Pipeline exits former SunOpta conventional agronomy unit

Senior vice-president Neil Juhnke said the sale came after a one-year trial confirmed the facility would struggle to compete in a retail inputs market increasingly defined by consolidation and scale.

Pipeline Foods has sold the conventional agronomy inputs unit it acquired last year as part its deal for SunOpta’s organic corn and soybean business.

Financial details were undisclosed for the sale to Crystal Valley, a Minnesota farming cooperative, which was announced earlier this month.

Neil Juhnke, a senior vice-president at AMERRA-backed Pipeline, told Agri Investor the inputs unit is a single store in Hope, Minnesota that constitutes the last mile in a supply chain connecting regional farmers with conventional inputs.

He said that given Pipeline’s focus on developing supply chains for organic and specialty grains, the retail agronomy business was one of a number of units included in the SunOpta transaction that were immediately put under strategic review following the close of that deal.

After operating the business for a year, Pipeline determined it was not of a competitive enough scale, Juhnke said

“We were either going to need to scale into that business and become more competitive and efficient or divest,” he told Agri Investor. “It made more sense for us to divest. The retail agronomy business, in general, has been consolidating, and most of the serious players in that line of work have multiple sites and significant capability to buy large volumes of fertilizer into shuttle facilities.”

For example, Apollo Global Management-founded Pinnacle Agriculture, since its creation in 2012, had assembled a network of more than 130 retail locations by the time of its sale to privately held agribusiness JR Simplot last November.

Crystal Valley’s purchase of Pipeline’s conventional agronomy business includes only the single retail store, its customer list and an associated agronomy manager, Juhnke said. He added that Pipeline will retain ownership of grain elevators on an adjacent property that were also part of the SunOpta deal.

Pipeline paid $66.5 million in February 2019 for the organic corn and soy divisions of  SunOpta, a NASDAQ-traded natural and organic foods producer headquartered in Canada that counts Oaktree Capital Management among its investors.

At the time, Pipeline chief executive Eric Jackson told Agri Investor that in addition to expanding the company’s networks of supply chain assets the SunOpta acquisition would provide access to railroad lines that would help facilitate sales into regions of the country that were difficult for Pipeline to reach.

Pipeline’s network of midstream assets dedicated to organic and non-GMO food and feed also includes facilities in Missouri, North Dakota, Iowa and elsewhere. It acquired the ancient grains unit of the Fountain City, Wisconsin-headquartered Organic Ventures for an undisclosed sum in November.