Winnipeg-based AGI announced Thursday it has bought all outstanding shares in Oakville, Ont.-based Affinity Management Ltd., developer of the Compass brand of farm and agribusiness management software, among other business management tools.

Affinity, which was founded by Neal Dilawri in 2007 and built up through partnership with chemical firm BASF, today has 18 employees. Dilawri will now take a “senior leadership role” working on the AGI SureTrack platform and provide “vision and guidance” going forward, AGI said.

The Compass product line, which today serves over 8,000 individual farmers across North America, includes an enterprise resource planning (ERP) system for growers and ag retailers and an agronomy tool, AGI said.

The ERP system “provides full accounting functionality, including management of accounts receivable, accounts payable, payroll and inventory tracking.”

The Compass system, AGI said, “also acts as a central data repository and portal which allows for the sharing of information with a grower’s trusted advisors, including agronomists, accountants, lenders, and insurance providers.”

Affinity’s staff also includes accountants who provide bookkeeping services to the company’s grower customers, AGI said.

The Compass product suite is “highly complementary to AGI’s current offering and will be a key component of the full AGI SureTrack platform.”

The SureTrack platform, formerly known as Intellifarms, includes the SureTrack Farm system for use by farmers and the SureTrack Pro system for use by processors, merchandisers and grain buyers to source product directly from farms.

The platform is meant to bring together data from “across the farm, providing our customers with the ability to manage their crop production, manage their overall business, and market their grain based on content and robust traceability,” AGI CEO Tim Close said in Thursday’s release.

Compass, he said, “takes AGI SureTrack to the next level, adding comprehensive ERP capabilities for AGI dealers and agriculture retailers, and significantly adding to our offering for farmers.”

In an update Thursday on its fourth-quarter financials, AGI said it has “demonstrated the success of its AGI SureTrack subscription model” in 2019, by “increasing retail equivalent sales by 70 per cent, despite capacity constraints and a challenging U.S. ag market.”

In 2020, the company added, “that growth is expected to continue as AGI builds on existing relationships with processors, merchandisers, grain buyers and producers throughout North America.”

Investments in sales, marketing and technical resources for AGI SureTrack are meant to “address capacity and accelerate the future pace of new user additions, thereby increasing our recurring revenue stream and adding significant equipment cross-sell opportunities.”

Financial terms of AGI’s deal for Affinity weren’t disclosed in Thursday’s release, except to say the purchase was “funded from the company’s operating facilities.” — Glacier FarmMedia Network

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Winnipeg-based AGI announced Tuesday it had agreed to make a “minority equity investment” of US$15 million (C$19.57 million) in Farmobile, effective Wednesday.

Neither company said how much of an equity stake $15 million would buy, percentage-wise, but AGI noted the deal comes with the right to appoint two directors to Farmobile’s board.

Farmobile provides hardware and software for real-time collection, organization, analysis and storage of farm data, such as its PUC IoT (Internet of Things) device, which collects and streams agronomic and machine data from most makes and models of field equipment.

Data farmers collect through Farmobile equipment can be converted into standardized field records for sharing with trusted advisors or for monetizing through the Farmobile DataStore exchange, the company’s digital marketplace.

The Kansas City-area company’s revenue comes from Farmobile PUC subscriptions and data licensing.

Since launching PUC in 2014, Farmobile said it “has collected more point-by-point farm data, including detailed agronomic data for planting, harvesting, foraging, spraying, and spreading; field data; and location data, from more sources than anyone else in the industry.”

“Our investment in Farmobile substantially expands our technology platform and integrates automated data collection seamlessly within our IntelliFarms SureTrack farm management and grain exchange platform,” AGI CEO Tim Close said in the company’s release.

The SureTrack system — which came to AGI when it took over Missouri-based tech firm IntelliFarms in March — features suites of sensors “from the field to grain bins” allowing farmers to manage operations with real-time field activity data, grain handling, storage and conditioning equipment and marketing and price discovery options.

“Agriculture is evolving faster than ever before, and data is at the core of the progress we have made and the progress we will make in years to come,” Close said separately in Farmobile’s release Wednesday.

“The power of a company like Farmobile is that they enable access to insights that have previously been locked inside of machines or left in the field due to the challenge of data collection and transfer.”

“In a precision ag world, data is a crucial system of record for every pass on a field, which quickly turns into a system of orchestration to enable better in-field management decisions,” Farmobile CEO Jason Tatge said in that company’s release Wednesday.

