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Australia’s Competition Law Out of Touch with Farm Sector

03 July 2013

AUSTRALIA - The Australian Competition and Consumer Commission’s decision this week not to oppose the sale of GrainCorp to US-based Archer Daniels Midland demonstrates how Australia’s competition law is out of touch with the farm sector, NSW Farmers said recently.

The association said the ACCC’s conclusion that the acquisition of GrainCorp by ADM was unlikely to substantially lessen competition in the market clearly illustrated the limitations of the competition regulator.

NSW Farmers has made a submission to the ACCC outlining how the operation of GrainCorp’s infrastructure already impedes true competition for farmers’ grain and its concerns that this is likely to get worse under ADM.

Chair of NSW Farmers’ Grain Committee Mark Hoskinson said the dominance of GrainCorp in the provision of storage and handling of grain means that the majority of farmers and grain traders have no other real option but to use GrainCorp’s bulk handing system.

"This provides GrainCorp with an advantage when it competes against other traders which are seeking to accumulate and move grain for export," he said.

"One of the authors of the ANZ’s Greener Pastures Report Angus Taylor recently said the ACCC should be uncomfortable with the market concentration held by GrainCorp nevertheless the ACCC has given the green light."

NSW Farmers is concerned that combining the balance sheet strength of ADM with GrainCorp’s market position would make it easier for an ADM-owned GrainCorp to negatively impact on competition.

Mr Hoskinson said the association will continue to lobby the Treasurer to seek a withholding of regulatory approval for ADM’s takeover on the basis that the sale is not in the national interest.

"Agriculture and the industries that support the export of our grain have the opportunity to be a strong driver for Australia's economic wealth" he said.

"As a nation we lose opportunities when foreign investment surpasses being just capital investment and becomes control of the market place.

"Our concern is that if GrainCorp's integrated up-country and port assets are purchased by ADM this is what will happen.

"If, contrary to the demands of grain farmers, the Treasurer refuses to block the sale, then he must place firm conditions upon the sale to preserve the national interest.

"Conditions requiring fair and transparent access to GrainCorp's up country and port terminal facilities must be required. They should be subject to agreed performance benchmarks that provide the appropriate platform for competition to flourish.

"The stocks information that GrainCorp's marketing division already uses to its advantage must be disclosed to the wider market.

"ADM's announced commitment to expenditure must be spelt out in greater detail and guaranteed.

"The government also needs to consider whether the bottlenecks in the export market for grain could be overcome through a more diverse ownership of the east coast's existing ports," he concluded.

GrainCorp operates approximately 90 per cent of grain receival sites in NSW and exports approximately 45 per cent of all bulk wheat originating in NSW.

TheCropSite News Desk



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