GrainCorp takeover needs greater scrutiny

Archer Daniels Midland’s proposal to takeover GrainCorp highlights the need for greater competition in the grain supply chain, Australia’s largest state farming group NSW Farmers said today.

The American-based agricultural processing firm has made an indicative, non-binding proposal to takeover GrainCorp, which operates eight of the nine port terminals along Australia’s east coast.

NSW Farmers’ Grains Committee Chair Mark Hoskinson said the international agribusinesses circling like sharks around GrainCorp demonstrated the need for appropriate market rules to facilitate competition.

“Given the market power that the east coast port terminals give GrainCorp, we are not surprised it is a takeover target. But the question is how will this benefit a competitive market for farmers’ grain?” he said.

NSW Farmers has called for the Government to amend its Wheat Export Bill to ensure rules are in place to level the playing field between the trading arms of bulk handling companies and other exporters.

Mr Hoskinson said he wanted frameworks implemented similar to those which underpin many competitive modern markets, such as the mandatory stocks reporting which is used in the USA and Canada.

“We believe fair access to port terminal facilities can be achieved through the proposed port access code,” he said.

“However, the code serves no purpose if it is not enforceable or if port terminal operators can choose not to be party to the code. It should also be a requirement for any exporter to uphold the quality reputation of Australian grain.”

Along with a number of other grain farming organisations, NSW Farmers is seeking these functions to be overseen by a specialist industry agency with a statutory charter.

Mr Hoskinson said that NSW Farmers will be considering all options to ensure greater competition in the NSW grain industry.

“We understand any takeover of GrainCorp will require approval of the ACCC and the Foreign Investment Review Board,” he said.

“The proposed takeover needs greater scrutiny to ensure it meets the national interest test and at the very least, conditions including divestment of a number of GrainCorp’s port terminal facilities should be a condition of sale.”

Mr Hoskinson also refused to rule out other options such as seeking GrainCorp’s port terminal facilities declared essential infrastructure.

NSW wheat farmers annually contribute more than $1.5 billion dollars of export revenue to the NSW economy.

Contact: Veneta Chapple

Phone: 0429 990 218

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