“AGI understands that, so we are thrilled to have a partner and investor like AGI as we continue on our mission to help unlock the full potential of data in agriculture.”

AGI’s grain handling and storage equipment brands include Westfield, Wheatheart and AGI augers, Westeel and Twister bins and Batco and Hi Roller conveyors, among others. — Glacier FarmMedia Network

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Net incomes plunged last year, and that setback was followed in March by China’s halting purchases of canola, Canada’s biggest crop. Now farmers are turning to government aid to avert disaster, lenders are extending the term on loans and machinery dealers are seeing declining sales.

Prime Minister Justin Trudeau’s Liberals hold only a handful of rural western seats to potentially lose in the October election, but they have also angered eastern dairy farmers for surrendering greater market access in recent trade deals.

Agriculture is not as directly important to Canada’s economy as the service sector, for example, said Brett House, Scotiabank’s deputy chief economist. But farm spending indirectly underpins other sectors, said Alberta Agriculture Minister Devin Dreeshen.

“Farmers reinvest every dollar they get. (The pullback) reverberates throughout the entire economy,” he said.

Shaun Dyrland, who farms near Kyle in western Saskatchewan, said conditions are the toughest in about 20 years, forcing the farm to make its first claim from AgriStability, a federal government program that helps farmers weather losses due to poor crops, rising costs or market disruptions.

“Things were running along pretty good and now we’ve had to make some changes just to make ends meet and make the numbers continue to work,” he said.

Dyrland, 40, has eliminated two hired positions on his fourth-generation farm and cut chemical and fertilizer purchases.

“It’s definitely reminding me of the late ’90s, early 2000s, where we had to really squeeze every penny and make sure every decision was the right one.”

Canadian farmers’ net income plummeted 21 per cent last year to $11.6 billion due to soaring debt and labour costs, marking the lowest income level in seven years. Farmers owed a record-high $106 billion.

Payments from AgriStability have jumped 37 per cent year over year, a spokesman for the federal agriculture department said.

“(Farmers’) stress level is extremely high,” said Wendy McDonald, an agronomist at Manitoba farm consultancy 360 AG. “They need this crop to do well and it’s not off to a great start.”

Canadian farmers have fared relatively better under low commodity prices than U.S. growers in recent years due to a low dollar that helped exports and greater crop diversity, said Ryan Riese, national director of agriculture at Royal Bank of Canada. Now amid harder times, interest in buying farmland is tapering off, he said.

In Ottawa, there is still hope that farmers can withstand a short-term decline.

“They had a good number of years with significant increases (before the downturn). I’m still optimistic,” said federal Agriculture Minister Marie-Claude Bibeau, whose government has increased limits on interest-free farm loans.

But farmers are already making adjustments.

“They’re not buying new equipment. They’re fixing what they have,” said Steve McCabe, executive director of Agricultural Manufacturers of Canada, whose members include Ag Growth International and Buhler Industries.

“Buying is really down from last year.

Farm supplier Nutrien is “particularly concerned for the financial health of Canadian farmers” who are shut out of China, their best export market, said spokesman Will Tigley.

Bankers ‘hoping for soft landing’

Lenders are anxiously penciling out farmers’ growing risk.

“There is a significant amount of nervousness in both the cattle and cash crop sector at the moment,” said Glen Snyder, agribusiness manager for Bank of Montreal in Saskatchewan, Canada’s main canola-growing province.

“I’m hoping for a soft landing, and not a hard one that we experienced in the late 1980s early 90s.”

The prospect of soft crop prices and potential for lower yields raises concerns about farmers’ debt service coverage ratio (DSCR) – a metric closely watched by lenders that indicates a farm’s profitability and ability to manage debt, Snyder said.

Even a well-managed farm could see its DSCR slip into a worrisome range this year if crop receipts decline by 10 per cent, a realistic scenario given Saskatchewan’s drought, Snyder said.

The drop in net income “is a big deal for sure,” said Jean-Philippe Gervais, chief agriculture economist at government lender Farm Credit Canada. “Producers are going to have to be a little bit more careful.”

Gervais said some farmers are spreading their debt over longer periods of time.

“I always felt the good times couldn’t roll forever,” said Dyrland, the Saskatchewan farmer. “Nobody likes to see it come. But I think in agriculture, it’s bound to happen.”

