ADM's charm failure

ARCHER Daniels Midland (ADM) must be re-evaluating the success of its recent charm offensive.

An independent poll conducted for Fairfax Agricultural Media showed growers have what many would deem a healthy distrust in the US company seeking to take control of GrainCorp, and with it a near monopoly position on eastern grain port facilities.

The poll of 356 growers indicates most growers want the sale either blocked or allowed only to proceed with strict conditions on port access and market disclosure.

Few believe the company has a track record it can trust and fewer still are buying their promises it will pump big dollars into capital upgrades.

It suggests one of two things. Either ADM’s charm offensive tour has failed dismally or that it was working to boost trust from an even lower level than it could have imagined.

ADM will likely argue the results are based on only a small number of growers.

That’s true – it’s representative of about 1.6 per cent of grain players in the eastern States.

But that’s a big enough sample size to give the survey a confidence level of +/-5.2pc.

Based on that, ADM could argue as many as 10pc of growers believe the deal will be good for their farm or that as many as 18pc believe it’s likely it will come good on its spending promises – neither of which are ringing endorsements.

Equally, the results could be much worse.

Of course for ADM, grower approval isn’t a deal breaker.

Best estimates suggest grower shareholders account for just 10 per cent of GrainCorp shares so ADM’s not relying on grower approval to get it over the line.

Nor is grower approval essential for regulatory approval – the major hurdle still standing in the way of the $3.4 billion deal – even if many growers wish it was.

But if the Foreign Investment Review Board isn’t at least listening with interest to grower concerns about the deal as it weighs up whether it meets its national interest test, you’d question why – especially in the wake of Senate committee grillings which have left many wondering just how effective the Australian Competition and Consumer Commission’s own assessment of the deal was.

With an election in the wings, many growers will be watching closely to see how all parties weigh in on the prospective sale of Australia’s biggest listed agribusiness – and whether the party in power at the time of the decision lifts a finger to stop it.

TheLand
Date: Newest first | Oldest first

READER COMMENTS

Dickytiger
2/08/2013 9:52:19 AM

It's none of the government's business. In fact, it's nobody's business apart from shareholders, and they've voted in favour. Meddling in private property transactions has got to stop.
Deregul8
2/08/2013 10:44:58 AM

Growers sold their shares and now whinge about the fact others value the company more than they ever did? If Heffernan's redneck campaign succeeds here it sets a very dangerous precedent and will send foreign investment scuttling and the loser will be the Australian grain grower. Land prices will collapse, second hand machinery prices will collapse and agribusiness share values will also collapse. If you blokes want ownership of the assets you can buy your shares back for $12 a pop.
Hick from the sticks
2/08/2013 11:03:36 AM

If an overseas company invests billions of dollars in an Australian company surely it is doing so to earn money. I fail to see why they would run the asset down by not investing further. Sure they re going to screw the growers as much as possible but to think that Graincorp wasn't doing the same is to live in a fantasy land. ADM has access to greater financial assets which I hope it will use to grow its business in Australia.
A matter of opinionA selection of editorials from around the Fairfax Agricultural Media group covering the issues of the week.

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