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Co-op buys back JV stake from Cargill

The Midwest market has moved from servicing ethanol demand towards a focus on value-add crops such as non-GMO and food-grade corn, Central Valley Ag's Matt Ashton tells Agri Investor.

Privately held agricultural conglomerate Cargill has sold back its stake in Progressive Ag Partners, a Midwest grain-handling joint venture, to its partner, Iowa-headquartered cooperative Central Valley Ag, for an undisclosed price.

Progressive Ag Partners was created in 2002 through an agreement between Cargill AgHorizons and the United Farmer’s Cooperative (which later merged with CVA) that combined the operations of two adjacent grain elevators located in Bradford, Iowa. The company buys and sells from regional grain producers and has the capacity to load grain delivered by both truck and rail, with enough rail capacity to ship as much as 110 car shuttle trains.

CVA is a grain, agronomy, feed and energy company owned by a cooperative of local farmers. It has 93 locations spread across Iowa, Nebraska and Kansas and from June 1 will take full control of the Progressive Ag Partners facility.

Transient companies

Matt Ashton, CVA senior vice-president for grain, told Agri Investor that when Cargill first entered the joint venture in 2002, most of the grain produced in the region was shipped on rail to ethanol production facilities in Nebraska. Today, he explained, there is more competition for the grain, because much of it goes to local ethanol plants.

“A lot of limited-liability companies that are put together in ag, in my opinion, are not put together for eternity,” Ashton said. “It’s a means to an end and certainly in this case, it served its purpose.”

Ashton said that taking full control of the venture fits in with CVA’s larger plans to begin offering logistics and trading services for the value-add specialty crops such as non-GMO corn, food-grade corn, white corn and non-GMO white corn that his company thinks is the region’s comparative advantage.

“This facility is in a part of our trade territory where a lot of those commodities are grown, so we are going to dedicate the facility from January through September to only handling the value-added crops,” he noted. “September through December, we will handle corn and beans and milo that are grown by our local producer and then we will transition the facility in January to the value-added crops.”