ADM inquiry to re-open

15 Nov, 2013 03:00 AM
NSW Farmers Grains Committee chair Dan Cooper (left), VFF Grains Group manager Steve Sheridan and NSW Farmers grains policy director Justin Crosby in Canberra lobbying over the GrainCorp sale.
NSW Farmers Grains Committee chair Dan Cooper (left), VFF Grains Group manager Steve Sheridan and NSW Farmers grains policy director Justin Crosby in Canberra lobbying over the GrainCorp sale.

FARM groups have intensified urgent lobbying efforts to block the looming $3.4 billion sale of GrainCorp to US multinational agribusiness Archer Daniels Midland (ADM), with re-opening of a Senate inquiry into the deal only weeks away.

Representatives from the NSW Farmers’ Association and Victorian Farmers Federation (VFF) descended on Canberra on Thursday to present their arguments to various federal politicians and ministers and the Foreign Investment Review Board (FIRB).

Their efforts coincided with confirmation a Senate inquiry into the controversial sale will re-open next month, spearheaded by NSW Liberal Senator and wheat farmer, Bill Heffernan.

The next public hearing on December 2 is likely to see ADM and GrainCorp senior executives called to provide fresh evidence.

Senator Heffernan said he intended to call a series of witnesses including the “main players”, and would use the committee’s subpoena powers if necessary. He said other hearings may also be held to better inform the controversial debate which he believes is currently being dominated by hedge fund lobbyists using “workshop words”.

“I note with some interest, parliament is being bombarded by lobbyists wanting to protect the GrainCorp sale with hundreds of millions of dollars up for grabs to be made for hedge funds,” he said.

“But there will be nothing in this for the farmers.

“So far the debate has been about political positioning, workshop words and lunches, avoiding direct questions and papering over the national interest.

“But everyone’s avoiding a discussion about what’s in this by way of a better deal for growers and tax revenue for the government.”

A December 17 deadline has been set for FIRB and Treasurer Joe Hockey’s final assessment of the national interest test on the sale. The Senate inquiry is likely to provide a final report ahead of that deadline making various recommendations.

In the meantime, Mr Hockey is refusing to meet with key stakeholder groups or speculate on likely outcomes.

The GrainCorp sale issue has sparked intense debate over recent weeks, with National party members saying it goes against the national interest to sell the grain handling monopoly to a US company and should be blocked by the Federal Treasurer.

In contrast, some rural Liberal MPs are not opposed to the deal but believe ADM needs to bolster its offering to growers, and have been pushing for strict conditions to make it more acceptable and improve competition.

With the political argy-bargy intensifying, GrainCorp managing director Alison Watkins presented GrainCorp’s case to a private meeting of the federal National Party, during a 90 minute meeting in Canberra on Thursday.

She also announced GrainCorp’s end of financial year results - but was unable to say if another Senate hearing would delay the sale’s conclusion.

Ms Watkins said in addition to FIRB and the Treasurer’s approval, ADM still needed regulatory clearance from the Ministry of Commerce of the Government of the People’s Republic of China (MOFCOM). She said the US company’s extended offer would remain open until Feb 28, 2014, but any inquiries about MOFCOM’s final timeframe were, “a question really for ADM”.

She expected Mr Hockey would stick to his December 17 deadline but couldn’t disclose details of any discussions between GrainCorp, ADM and the Treasurer, citing confidentiality.

She also refused to be drawn on comments by billionaire businessman and new federal MP Clive Palmer who said this week he was “dead against” the sale, saying the Australian agricultural industry retained its independence.

She said many people were expressing views on the issue, and “some of them are better informed and some of them are less well informed”.

“There’s certainly quite a degree of intense debate happening - that’s probably an understatement - and we don’t think that’s a bad thing at all,” she said.

“But it’s important that this debate focuses on the facts and is a fact-based discussion.”

Ms Watkins said those with views on the deal, including growers, needed to understand the east coast grains logistics supply chain was “very competitive”, where marketing alternatives for growers are “many and varied” and ports regulated by the Australian Competition and Consumer Commission (ACCC).

“We continue to believe it’s a very good offer for our shareholders – it represents close to a 50 per cent premium above trading prices that we were at before ADM came along,” she said.

“And we are very comfortable with ADM’s credentials and the benefits that they will bring to Australia and Australian growers by becoming part of their network.

“Our responsibility as directors of GrainCorp is very clear and that is to act in our shareholders’ interests and directors are very clear in their unanimous recommendation that this offer form ADM is in shareholders’ interests.

“We very much believe there’s a very strong alignment between shareholder interests and grower interests.

“We don’t have a business if we’re not providing the best service, the best marketing options and the lowest cost supply chain to our growers.

“If growers aren’t delivering grain into us, in a volume business, we don’t have much of a future.”

VFF Grains Group manager Steve Sheridan said he and NSW Farmers Grains Committee chair Dan Cooper presented a consistent message to FIRB and political representatives: that there was no benefit to growers in selling GrainCorp to ADM, only risks around access to grain stock information, ports and upcountry storage facilities and ongoing supply chain investment.

“These are all things ADM has given verbal commitments on but there are no written assurances from them or government,” Mr Sheridan said.

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15/11/2013 6:10:39 AM

Competition is the biggest loser in the ADM takeover. Fact is GrainCorp and ADM are currently competitors in the grain market. After the takeover, there will be one less. More than that, the we will have one of the biggest global grain traders and silo operators getting bigger. The only condition that could possibly help growers and other local grain operators and processors compete would be to require ADM to immediately divest itself of half the export terminals and many of the country silos. Even in USA there is no concentration of export control as ADM would get here.
15/11/2013 8:42:31 AM

Bill Heffernan calling the "main players". He couldn't call a sheep dog.
15/11/2013 10:28:05 AM

I agree with you LTF. We cannot afford to reduce competition in the marketplace. The ports are the big choke point where we need more players.
15/11/2013 11:45:11 AM

The deal offers Australia the potential for an uplift in its grain handlng infrstructure, which Graincorp will striuggle to do.The arguments against the deal seem to come from people intent on ignoring that the world is now a global marketplace and that competition and efficiency are necessary to remain relevant.
15/11/2013 11:53:16 AM

Glencore, Cargill, AWB, and so on, have all some dirty laundry in the cupboard. We have a great regulatory framework to be able to cope with these big companies. I think that is the challenge to enjoy the benefits of these big players but still have a market framework that encourages new entrants.
Bushie Bill
15/11/2013 1:07:23 PM

What a waste of time and public money. Shameful.
15/11/2013 1:34:44 PM

have you been asleep for the last 50 years, RM? From your revelation that "the world is now a global market place", one would think so.
15/11/2013 1:40:56 PM

not as shameful as your ridiculous push for Australia to import wheat from India, bushie bill.
17/11/2013 6:16:19 PM

The rot began with the corporatising of AWB and allowing money dealers to wrest control from the growers. As a statutary co-op AWB had economy of scale and controlover quality with a legal obligation to maximise returns to the grower. The fact that AWB could successfully out compete the big boys was what the international grain traders didn't like, so with heaps of money and resorces to lobby politicians they eventually brought it down.
looking after home
18/11/2013 12:36:49 PM

You cannot on surmise Cargill's dirty linen as they are a private family US company - no open books, ADM means the end of listing on our stock exchange - no open books - as henrgy Ergas said in the Australian last week - we have no Australian companies other than Graincorp representing our interests off shore - the past few years has seen the US and Canadian farmers enjoy new markets and profits at our expense - NO NO NO to representation of Australian farmers by foreign interests off shore or FTA negotiators who have not first look at the mess they have created and are still in a rush to do.


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