GrainCorp boss ramps up foreign investment case
It is fantasy to think that Australia can insulate itself from more foreign investment in the agriculture sector, grains marketer GrainCorp says.
Chief executive Alison Watkins said Australia did not have a big enough population to provide the capital needed to keep upgrading infrastructure in the grains sector, so investment from the likes of US agriculture company Archer Daniels Midland was essential.
The Australian grains sector also needed access to global markets to buy its products because Australia produced far more than it could possibly consume.
Her comments come as the federal government is considering whether to approve a $3.4 billion takeover of GrainCorp by ADM. But tension is rising inside the Coalition over the bid. The Nationals, like their farmer constituency, fear a foreign takeover of GrainCorp would exacerbate concerns about the supply chain and port access. They argue Treasurer Joe Hockey should reject ADM's bid.
But speaking at a farming conference on Thursday, Ms Watkins said Australian agriculture had already undergone enormous change to become more efficient, competitive and innovative, and was on the cusp of its greatest era of opportunity in the face of growing world demand for food and fibre.
"There are some industry observers who yearn for a return to more insulation from global dynamics, for us to turn back inward," she said. "But it is pure fantasy to think it would somehow be worthwhile or even possible to pause or even turn our backs on the process of globalisation that has delivered us such success."
Ms Watkins said ADM's takeover offer reflected a large and meaningful vote of confidence in Australian agriculture.
"Here is a company that is so confident about our product, capability and future that it wants to invest billions of dollars here," she said.
"It's as good an indicator as any that our industry is globally respected and has huge opportunities open to it around the world."
Ms Watkins said Australian grain growers now had many more options on how they could store or sell their crops and to whom they could sell it. In GrainCorp's catchment, up to half the crop bypassed GrainCorp's export supply chain and was sold to more than 100 domestic customers.
■ Bega Cheese is yet to decide on a possible increase in its bid for Warrnambool Cheese & Butter, which is the target of a three-way takeover battle. The Bega Cheese board met on Thursday to discuss its offer of $2 plus 1.2 Bega shares for Warrnambool shareholders, which amounts to about $7.80 per Warrnambool share. But the company said it was yet to decide whether or not to lift the bid. Warrnambool's board has already recommended an $8 per share offer from Canadian dairy company Saputo.