International agribusiness merger would bring Canadian grain volume insurance program to Australia

Five-year-old risk management measures adopted by Canadian agribusiness Viterra Inc. (TSX:VT)  may soon benefit Australian farmers if a proposed merger between Viterra and ABB Grain (ASX:ABB) is finalized as planned.
Subject to completion of the proposed merger between Viterra and Australian agribusiness ABB Grain, ABB Grain will introduce grain volume insurance and the removal of a volume variation fee in the Australian marketplace.
ABB Grain said it had previously investigated grain volume insurance and concluded it was not, at the time, economical to obtain such coverage on a standalone basis.
Viterra has entered into a grain volume insurance program to insure the combined company against lower than expected grain production in South Australia.
The program would begin to pay out in the event of approximately a 33% drop in average annual South Australian grain production levels. It would fully pay out in the event of a 65% drop in production.
The maximum payout under the program is $27 million
“Viterra’s ability to extend its Canadian grain volume insurance program to include the operations of ABB Grain is a creative solution that reduces the risk profile of the combined company,” Viterra president and CEO Mayo Schmidt said in a joint press release from the companies. “It illustrates the kind of benefits and innovation that we can bring to the table collectively, working together to bring value to the business, its growers, shareholders and destination customers.”