Mallee farmer backs ADM

12 Nov, 2013 10:16 AM
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Mallee farmer Chris Kelly at the GrainCorp storage facility in Woomelang. Photo: Angela Wylie
Mallee farmer Chris Kelly at the GrainCorp storage facility in Woomelang. Photo: Angela Wylie

A MALLEE wheat farmer and long-term customer of GrainCorp has urged Treasurer Joe Hockey to allow the Australian company to be taken over by US corporation Archer Daniels Midland (ADM), saying it represents ''the chance of a lifetime''.

Chris Kelly said the proposed $3.4 billion takeover would be good for farmers, country communities and the Australian economy.

And Mr Kelly, who lives and farms in the Nationals' heartland of north-west Victoria at Woomelang, wants Nationals MPs to stop campaigning against the deal.

''It's an opportunity too good to miss,'' he said. ''Because ADM is one of the biggest global commodity trading companies in the world, they have a presence in 140 different countries.

''They're more than 100 years old, they're more than 10 times bigger than GrainCorp, so they're intimately well connected … that's the secret of 21st century trading. They can seamlessly move product.''

Just two months into the life of the new federal government, the ADM takeover bid for GrainCorp has sparked divisions between the federal Nationals (who oppose the sale) and their senior partner in the Coalition, the Liberals. Mr Hockey will decide by December 17 whether the $3.4 billion deal should go ahead.

Mr Kelly said ADM would invest large sums of money to improve infrastructure and grain-handling equipment, to make grain handling and the whole supply chain more efficient.

''They've promised to spend between $40 million and $60 million on infrastructure every year, bringing designated sites into the 21st century.

''This deal, it ticks a lot of boxes for the 21st century. And we're a big exporting country and we need the absolute best infrastructure and we need the best global connectivity and we need competition - this is the absolute imperative that underscores everything.''

GrainCorp had done well to invest money in infrastructure since the company was listed on the stock exchange in the late 1990s, but had been hamstrung by devastating droughts that had limited the company's ability to make capital improvements, Mr Kelly said.

He said he would not be a lone voice among farmers in favour of GrainCorp's sale to ADM. And he said one argument used against the sale - that it could be a risk to Australia's food security - was ''ridiculous''.

Asked if it was appropriate for another large Australian business to be taken over by a foreign entity, Mr Kelly said: ''What's appropriate is making the right decision in the interests of not only the stakeholders but all Australians.''

But the president of the grains group of the Victorian Farmers Federation, Brett Hosking, said that on current evidence the group opposed the sale.

He said that for months the VFF had repeatedly but unsuccessfully sought firm, written assurances from ADM on key matters of concern about how it would operate if it acquired GrainCorp.

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READER COMMENTS

Ted O'Brien.
12/11/2013 1:48:05 PM

Chris Kelly. Do you remember how the Austraian grain sorghum industry got off the ground? There were three merchants, all offering $23 dollars a tonne for years. Nobody grew much sorghum, because the price was too low. In 1970 many people who had not had enough rain to plant wheat planted grain sorghum instead. Some enterprising lads on the Liverpool Plains, with Don Barwick of the Wheat Board assisting, observed that this sorghum for which $23 was offered was being loaded onto ships at a price which could yield $39 at Quirindi. But you had to have a shipload to get it.
Ted O'Brien.
12/11/2013 1:48:34 PM

So they formed a company called The Coarse Graingrowers Association, and canvassed growers with the talk of $39. They hired off season wheat handling storage and equipment, and pooled the grain. One merchant, Dalgetys, raised their price to $27. There was talk of the CGGA being broke and unable to pay, but Dalgetys took delivery of their sorghum into the CGGA pool. The sorghum was marketed in much the same way as the Wheat Board operated, and we got our $39. You should understand from that, Chris Kelly, how the free market operates.
LTF
12/11/2013 2:43:10 PM

Chris Kelly himself has been a private grain merchant for many years, and has done a very good job along the Vic?NSW border where the major storage operators have traditionally been weak. However, much of what he claims as benefits for Australia and the grain industry sounds more like hope than reality. There is nothing in the ADM bid, which suggests extra competition. On the contrary. GrainCorp disappears and because ADM is already in the market as a trader, we have one less bidder. A multi national trader and storage operator increases its share of the market. That is less competition.
chrisgo
12/11/2013 5:42:07 PM

I wonder if Mr Kelly happens to own any Graincorp shares?
15% Protein
13/11/2013 4:39:23 AM

Chris Kelly from Woomelang and Chris Kelly from Finley are not one and the same.
Jed
13/11/2013 5:21:00 AM

Chris you admit you where wrong in supporting the Wheat Deregulation and again you are off with the pixies on this one. I am glad I did not vote for you in the GGL election because you are so out of touch with reality. Talk to some real farmers to get the correct information?
Save Graincorp
13/11/2013 10:39:06 AM

Mr Kelly, this is not just about you! Retaining Graincorp, albeit without the current board is in the best interest of all Australians. You don't need to be a grain grower to know that. ADM's history is littered with fraud,price fixing, tax evasion. The funds it allocates to deal with these probes outweighs your gallant or gullible! mantra. The people of the city have a voice too. And we say No Sale. Its not about your profit now, Graincorp was set up by farmers, for all Australians, and we are not ready to be sold to the highest bidder. Food and its supply chain is freedom, and of national interest.
damian
13/11/2013 4:43:53 PM

Chris is right. GrainCorp needs to be recapitalised. Who is going to get out the cheque book to pour some equity into the company? ADM have the capacity to put more Australian grain into more destinations than GrainCorp can. The fact is, ADM will have to compete for the grain. Every year we know more of the crop is going direct from the farm to the flour mill or the feedlot or the stock feed manufacturer - it does not go into a Graincorp site. The challenge for ADM will be to improve the business so they get a bigger share of that grain.
Philip Downie
14/11/2013 5:52:13 AM

Damian how are they going to get more markets this is a furphy. From what you say they are going to get more grain, from where? What happened to Graincorp was they wanted to pay big dividends instead of investing their profits back into the business you just have to look at the share register some years back to see why. I bought shares way back because I told my advisor the directors were working for self interest and thus mine as a shareholder, dividends were good. Didn't do anything for the infrastructure though.
ben jensen
14/11/2013 6:19:18 AM

ADM is bidding for ownership of a grain handling (monopoly) facility.The grain market is deregulated. ADM is already free to participate as a buyer. It says it cant do that properly because it does not own GrainCorp. That means we have two big problems. First is that deregulation of marketing is not working. Second is, that once ADM owns GrainCorp, then other buyers are in ADM's current position of not being able to fully compete to buy our grain. Something tells me we are all being taken for suckers in this ADM debate eh damian?
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