Cargill has vaulted up the league of crop handlers in Australia by purchasing AWB's commodity management business, in a deal termed a "significant milestone" for the industry.

The US agribusiness giant is to pay cash for the business, once Australia's monopoly wheat exporter, from Agrium, the acquisitive Canadian fertilizer and farm retail group in the process of digesting AWB.

The value of the deal will be decided when it is completed, an event expected in the first half of next year once regulatory approvals have been obtained.

However, as of September 30, the operations being disposed of would have been worth about Aus$870m ($860m), including some Aus$240m in debt that Cargill will assume.

'Dividends for growers' 

Mike Wilson, the Agrium chief executive, said that Cargill's purchase of the AWB business "will be a significant milestone in the evolution of Australia's grain industry".

"We believe it will provide dividends for Australian growers through improved market access, knowledge, relationships, and expertise in the world grain trade, and as a result will provide a stronger global marketing presence for Australian crops," he said.

Cargill has been a relatively small player in the Australian grain handling sector, employing only 1,900 of its 131,000 staff in the country, and this spread over sectors including cattle feedlots, oilseed processing and flour milling.

The deal also comes amid something a flurry of investment by Cargill, whose profits have been boosted by the rising and volatile crop markets.

The company also on Wednesday unveiled the purchase of a majority share in Indonesian sorbitol producer Sorini Agro Asia Corporindo for 2.72bn rupiah ($300m), and last week announced the capacity upgrade of its Gilman grain facility in Illinois, which will be able to receive 60,000 bushels of grain an hour, 25,000 bushels an hour more than at present.

Retail core

Cargill is the latest of a series of grain giants to target Australia since the deregulation of its grain export operations, following a breach by AWB of curbs on shipments to Iraq during the regime of Saddam Hussein.

Canada's Viterra bought ABB Grain, initially a barley business, last year, while Japan's Sumitomo Corporation has bought a stake in Emerald.

For Agrium, however, the prime objective of its $1.1bn AWB purchase was to snap up the group's retail business, Landmark, to extend its footprint of farm supply operations from North America.

The Cargill deal "is the best course of action for all stakeholders involved", Mr Wilson said.

Agrium will also retain commodity business worth some Aus$55m not being bought by Cargill.