COMMENT by AUSBuy CEO Lynne Wilkinson
IT HAS BEEN a revelation to see the vitriol heaped on Mr Hockey’s decision to stop the sale of Graincorp to ADM (USA), because it has shown that many “observers” in the media have failed to see the exquisite subtlety of the decision and the limitations of their fixed views.
There is little doubt that the Abbott Government has inherited a mess, much of which has been exacerbated since 2007.
Only policies which meet Australia’s “national interest” will get Australian assets and our people working for Australia again, revitalise our economy, and reduce our debt so we can take advantage of the opportunities the Asian century is supposed to promise.
We can only hope that the “intent” of this decision is replicated as we see off-shore bidding for other strategic assets in the food sector.
If ADM owned the assets, then there is no guarantee the farmers would be able to access or use the infrastructure for any other buyer other than ADM.
The majority of our grain exports are still controlled by foreign interests beyond the farm gate. Graincorp and CBH (WA) represent less than 50% of our grain exports. Hardly a duopoly!
Foreign owned Glencore, Dreyfus, among others own our grain exports, and the family owned US company Cargill owns many of our beef and grain exports.
Cargill has not reinvested in grain infrastructure. They use existing infrastructure. So much for successive Governments’ waivers to foreign take over that they will build infrastructure and invest here.
The problem is further exacerbated by our tax laws which favour foreign interests with only 10% withholding tax on declared profits, after they have been siphoned off shore.
Mr Hockey may have found some unexpected “reds” in the bank accounts, and these are just some of the issues which rob is of reinvestment here. Food for thought in the commission of audit.
Mr Hockey has effectively told the Graincorp board to do better than they have done and reinvest in the business.
As they say “if you can’t change the people you change the people”. It seems it is all too easy for Boards to think short term, especially when there is no shortage of keen buyers.
Graincorp was once owned by the farmers. It is now owned largely by institutions who will still look for quick returns to their shareholders, but it also means Australian can invest in the company for the long term if it is controlled here.
The problem is when Australian exports are sold by foreign interests we are no longer control our reputation or the supply chain. Our products are not differentiated in the market place. Our farmers become price takers, not price makers.
It is human nature, supported by their policies, that other countries give priority to their own. This does not make sense in a world hungry to secure its food.
Generations of our farmers have built Australia’s reputation as among the best in the world for quality and productivity, decades of falling income and rising debt has been ignored.
Now Mr Hockey has given the east coast grain growers the assurance that they have some control over their future.
There are lessons to be learned from this. Governments keep talking about Australian businesses being productive and competitive, yet Australia has a handful of businesses competing with countries that have dozens if not hundreds of businesses in particular sectors, and who subsidise their growers.
In the meantime our processors and manufacturers languish, or if foreign owned here have a habit of threatening to leave or do move off shore to source elsewhere and sell back to us.
He has also defined his Party’s “open for business” policy by saying to ADM you can buy up to 24.9%, but cannot control the assets, the profits, decisions.
This new kind of “open for business” means we are not desperate sellers and deal with us on our terms. Just as every other country does that controls and grows it wealth creating assets.
We do hope Mr Robb is listening as he is rushing to sign Free Trade Agreements with China, Japan and Korea – all controlled economies that have bought assets here in the supply chain and now our land.
Perhaps finally we are going to think strategically, identify our sustainable competitive advantages and benefit from assets that are grown and produced in Australia.
Get Australians and our assets working for Australia again. We welcome foreign investment not takeover.
This has been AUSBUY’s position since 1991.