Agricore United

Agricore United

May 12, 2006 16:55 ET

Agricore United Insures Cash Flows From Adverse Weather

WINNIPEG, MANITOBA--(CCNMatthews - May 12, 2006) - Agricore United (TSX:AU.LV) announced today it has extended its current integrated risk financing program which will expire October 31, 2006. The new program will cover many of its traditionally insured risks and provide protection against significant declines in grain volume as a result of drought or other related weather events. The three year program will take effect November 1, 2006.

The new multi-year program will include a total of $75 million of grain handling volume coverage over three years. "Because the new program integrates the grain volume protection with traditional insurance coverage, we pay the cost of insuring the portfolio rather than insuring each risk area on a stand alone basis - thus reducing cost," said David Carefoot, Chief Financial Officer.

The new integrated program will replace cash flows of the company if weather causes shipments to decline below a specified level. For example, for the crop year ending July 31, 2007, the coverage would take effect if industry shipments fell below about 27 million tonnes, with a downside limit of about 19 million tonnes - a level experienced in 2003, following one of the three worst droughts in the last 90 years.

Developed with Willis Canada, the new program will be underwritten by a member of the Swiss Re Group, a long-term risk partner of Agricore United. The new program is similar to one initially developed in 1999 for one of Agricore United's predecessor companies, and which, at the time, was a first in providing grain handling volume insurance within a policy that included coverage for a major business risk as well as traditional property and casualty risks.

"As with prior programs, this new vehicle is intended to lower the annual long term cost of risk while at the same time reducing cash flow volatility," added Carefoot.

Agricore United is one of Canada's leading agri-business with headquarters in Winnipeg, Manitoba and extensive operations and distribution capabilities across western Canada. Agricore United leverages its technology, facilities, services and logistics expertise to connect prairie-based agricultural customers to domestic and international end-use customers and suppliers. The company's operations are diversified into sales of crop inputs and services, grain merchandising, livestock production services and financial services. Agricore United's common shares are traded on the Toronto Stock Exchange under the symbol AU.LV.

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