Cobb's GrainCorp regret

15 Nov, 2013 11:15 AM
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John Cobb says the sale of GrainCorp to ADM is not in the best interests of the grains industry - or Australia.
If ADM wanted to get a bit clever about things after the sale they could
John Cobb says the sale of GrainCorp to ADM is not in the best interests of the grains industry - or Australia.

FORMER Coalition agriculture spokesman John Cobb said he had no inside information on whether Prime Minister Tony Abbott was considering blocking the GrainCorp sale - and would not disclose any details if he had them.

In May, when acting as the opposition’s agricultural spokesman, Mr Cobb urged the former Treasurer Wayne Swan to reject the GrainCorp takeover, saying he was against Australia losing control over its agricultural assets.

He repeated that mantra when Chris Bowen became Treasurer after Mr Swan resigned in late June, backing the views of farmers in his western NSW electorate.

“NSW farmers do not agree to the sale of GrainCorp as they most certainly do not believe it’s in the best interest of the grains industry or Australia,” he said back in July.

“The Nationals have been advocating on this issue for months now – as the deal will result in virtually all grain export facilities in Australia, except for Western Australia, being foreign owned adding to concerns that competition will be significantly reduced.”

Mr Cobb said one of his biggest regrets in the shadow minister’s role, which he held from 2008 until Barnaby Joyce’s ministerial appointment post-election, was not speaking out publicly to try and force a merger between WA’s bulk handling co-operative CBH and GrainCorp.

He said a merger between the two grain handling and marketing giants would have been the best way to maintain control of a large portion of Australia’s grains’ supply chain and protect growers.

Mr Cobb said CBH was now a prime target for foreign takeover and it was only a matter of time before a multinational suitor made the right financial offer to growers, leaving the nation’s logistics system almost entirely in the hands of foreign ownership.

But he said WA had a “siege mentality” and his merger talks met resistance whenever the issue was raised.

“I told the West Australians that CBH may be a co-operative now but it can still be taken over by someone else one day - and you should have seen their jaws hit the ground,” he said.

Mr Cobb said his views on the ADM acquisition remained unchanged and were based on lack of alternative for growers, at upcountry grain delivery sites.

He said while GrainCorp currently had about 300 grain receival sites on the east coast of Australia, less than 100 of them – located in north-western Victoria, NSW and southern Queensland - took the vast majority of the seasonal grain harvest.

Mr Cobb said those 100 or so grain receival sites carried “enormous power” in the volume driven grain logistics business.

“If ADM wanted to get a bit clever about things after the sale they could,” he said.

However, Mr Cobb said a potential sale condition would be to enforce ADM to allow competition, at upcountry storage sites.

He said the legality of allowing open access for other grain companies would need to be clarified.

Yesterday, WA Liberal Senator Dean Smith spoke about the GrainCorp sale during a speech in the Federal Senate, linking it to Mr Abbott’s election night declaration that “Australia is open for business”.

“I take the firm view that foreign investment in our agricultural sector is not something to be feared,” he said.

“It represents an opportunity, not a threat.”

Senator Smith said opposition to the ADM acquisition was coming from the same organizations and individuals who offered the same arguments last year, against the final removal of wheat export marketing legislation.

“In my view, those arguments were not supported by facts last year and they are not supported by facts today,” he said.

“The debate about foreign investment should not be used as a Trojan horse by those seeking to reverse the strong and obvious benefits that have resulted from the deregulation of wheat export marketing in our country.”

Senator Smith said opponents claim that the ADM takeover should be opposed on the basis that GrainCorp has a monopoly on the east coast but “this is simply wrong”.

“Over 50 per cent of Australia's average east coast crop production bypasses GrainCorp's export supply chain altogether ... only around 30pc of the grain passing through GrainCorp's ports is its own product,” he said.

“The rest is owned by other marketers.

“Far from a monopoly, competition is thriving.

“Having made such a large investment, common sense tells you ADM will be working to attract more growers to the GrainCorp supply chain by improving it, not limiting access to it.”

But South Australian Liberal Senator Sean Edwards said he found views in favour of the GrainCorp takeover that are coming from WA “somewhat curious”.

“I find it somewhat curious that WA, which is dominated by CBH and have no real stake in GrainCorp, would be weighing in on an issue that primarily affects east coast graingrowers,” he said.

Senator Edwards said some WA grower groups may suggest the GrainCorp sale is positive for national grains industry and promotes greater competition and investment and that blocking ADM sent negative signals to the global market.

“(But) I don’t think those groups in WA would take too kindly to GrainCorp making regular commentary on what direction CBH undertakes,” he said.

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READER COMMENTS

seethelight
16/11/2013 1:19:23 PM

Senator Dean Smith's insight that last year's controversy over the campaign by the National Party and S.F.O's, and opposition to the ADM takeover now, is a continuing campaign to restore political control of the wheat industry to the National Party and it's favourite cronies in the S.F.O's, is perceptive. With the WEA gone,stopping the ADM takeover is the last roll of the dice for the agrarian socialists.That the Liberals are finding this a difficult decision shows that too many Liberal politicians are there for the wrong reasons.Unlike Dean Smith who recognises what free enterprise means.
Ted O'Brien.
17/11/2013 8:25:24 AM

"promotes greater competition"??? What garbage!! By taking over Graincorp ADM is taking one of its most effective competitors out of the market. Pull your heads out of the theory textbooks and have a look at the real world! Then ask : Who wrote the textbooks?
NTrealist
18/11/2013 8:39:53 AM

ADM are prepared to pay WAY over the realistic price for GNC shares, and they are probably prepared to spend money on upcountry infrastructure that hasn't been spent in decades for the benefit of the storage network. Execution costs will then reduce, and the hip pockets will expand in whinging farmers' jeans. They won't be afraid to cut the mediocre management out of GNC and replace them with intelligent decision makers. Let ADM in, just make sure they pay full tote company tax to Australia's coffers and don't get away with journaling profits etc. overseas.

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