BANKS CARGILL Agriculture and Allied Grain are to combine their forces in a joint venture producing the UK‘s second largest grain buyer.

The new company will be called Frontier, and will be 50% owned by each partner. It will buy around 4m tonnes of grain each year.

The deal is expected to go through in March 2005.

It is the latest in a series of moves towards consolidation in the cereals sector, which saw Banks and Cargill merge in 2001, Grainfarmers buy up Dalgety‘s grain marketing wing in 2003 and Centaur and Soufflet UK merge in the same year.

Allied Grain, which is owned by Associated British Foods, had sales of £331m in the year to Sept 18, but only £223m of that comprised sales outside the group.

Banks Cargill Agriculture had sales of £483m in the twelve months up to May 31.

Both companies are primarily grain merchants, but they also sell seed, fertiliser and other agricultural inputs. BCA sells advice on agronomy.

Allied Grain‘s Managing Director, David Irwin said: “Our complementary strengths will enable us to provide a broader product offering for inputs over a wider geographic area, identify more sustainable and profitable markets for grains and oilseeds and contain costs throughout the chain.

“For our farmer customers, we will also offer the ability to exploit supply chain efficiencies and minimise food miles by finding local, sustainable markets for their grain.

“For our food customers, our strong farmer relationships mean we will be able to offer high quality, locally-sourced grain anywhere in the UK.”

BCA‘s managing director, Mark Aitchison, will become MD of Frontier. He called the deal exciting, and said it would help provide certainty for farmers rocked by CAP reform.