The Land NSWFA View - Hockey say no to ADM

The Land Newspaper
NSW Farmers View
15 November 2013

Daniel Cooper - Grains Committee Chair

WITH harvest  working its way south through the State, the issue  of American agribusiness giant  Archer Daniels  Midland's takeover bid for GrainCorp continues to be at the forefront of farmers' minds  as they deliver their  crop to the local silo.

One of the reasons  for this is that across the entirety of the eastern seaboard, for most  farmers  this will be a site owned by GrainCorp.

Despite all the recent  discussion by GrainCorp this week about competition in its primary  market  for the storage and handling of grain in eastern  Australia, GrainCorp's market share is bigger  than that held by either Coles or Woolworths in the supermarket sector.

GrainCorp itself  boasts to investors that it receives 60 per cent of eastern Australia's crop into its upcountry facilities, a figure which  rises to 75pc when it includes the grain it handles at its ports that originate from outside of its upcountry network.

It also recognises the natural inhibitions that are placed on competition as it tells investors  that its network "cannot be easily replicated".

To growers, the statement by GrainCorp chief  executive officer Alison Watkins that their on-farm storage  is a competitor to her business is laughable, with the majority of this storage being  to keep the headers  rolling during the harvest season, not for long term  storage.

The fact this storage is not able to be used cost effectively by the majority of farmers for long-term storage is confirmed by recent analysis funded by the Grains Research and Development Corporation.

To put it bluntly there is just no hiding from the fact that GrainCorp operates a structural monopoly up and down the east coast.

This, and the impact the operation of this monopoly has on competition for farmers' grain and the price they receive, are key issues that government needs to consider as it weighs up the approvalof the takeover.

In the context of the takeover bid, NSW Farmers has been working closely with the Victorian Farmers Federation and AgForce Queensland to ensure the government understands what the consequences of the sale will be for farmers.

Treasurer Joe Hockey has chosen not to be rushed  and extended the deadline for his decision to ensure that a good decision is reached.

NSW Farmers continues to call on the Treasurer to not allow the sale to proceed.

We don't believe it to be in the best interests of farmers, rural communities nor in Australia's national interest. 
 

Contact: Veneta Chapple

Phone: 1300 794 000

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