THE complex factors surrounding Archer Daniels Midland's (ADM) bid for GrainCorp can be distilled by the production sector into one succinct question - what’s in it for us?
The Australian business community cannot fathom why there is any opposition to the deal whatsoever, while the National Party makes noises about not letting the sale go ahead under any circumstances.
In truth, there are pros and cons to the sale, but the one area that has not been significantly analysed is how will growers benefit from the sale?
Sure, we’ve read reams about ADM boosting capital expenditure by $50 million. That’s great and will undoubtedly boost the efficiency of GrainCorp sites – but who will benefit from the these efficiencies? ADM is run on commercial lines and there’s no indication they’re all of a sudden going to feel the need to spread some largesse among the grower community. It may well be a case of similar costs to growers as before, perhaps with improvements in turnaround times the spin-off benefit.
More promising is the commitment from ADM chief executive Patricia Woertz to research in terms of creating varieties the market wants. She threw up the example of developing wheat varieties in Australia more suited for use in the Asian bread market, which is growing and right on our doorstep.
To win growers over, ADM has to offer something up in return, and these sort of commitments are a step in the right direction.
The production sector has become somewhat of the forgotten side of this debate, which has become a full-scale political football. Big picture concerns like foreign investment and competition policy are taking emphasis away from the impact of the sale on growers.
As we’re told repeatedly by the business sector, perhaps a little too gleefully at times, the production sector has no formal decision making role in the process. This expired the second they cashed in on their GrainCorp shares, so the line goes.
However, this is disingenuous. For the ADM purchase to be a success it will need the support of growers, a fact ADM itself has acknowledged. And growers should be in there lobbying as hard as possible to get ADM to sweeten the deal. Sure, their opinion won’t influence the deal going through or not, but it will matter a lot as to whether it’s a success.