— Reporting for Reuters by Rod Nickel in Winnipeg and Kelsey Johnson in Ottawa.

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Winnipeg-based AGI announced Wednesday it has bought Burnaby, B.C.-based CMC Industrial Electronics and Iowa-based Junge Control (JCI) for undisclosed sums.

CMC, which formed in 1997 and has facilities at Burnaby and Minneapolis, makes commercial bin monitoring sensors and systems as well as hazard monitoring sensors and systems for “material handling applications” in the grain, feed and milling sectors.

CMC’s new product offerings include the Grain Ranger system, launched in February last year. The system communicates with legacy analog and digital grain temperature cables to provide bin temperature data to a user’s computer, phone or tablet.

JCI, meanwhile, makes automation, measurement, blending and batching systems, equipment and software for the agriculture and fuel industries.

The company was founded in 1979 by Dave Junge, an Iowa farmer credited with building the world’s first computerized fertilizer plant.

AGI said Cedar Rapids-based JCI’s precision blending and measurement systems, used mainly in liquid fertilizer blending, are “highly complementary” to the new parent firm’s fertilizer product offering.

The two firms booked combined sales of about $15 million in their most recent full fiscal years, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $4 million, AGI said.

AGI, whose ag equipment brands already include auger makers Westfield and Wheatheart, grain conveyor maker Batco, grain bin makers Twister and Westeel, aeration equipment maker Grain Guard, among others, said the new acquisitions “add significant strength to our applied technology platform.” — AGCanada.com Network

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AGI announced it had completed its deal to buy its fellow Winnipeg-based manufacturing firm for $221.5 million on Wednesday — after announcing the Competition Bureau of Canada would allow the deal on which the Westeel sale hinged.

The deal, first proposed in November, calls for Irish building materials manufacturer Kingspan Group to buy Westeel’s Winnipeg parent, Vicwest, for about $350 million and to sell the Westeel division to AGI.

Kingspan keeps Vicwest’s separate Vicwest Building Products division, which makes several brands of metal cladding and roofing for the residential, commercial and farm sectors.

The Competition Bureau’s consent agreement for the Vicwest deal, however, calls for Kingspan to find a buyer for Vicwest’s manufacturing facility in Hamilton.

The bureau said it found Kingspan’s takeover of Vicwest would otherwise “likely result in a substantial lessening of competition for the supply of insulated metal panels in Ontario by eliminating the competition between Kingspan and Vicwest.”

“Kingspan worked co-operatively and quickly with the bureau to find a solution to the concerns expressed,” Jeanne Pratt, senior deputy commissioner for the bureau’s mergers branch, said in a separate release Tuesday.

“With the sale of the Hamilton operations, insulated metal panels customers such as installers, general contractors, and commercial and industrial building owners will benefit from competition when buying insulated metal panels.”

“Growth platform”

“Westeel’s complementary product offering expands our growth platform within North America and around the world and we look forward with enthusiasm to bringing this outstanding company into the AGI family,” AGI CEO Gary Anderson said in the company’s release.

AGI president Tim Close added that the company “places the highest value on the contributions of its employees and we look forward to meeting and welcoming all of the people at Westeel.”

Westeel makes grain bins at Winnipeg and Saskatoon and petroleum storage tanks at Olds, Alta. and Tisdale, Sask., and runs distribution centres at St-Simon-de-Bagot, Que., Fargo, N.D., Saskatoon and Winnipeg.

AGI’s stable of manufacturers already includes Twister and Grain Guard, two manufacturers of hopper-bottom and flat-bottom bins.

AGI, however, said last fall that Westeel complements the Twister and Grain Guard lines with products “not currently part of AGI’s catalogue,” such as smoothwall bins, hopper cones and commercial hopper-bottom bins.

The $221.5 million aggregate purchase price for Westeel includes about $13 million in net cash on closing, plus a “redundant” Westeel manufacturing plant in Regina, which is up for sale with an estimated market value of about $4 million.

Westeel had set up a “strategic alliance” in 2010 with another Winnipeg manufacturer, Buhler Industries, to sell Buhler-made, Westeel-branded grain handling equipment through Westeel’s Canadian distribution chain. Buhler’s Farm King division, in a separate agreement, served as the exclusive distributor for Westeel in the U.S.

According to Buhler, those arrangements with Westeel expired in 2013 and were not renewed. — AGCanada.com Network

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