Owensboro Riverport Authority Lease Grain Facilities to Bunge
The Owensboro Riverport Authority in Owensboro, Kentucky has leased the complete operation of its grain facilities to Bunge North America under a contract bid accepted on April 12, according to Riverport president and CEO, Ben Wright, reports Kitco.
Until recently Bunge oversaw front end business and grain marketing for the business, but with the goal of increasing the facility’s throughput, ease of delivery for farmers and the improvement of the grain facilities, Bunge will take over operations that consist of three 30,000 bushel grain bins, one outdoor 600,000 bushel pod, a grain drier, scales and conveyor equipment.
Under the 15-year agreement, Bunge will pay $275,000 per year to the riverport for rent, which will be subject to adjustments based on the consumer price index every five years, but not to exceed 2% per year, and will pay for all utilities. Bunge will also be required to invest $975.000 within the first three years of the lease to upgrade specific items including raising the outbound conveyor system and installing an additional 120,000 bushels of storage with the riverport providing financing if needed.
"It's a straight lease agreement with capital investments," Wright said according to Kitco. "The goals are to expand the facility and to accomplish more throughput of grain long-term. ... Bunge will manage the entire facility from beginning to end with Bunge employees. We will be transferring our employees back into other ORA jobs. In essence, the grain company, Bunge, are the experts."
Other aspects of the agreement include a clause that states Bunge must maintain a minimum throughput of seven million bushels of grain per year at the site or pay the riverport one cent for every bushel under the set minimum. This clause would be voided if weather or other uncontrollable factor adversely affect growing conditions. In addition, for every bushel above seven million through the facility up to 12 million bushels, Bunge will pay one cent per bushel handling fee.