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Gold Kist, ADM to form grain-elevator joint venture

Published on 28 April, 2006, Last updated at 04:15 GMT

28th Apr, PHILADELPHIA, USA - Chicken grower and processing company Gold Kist Inc. (GKIS.OQ: Quote, Profile, Research) on Thursday said it would form a joint venture with Archer Daniels Midland Co. (ADM.N: Quote, Profile, Research) that would own three grain elevators in the Midwest.

Terms of the pact were not disclosed. The joint venture would allow the companies to make more efficient use of rail transportation services, Gold Kist said.

Gold Kist would get direct access to corn for two of its poultry feed mills, while ADM would gain a year-round destination market with a long-term customer. The joint venture is expected to begin operations in August 2006.

Through a newly announced joint venture, the two companies will each own a 50 percent interest in the three grain elevators by August. Terms of the deal were not disclosed.

The agreement is expected to create opportunities for both agriculture-related firms to facilitate planning, optimize logistics and make more efficient use of rail transportation service.

Gold Kist will gain direct origin access to a large percentage of its corn requirements for two of its facilities and ADM will gain a year-round destination market with its partner.

"This joint venture should provide economic advantages for both companies," John Bekkers, Gold Kist president and chief executive officer, said in a statement. "It is designed to provide us with a guaranteed source and timely delivery of approximately one-fifth of our corn requirements and also should allow us to obtain additional savings through negotiations for dedicated rail service and larger trains.

The three elevators are located in an area that produces more than 241 million bushels of corn annually. Corn from the elevators are expected to supply a large percentage of the needs for Gold Kist's poultry feed mills in Ambrose, Ga., and Live Oak, Fla.

"Gold Kist has long been a valued customer of ADM," said a statement from Lewis Batchelder, senior vice president for grain and transportation with Archer Daniels Midland. "Through this joint venture, ADM will gain not only a reliable market for its grain, but also enhanced knowledge of the poultry feed market."


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