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  • By Lynda Kiernan-Stone, Global AgInvesting Media

Louis Dreyfus, Amaggi Group Sell Stake in Grain JV to Japan’s Zen-Noh

Brazil’s Amaggi Group and Louis Dreyfus Co. announced that they have agreed to sell a 33 percent stake in their existing Brazilian joint venture to Japan’s Zen-Noh Grain Brazil, making Zen-Noh an equal partner in the venture.

The partnership between Amaggi and Louis Dreyfus dates back to 2009 when it was launched under the name, Amaggi & LD Commodities with the goal of originating soybeans and corn, financing farmers, and being active in the exchange and sale of seeds, fertilizers, and agrochemicals in the Brazilian region known as ‘Matopiba’, consisting of the states of Bahia, Maranhão, Piauí and Tocantins. The joint venture also holds a 25 percent participation in the Tegram grain terminal at the Itaqui port in Maranhão. The remaining 75 percent in the terminal, which is currently under development in the north of Brazil, is controlled by Switzerland’s Glencore Plc and Brazil’s NovaAgri and CGG Trading according to Reuters.

Upon the formation of the joint venture in 2009, Kenneth Geld, CEO of Louis Dreyfus Commodities said, “Dreyfus and Amaggi are consolidated in other regions of the country, but we have detected a great potential of synergy in the Northeast. Louis Dreyfus Commodities has a trading profile, acting in more than 50 countries. Amaggi, on the other hand, has expertise in production, origination, logistics and fomenting farmers. Dreyfus becomes more 'Brazilian' and Amaggi more international.”

Early Signals

In May of last year, Bloomberg reported that Louis Dreyfus and Amaggi hired HSBC Holdings Plc to manage the sale of part, or all of their 25 percent stake in the Tegram terminal. After receiving approval in 2011 for the commencement of construction on the site, the five owning parties have spent US$170 million to develop the facility to a handling capacity of five million tons of soybeans and corn per year.

As of last year, there were plans in place to spend an additional 130 million reais (US$$40.5 million) on the terminal, which is 2,500 miles closer to the Panama Canal than Santos – the top port in Brazil, giving it a geographic advantage for grain shipments headed to Asia.

The Addition of Zen-Noh

The agreement will bring Zen-Noh Grain Brazil, the Brazilian subsidiary of Japan’s Zen-Noh Grain Corp. – itself a subsidiary of Zen-Noh, one of the largest agricultural cooperatives in the world into the joint venture.

With 993 member cooperatives, Zen-Noh exports approximately 13 million tons of grain and beans through its elevators located in the Gulf region of the U.S., and sees consolidated revenue of more than $50.5 billion through its supplying and marketing of agricultural products.

“With this incorporation, the joint venture will be able to count on the experience of one of the world’s leading cooperatives, which will contribute to operations in one of the most promising grain producing regions in Brazil,” Louis Dreyfus said. “It will also strengthen the partnership in Tegram, a port that represents one of the main alternatives to the export routes of the country’s south and southeast regions.”

Zen-Noh will be partnering with Amaggi – an integrated Brazilian agribusiness with activities along the entire value chain in Brazil, Argentina, China, Norway, the Netherlands, Paraguay, and Switzerland. Founded in 1977, the company saw production of more than eight million tons of grain last year with revenues of US$2.9 billion in exports. Also active in river transportation and electric power generation, Amaggi transports 3.5 million tons of grain per year along Brazi’s Madeira-Amazonas corridor.

Zen-Noh will also be partnering up with Louis Dreyfus, one of the top commodity traders in the world. Founded in 1851, Louis Dreyfus is one of the A-B-C-D companies along with ADM, Bunge, and Cargill. Spanning the entire value chain, Louis Dreyfus originates, produces, processes, refines, transports, markets, and distributes approximately 81 million tons of commodities per year. Through its extensive world-wide network of assets, the company oversees operations from farm to fork, feeding more than 500 million people per year.

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