GRAINFARMERS have reached agreement to buy the UK grain marketing arm of Dalgety Arable, in a deal which will make Grainfarmers the largest grain marketing business in the UK.

In the deal, effective from April 30, Dalgety has entered into an ex-farm procurement agreement with Grainfarmers, under which Dalgety's field force of 120 arable specialists will act for Grainfarmers, ensuring continuity of grain marketing for Dalgety's farmer customers.

Grainfarmers will achieve national coverage of all of the UK's main arable areas, reinforcing its position as the UK's biggest farmer-owned and controlled arable business.

The enlarged business is expected to have a turnover of £300m, handling 4m tonnes of ex-farm grain, giving it an estimated 20pc share of the UK grain market. It will employ 190 and will enjoy significant economies of scale, with savings in duplicated costs of £1m a year.

"This innovative agreement enables field staff overheads to be shared in an industry striving for better efficiency," said Tony Taylor, Dalgety Group chief executive. "We will continue to build on our market leading positions in arable and grassland farm inputs. At the same time, this agreement will broaden the grain marketing services Dalgety arable customers receive."

Tim Pollock, Grainfarmers managing director, said the two companies were a very good geographic fit, having relatively little farmer customer overlap.

"Our agreement with Dalgety will give us the capability to meet our end-user customers' raw material needs on a national basis by extending our coverage from our traditional trading regions in the South, East and Midlands into the North of England and Scotland.

"Farmer shareholders and suppliers will benefit from the increased range and scale of domestic and export market opportunities offered by the enlarged business, as well as our international marketing alliance with global shipper Louis Dreyfus."

Existing Dalgety grain suppliers will be offered the opportunity to take up shares in the enlarged Grainfarmers business, which has about 4,000 farmer shareholders.

Andrew Barnard, director responsible for Dalgety's grain business, will transfer and join the Grainfarmers board as operations director.

Grainfarmers' parent company, the Southern Counties Agricultural Trading Society, will, subject to shareholder consent, be renamed Grainfarmers Group.