Whitgro Inc. will merge with Northwest Grain Growers in May as part of a plan to update facilities and move grain using 100-car shuttles.
“Market economics is a big reason,” said Heath Barnes, general manager of Whitgro Inc. “Really, (it’s the) same reason all the other co-ops are consolidating — mainly market economics, a shift in some of our freight options and our ability to remain competitive for our members.”
Whitgro has 390 members. Northwest Grain Growers has 1,700 members.
Chris Peha, general manager of NWGG, said the companies have worked together for a long time. The majority of Whitgro’s facilities are on a short-line railroad owned by the state. NWGG has an agreement with the short-line operator to move and load grain at Whitgro’s facilities and ship it to NWGG’s facilities along the river, to load onto barges.
The railroad has approached NWGG about using 100-car shuttles on the short-line railroad, which will require a $6 million to $8 million investment to update facilities and receive the railroad’s proposed lower rate, Peha said. The company plans to make the changes in the next 12 to 24 months, he said.
Whitgro and NWGG’s boards determined the best move was to merge the companies, Peha said.
Barnes and Peha did not provide an estimated value of the combined businesses.
Barnes doesn’t expect farmers to see much impact as a result of the move.
“They’re going to continue to remain at a competitive freight rate and competitive patronage levels,” he said.
Peha said the change will also provide administrative efficiency and savings on insurance and banking.
NWGG has five barge-loading facilities, but members are “river captive” with aging infrastructure and occasional river closures for lock maintenance, he said. The merger will allow the flexibility to ship by rail or barge, he said.
“We can ship our grain to the best available market at all times,” he said.
Whitgro was formed by the combination of wheat-growing organizations in Endicott and St. John. That merger occurred in 2008, Barnes said.