What is in this article?:
- Louisiana's Port Allen grain facility leased by Louis Dreyfus.
- Lease agreement requires massive upgrade of facilities.
- Through-put at facility expected to increase price farmers receive for grain.
“For the most part, we were pretty happy,” with the first 45 years of Cargill’s lease, says David Bollich, with the Louisiana Farm Bureau.
Farmer displeasure with Cargill roughly coincided with the company buying out Continental Grain, another export elevator, just prior to 2000.
“Port Allen is 55 years old and it’s close to obsolete,” says Bollich. “In order to compete in the export market, it needs – and has needed – big improvements. It has an obsolete barge unloader and, despite the local grain they buy, the bulk of what is loaded on a ship still comes from barges. It’s inefficient and expensive to do it, now. The actual system for loading vessels is simply obsolete.”
By picking up another elevator, “Cargill picked up efficiencies that pretty much allowed them to put Port Allen on the backburner. At that time, I think they were thinking ‘we’ll continue to buy local grain. But we’ll pay less for it because it isn’t critical for us. We’ll have a nice profit margin in it.’”
And for a decade, “it worked well for them. No one faults them for that. It impacted farmers’ prices but it was a business decision.
“However, to farmers’ credit, they – and Farm Bureau – realized what had happened. Years ago, they began asking ‘hey, is there another tenant that could take over Port Allen? An international trader, who is not already on the Mississippi River and would like a facility on the Gulf?’
Those questions – often peppered with irritation over basis and the price paid to farmers for grain -- only picked up steam in 2010 as the new lease approached and the Port Allen Commission wrestled with the possibilities.
“It’s well known that there has been some discontent amongst farmers in this region regarding the current operation of the elevator,” says Strain. “I’d had discussions with farmers on this for a number of years. The major (cause) of the decision was based on economics. But I can tell you many farmers were discontent and that was a factor.”
Initially, there was concern there would be little interest in bidding for the facility. Those worries proved unnecessary.
Eventually, the bids were narrowed to three: Cargill, Louis Dreyfus and Noble Commodities. Noble is an international trader but has no presence in the United States. They dropped out of the running late last summer. It came down to Dreyfus and Cargill.