'Not a protected species'
Australia's last listed grains handler GrainCorp is not a protected species, despite the government's surprise decision to shield it from a $3.4 billion foreign takeover bid, farmers say.
Shares in GrainCorp slumped on Friday after Treasurer Joe Hockey ruled a bid from US agribusiness major Archer Daniels Midland was not in the national interest.
In one of Australia's biggest rejections of a foreign company, Mr Hockey cited the concerns of "many industry participants" about competition and growers' ability to access the grain storage, logistics and distribution network.
"People say, 'Does this mean GrainCorp is not for sale?"' said Brett Hosking, Victorian Farmers Federation grains group president. "Arguably, it's never been more for sale - we've established a price target [and] areas for investment," he said.
An ADM takeover of GrainCorp - it already owns a touch under 20 per cent - would have granted cash-rich ADM with more than three-quarters of eastern Australia's grain crop and 90 per cent of its bulk grain exports.
GrainCorp markets 35 per cent of eastern Australia's grain to international buyers.
Previous billion-dollar bids for grain handlers by foreign companies have been approved. Beyond politics, the collapse of ADM's bid has been linked to the company's failure to woo growers concerned about its plans for GrainCorp's monopoly assets, as well as its troubled history in price-fixing.
Farmers groups were wary when ADM promised to cap grain handling and storage charges to inflation for three years only.
"The issue with ADM wasn't because it's a foreign company. It's about how they intended to run the company and control the assets," Mr Hosking said.
But the government's decision to reject the offer was slammed by the Business Council, Australian Shareholders Association and GrainCorp, which warned it would have "enduring implications" for the industry and prevented the country's agriculture from "realising the potential benefits from the significant capital ADM would have invested in the long-term future of the industry".
However, chairman of the NSW Farmers grains committee Daniel Cooper said a lack of detail crowded out ADM's promised capital expenditure of about $500 million. He called on the states to put money into improving rail services, saying there was huge frustration about Australia's supply chain.
Grains trader Lyndon Benecke said the proposed acquisition was a complex issue, but Australia would continue to attract foreign interest due to its high-quality products and low sovereign risk.
"They just don't want to sell themselves short - that's what the growers wanted," said Mr Benecke, of Grain Direct.
Australia deregulated its grain business in 2008. The listed ABB Grain was bought by Canadian agribusiness company Viterra for $1.6 billion in 2009. A year later, Canada's Agrium bought former monopoly wheat exporter AWB for $1.24 billion.
ADM now has the option to increase its stake in GrainCorp to just under 25 per cent.
ADM spokeswoman Victoria Podesta said the proposed GrainCorp acquisition "was good to have but not critical to our future".
The VFF's Mr Hosking said Australia offered "enormous opportunities. Agriculture is going from strength to strength, and the next 10, 15, 20 years are going to be exciting."