The Land NSWFA View ADM block a boon for ag

The Land Newspaper
NSW Farmers View
12 December 2013

Daniel Cooper - Chair Grains Committee

FARMERS across the State have welcomed the Treasurer Joe Hockey's decision not to approve the application by American agribusiness Archer Daniels Midland to takeover Australia's largest agribusiness GrainCorp.

We are pleased the Treasurer has acknowledged our farmers' concerns about the impact this takeover would have had on competition  for their gram.

GrainCorp's concentration in the market for the storage and handling of grain on the east coast is as high as the two major supermarkets combined and
in 2012 it bought almost one third of the east coast crop for its marketing and processing businesses.

Like the problems identified with the market power of the two supermarkets, putting ADM - which is the fourth strongest global agribusiness - in control of the GrainCorp  monopoly  was always going to be detrimental to improving the conditions  under which farmers make a living.

However, the flow-on effects would not only be at the farm gate, but also to the rural towns that our farmers contribute to and ultimately to the national economy where the government has rightly identified agriculture as one of the five economic pillars.

NSW Farmers has worked alongside Victorian Farmers Federation, AgForce Queensland and Grain Producers Australia to ensure a greater awareness of the impact the takeover would have had on our industry in Australia.

The Treasurer's decision is a great example of what a strong membership and united voice can achieve for our industry.

We have met with the Foreign Investment Review Board and many different members of the Coalition government to explain the vulnerability
of our farmers when other grain buyers are squeezed from the market.

The issue with this takeover was that without the right market fundamentals such as a truly contestable supply chain, the investment by ADM, including its deal sweeteners, would not result in returns to Australian farmers.

All of our grain issues have not been solved by the Treasurer's decision including Graincorp's plans to rationalise the upcountry network which were already in play prior to his announcement last week.

But the decision is a giant step forward for agriculture and we now need to work with farm representatives, grain traders and Graincorp during proposed rationalisation  of the grain handling network to ensure we have an efficient supply chain from which we can all be the beneficiaries. 

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