World Grain - February 2024 - 30

he said. " More crushing facilities are going to come online
that will adjust it more toward domestic use. And our
wheat that is grown in Montana and North Dakota typically
run 80% to export, but with lower export demand
we are seeing a shift allocating close to 40% toward domestic
use. "
Challenges aplenty
Looking ahead, Van Pevenage believes CGI has positioned
itself to withstand some of the headwinds that
are beyond the company's control.
But the prolonged period of soaring inflation and high
interest rates is starting to take its toll on the agribusiness
industry, Van Pevenage said. If these trends aren't
reversed, there could be significant consolidation.
" I think, particularly in our industry, which is a very
low-margin business, the high interest rates are really
starting to hurt a lot of companies, " he said. " I would
say that almost every week someone brings their business
to me saying: 'We're looking for a buyer. We want
out. We can't take it anymore.' "
Van Pevenage said the cost of doing business has
soared over the last four years. Labor costs, for example,
" have gone through the roof, " he said.
" I would guess our overall wage rate is probably
25% to 30% higher since the pandemic, " he said.
He said the fallout from COVID also exacerbated laCGI's
headquarters
is
located
in Portland,
Oregon, US.
business and acquisition opportunities and new market
penetration.
" CGI's acquisition of Great River Milling to launch
Enrich Foods gives us the platform to develop healthy,
clean, packaged food innovations, " he said. " It allows
us to leverage our agricultural base of 5,000 producers
to open new markets for them thanks to our unique
processing and packaging capabilities, all in an effort
to further our mission of nourishing the world safely. "
The plant features high-speed robotic lines for high
capacity, offering packing, milling and blending capabilities
for stone or hammer mills. It offers a range of
package sizes and types for retail, club and foodservice
use. It is Safe Quality Food, gluten-free, organic and
non-GMO certified, kosher and has allergen-friendly
capabilities.
In addition to shifting more attention to specialty
grains, CGI is distributing more of its traditional grain
products domestically due to a variety of factors. Up
until this year, about 100% of CGI's soybean crop was
targeted for export, Van Pevenage noted.
" This year, with an increase in crushing capacity in
North Dakota, we will likely target 70% of our handle
through export channels and 30% into domestic markets, "
30
bor shortage issues that already were starting to surface
prior to the pandemic.
" The labor problems really boomed during COVID,
and they haven't subsided much either, " he said. " We
continue to fight to have enough labor to keep all our
facilities running. We are bringing H2A and H2B
workers from overseas to fill the positions we can't get
filled locally. "
Although the worst days of the pandemic are over,
supply chains are still unsettled, and geopolitical tensions
are at their highest point since World War II.
Russia and Ukraine, both large grain producers and exporters,
are still waging war after two years, the conflict
between Israel and Hamas is expanding to other parts
of the Middle East, and the tension between China and
Taiwan continues to simmer.
The uncertainty surrounding the geopolitical disputes
and the sputtering global economy has adversely
affected agribusiness, Van Pevenage said. With so
much turmoil swirling, agribusiness companies will
need to be nimble and resilient to survive, he said.
" Having to deal with the intense volatility can be
stressful and create a lot of economic harm to the industry, "
he said.
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February 2024 / World Grain / World-Grain.com
http://www.World-Grain.com
World Grain - February 2024

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