GrainCorp sale sparks fears

30 Apr, 2013 05:00 AM

FARMERS aren't surprised by GrainCorp's decision to provisionally accept a lucrative $3 billion takeover bid by US agribusiness giant Archer Daniels Midland (ADM), but they are worried about shrinking competition in the grain supply chain.

NSW Farmers wants the federal government to insist on ADM divesting ownership of some of GrainCorp's port facilities to other market players if the deal goes ahead.

The association estimates GrainCorp's country silo, logistics and export facilities handles more than three-quarters of the eastern Australian grain crop and directly sells half NSW's wheat exports.

The Victorian Farmers Federation (VFF) is worried ADM may attempt to introduce a US-style closed-loop system - a feature of American grain exporting - where exporters predominantly buy into their own bulk handling system and export exclusive of other traders.

Both farm organisations and other industry groups were briefed last Friday by GrainCorp about its board's decision to recommend shareholders accept ADM's offer after it becomes official later this week.

"While this consolidation and acquisition is not unexpected, it is disappointing to see Australia's largest listed agribusiness acquired by foreign interests, said VFF grains section president Brett Hosking.

"In essence foreign multi-national grain companies will own and control the major grain port infrastructure in eastern Australia as well as control access to grains stocks information.

NSW Farmers wants Treasurer Wayne Swan to call for, and review, public submissions about the implications of one multi-national business taking control of so much of the grain supply network, in particular seven of eastern Australia's eight grain ports.

"Other members of the grain trade must also be guaranteed access to GrainCorp's upcountry receival, storage and handling network," said association grains committee chairman Mark Hoskinson.

"Upcountry grain stocks should also be disclosed to a level agreed to by the Federal Agriculture Minister when amending the Wheat Export Marketing Act."

Mr Hoskinson said the planned GrainCorp sale to ADM simply exacerbated concerns farmers already held about overseas companies swallowing up the competition within the local grain market.

Even if the deal proceeded regardless of concerns voiced by impacted grain farmers, strong safe guards were still needed to protect the national interest.

"It is our view that ensuring Australian farmers benefit the most from our strong position in the Asian Century must be an imperative in any decision on whether the GrainCorp sale is in the national interest."

VFF's Mr Hosking said in a deregulated market competition was essential to ensuring an effective and efficient supply chain to benefit producers, consumers and exporters alike.

"That's why we need a compulsory code of conduct to ensure all exporters have open access to ports and transparent information on grain stocks."

"This is crucial to ensuring all exporters can compete on a level playing field."

GrainCorp officials confirmed they have had grower feedback about the likely takeover, but it was mostly understanding of the market fundamentals that had seen ADM attracted to the Australian company's assets and strategic position in the grain marketplace.

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1/05/2013 2:59:05 PM

Do we stil have a FIRB Foreign Investment Review Board?


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