Foreign ownership not intrinsically evil for grains industry

AUSTRALIAN grain farmers have been fed a steady stream of nationalistic propaganda in regards to ownership of their key retailers and marketers over the years – but is foreign ownership of grains businesses the evil it's often made out to be?

As with many issues in the Aussie grains landscape, this sentiment against foreign ownership is at least partly rooted in the single desk.

Part of the spiel that went alongside the real functions of the single desk was the need for Australian ownership, as no-one else would look out for Australian interests like AWB, the single desk manager.

However, the real impact of the single desk, should you be a subscriber to its benefits, was the ability to market a large parcel of grain in the confidence you had the tonnage. To this end, it does not matter whether a company is owned by Australian, American or Martian interests.

Looking at the landscape post-deregulation, foreign interest in Australian grain assets continues – and wildly selling anything and everything offshore is not to be encouraged, there are clear cases where an injection of foreign capital networks can be beneficial.

This need not necessarily mean an outright foreign purchase.

The burgeoning Emerald Group business, which acquired Queensland grain marketer Philp Brodie this week, or the Elders Toepfer Grain alliance are cases where foreign capital has assisted an Australian business.

Elders and Toepfer have a joint venture, which utilises Elders’ experience in Australian grain accumulation, together with the international networks of grains giant Toepfer.

Japanese company Sumitomo has a 50pc equity stake in Emerald Group, which Emerald Group chairman Alan Winney said had a two-fold benefit.

He said there was obviously the benefit of the physical investment, but more importantly, the business links the deal created.

Straight buy-ups have also, thus far, worked reasonably well, with most growers giving the Viterra purchase of ABB a qualified thumbs-up – although they stress this deal cannot be fully judged as yet.

Obviously, it would be bad for the Australian grains sector if everything was dictated by overseas interests, or if the marketing clout fell into the hands of a few international grains giants, creating a cartel effect, but overall the sky will not fall in if deals like the Viterra takeover, or Agrium’s bid for AWB go through.

Agrium will want their share of the profits, no doubt of that, but as their chief executive Mike Wilson said, it's in their interest to have a vibrant grains sector and profitable Australian farmers to do business with.

The other cliché trotted out as a reason not to embrace foreign ownership is that they will not put the effort marketing into marketing Australian wheat.

High value grain markets are a chance for companies to boost profits, and again, a working partnership between growers and the marketers is in the best interests of all.

Similarly, the belief that all Australian marketers are pure as the driven snow and that they fight for Australian growers, even to the detriment of their own profit-making is naïve – we’ve got our share of sharks here as well.

The priority is a healthy and competitive grains business sector, right throughout the input and output sides of the supply chain. We don’t want foreign investment if the deals lessen value for growers, but equally, there’s nothing to be afraid of when they can bring something to the table.

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READER COMMENTS

Nationalist
10/09/2010 10:40:37 AM

So what makes Graincorp an all-Australian company? Just because it is listed on the ASX doesn’t make it Australian! If you look at the largest shareholders of Graincorp now days, they are mostly offshore fund managers and investors (non Australian). Graincorp is the only wheat trading company that has full control of the silos, ports and rail network. It is in their every interest to limit competition by restricting access to their port terminals, thus blocking out these “evil multinationals” whose very presence would create competition for our wheat, which we must now sell without the presence of any real fair competition.
Realist
10/09/2010 6:01:07 PM

You are dreaming Gregor! Admit that Australia's leaders have sold our wheat industry down the drain. We owned and managed our industry for over sixty years. We were the best.
Grain of TruthRural Press grains writer Gregor Heard on the big issues facing the broadacre farmers today.

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