives grain drying, cleansing and storage providers to farmers.

Kaastra emphasised Sollio’s dedication to farmers because it begins to say no, noting that it introduced the corporate is exiting the market now to offer growers time to plan for the harvest season.

“We are attempting to do every thing we will to supply minimal disruption to the farmer right now,” he stated.

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