(The Calgary Herald) The boom times for U.S. agriculture in 2011 have focused on soaring land and crop prices, bumper harvests and biofuels, but a recent deal has spotlighted a quiet industry that's booming: grain storage.
Agco, the world's third-largest farm equipment manufacturer, this week finalized its purchase of grain storage manufacturer GSI Holdings for $928 million.
Analysts estimate annual revenue of the global grain storage sector at $3.5 billion."It's historically grown above GDP as farmers have tried to maximize the potential yields of their crops, store onsite in hopes for better prices. So it has grown at a five to seven per cent growth rate," said Adam Fleck, a Morningstar analyst, who said he is covering the sector after the Agco deal.
Headquartered in Assumption, Ill., GSI sells its products globally through more than 500 independent dealers.
"Together, we will give our customers even greater access to technology to help them be more productive and profitable," Agco chairman Martin Richenhagen said on Thursday.
GSI, privately held by New York-based Centerbridge Partners LP, says it is the world's largest maker of grain storage systems. But information on the industry, which includes U.S. brands like Brock, Sukup and Agri-Systems as well as European and Chinese makers, is closely held.
In recent years some big investors have begun playing in the grain storage business. Gavilon of Omaha, Neb., has bought grain storage facilities from Oregon to Ontario, attracted by soaring crop demand, especially from the high demand created for corn-based ethanol.
U.S. grain storage capacity has expanded 12 per cent since 2005, coinciding with the jump in ethanol.
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