Two of the UK's leading oilseed and grain businesses, Allied Grain and Banks Cargill Agriculture, are to merge.
Subject to regulatory approval, the new joint venture, called Frontier, will be 50:50 owned by parent companies ABF Holdings and Cargill. The merger will provide a broader product range supplied over a wider geographical area to UK food producers and others.
David Irwin, Allied Grain md, said: "For our food customers, our strong farmer relationships mean we will be able to offer high quality, locally-sourced grain anywhere in the UK."
Together, the two companies, which employ around 700 people and have a combined turnover of £700m, will be looking to find more local sustainable markets for grain and to contain costs.
With world consumption of grain rising, world stocks remain tight. Meanwhile, reform of the Common Agricultural Policy is likely to make it harder for UK arable farmers to remain competitive.
Mark Aitchison, md of Banks Cargill Agriculture, who will head Frontier, said: "The deal represents some welcome certainty."
Meanwhile, Centaur Grain is also looking to form more partnerships with food businesses. Its collaboration with Warburtons bakery over the supply of milling wheat, and with Coors over malting barley, is seen as the way ahead for farmers.
Graham Lacey, Centaur's marketing director, told farmers last month that there must be much closer co-operation between producers and consumers.
"It is no longer sufficient for producers simply to co-operate in the belief that it will provide them with enough marketing muscle to stand up to buyers and argue over price," he said. But he warned: "Consumers of grain must realise it is not in their interests to buy from any source as long as it's cheap, and ignore the long-term security of supply issue."