Farmer support for ABB merger conditional

28 Aug, 2009 08:45 AM
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THE SOUTH Australian Farmers Federation (SAFF) has come out of meetings with ABB suitor Viterra impressed with the Canadian company’s vision.

But SAFF says its support for the proposed takeover bid relies on ABB pushing through a satisfactory port access undertaking with the ACCC prior to the merger meeting on September 9.

“Our view is that Viterra would run ABB far better than it has been run in the past, but we have concerns over the monopoly remaining unchecked going into this harvest,” SAFF grains council chairman Michael Schaefer says.

“Should the Viterra deal go through, but the undertaking not be in place, they have got very little time to get it done prior to the October 1 deadline.

“Our advice to ABB is to make sure the undertaking is not forgotten in the lead-up to the merger meeting.”

Further ACCC public consultations will begin on September 3 and the three bulk handling companies in question are advised to have a revised undertaking in place by then.

Previous undertakings by ABB, CBH and GrainCorp were rejected by the ACCC.

Mr Schaefer is optimistic his organisation can work well with Viterra after enduring a notoriously fraught relationship with ABB.

“We’ve met with Viterra, and the outcomes are very positive as a whole – I think we both understand where the other is coming from and acknowledge the respective concerns," he says.

“Their line is that until they are in charge, they can’t change anything, but we believe we have been somewhat misled in dealings in the past with ABB.

"It is fair to say our trust levels aren’t that high.

“We see this takeover bid as the last chance we will have of influencing the running of ABB.

"At the end of the day, whoever is running ABB, there is still a supply chain monopoly in place at the moment.”

SAFF will be leveraging its position as the representative group for many grower shareholders in ABB.

Market analysts Austock estimate 45pc of ABB shares are grower owned, making grower approval a critical platform in getting the takeover over the line.

Mr Schaefer said SAFF would now meet with ABB on Friday to discuss their wishlist for change.

He said he hoped the discussions would be more positive now that former managing director Michael Iwaniw was out the picture, making no bones about the working relationship SAFF had with the former ABB boss.

“Mr Iwaniw going has been a very positive move for all parties within the supply chain and we hope we work in better with them now.”

Unlike other farming groups in the past, such as the Victorian Farmers Federation (VFF), which developed a standing proxy voting system to gain blocs of votes in the major grain-based listed companies, SAFF has not yet adopted a voting position on the takeover bid.

“It would have to be a ‘no’ vote at this stage, until we get the undertaking, but it is something members will have to decide for themselves,” Mr Schaefer said.

“We wouldn’t like people to cost themselves, and make the wrong decisions economically for themselves after three terrible droughts.”

Mr Schaefer said SAFF’s requests were not unreasonable.

“We are not asking the earth – most of what we are asking for will be no cost to ABB, it will just allow the supply chain to run more efficiency, through things such as information flows, transparency of the stock inventory and logistics transparency, which would involve risk and reward right along the entire supply chain, including the upcountry sites.”

ProFarmer’s Richard Koch questioned whether SAFF was pushing the boundaries of what they could get out of the ABB undertaking by requesting commitments beyond those of the ACCC mandate, and which would not be imposed on the other bulk handlers.

Mr Schaefer said many of the issues applied across the board and should be implemented nationally, but said SA’s status as an export state made organising the supply chain more important.

“We need to make sure the non-ABB sites have access to the ports, at the moment they are seriously penalised.

“You have a look at Crystal Brook (in the state’s Upper Mid North), they have got an AWB GrainFlow and an ABB site, and the ABB site is $6.25 dearer to port.

“It’s very pleasing to read Graham Samuel’s comments regarding port access in Rural Press in recent weeks as it backs up what we have been saying for years, its good to see these issues get some traction.”

“We’re not saying it should be limited to ABB, but you compare SA to the east coast, where there is a lot of domestic use, 83pc of our grain goes out via the ports so it is important the port supply chain is set up right.”

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