Chapter 1
Ownership arrangements of grain handling
Terms of reference
1.1
On 16 May 2013 the Senate referred the matter of ownership arrangements
of grain handling to the Rural and Regional Affairs and Transport References
Committee (committee) for inquiry and report.
1.2
On 14 November 2013, the Senate agreed to the recommendation of the
committee that this matter be re-adopted in the 44th Parliament for
inquiry and report by 11 December 2013.
1.3
The committee was required to inquire and report on the following:
The ownership arrangements of grain
handling, with particular reference to whether:
- such arrangements are in
the interests of:
- Australia's farmers; and
- Australia's long term food security interests;
- there are potential
impacts on competing grain traders' access to grain handling facilities, ports,
silos and transport infrastructure;
- there are potential
impacts for grain traders, and a competitive marketplace, of access to
warehoused grain stock information;
- there is potential for
conflict between the responsibility to shareholders and the best interest of
Australian producers and consumers; and
- any other related matters.
Interim reports
1.4
In the 43rd Parliament, the committee tabled a first interim
report on 31 July and a second interim report on 30 August 2013.[1]
1.5
The second interim report provided an overview of the takeover bid by
Archer Daniels Midland (ADM) for GrainCorp Limited (GrainCorp) and the
regulatory reviews conducted by the Australian Competition and Consumer
Commission (ACCC) and the Foreign Investment Review Board (FIRB).[2]
1.6
The interim report considered perspectives on the merits of ADM's bid
with focus on concerns raised to the committee about the potential impact of
the bid on the interests of Australia's grain farmers as well as the Australian
grain industry and Australia's long-term food security interests more broadly.
1.7
The report highlighted the extent of cross-ownership in the Australian
grain handling market and the anti-competitive harm that the ADM's proposed
takeover of GrainCorp could have had on the market. In the interim report, the
committee questioned whether this ownership structure and the potential
anti-competitive impacts had been adequately considered by Australia's
regulators while drawing attention to ADM's record as a corporate citizen which
contributed to the low level of trust that Australian grain growers have in the
company.
Order under the Foreign Acquisitions and Takeovers Act 1975
1.8
On 4 October 2013, the Treasurer, the Hon Joe Hockey MP signed an
interim order under the Foreign Acquisitions and Takeovers Act 1975
(FATA) to extend the statutory time period for a decision on the proposed
acquisition to be made by 17 December 2013.[3]
1.9
On 29 November, the Treasurer made an order to prohibit the proposed
acquisition by ADM of 100 per cent of the shareholding in GrainCorp under the
FATA.[4]
Committee view
1.10
The Treasurer's 29 November announcement went to the heart of the
committee's inquiry. The committee determined that many of its concerns had
therefore been substantively addressed.
1.11
Nevertheless, the committee will monitor the outstanding concerns of
Australian grain growers, including port access and anti-competitive behaviour
within the industry. These and other unresolved matters raised in the
committee's second interim report may be the subject of future committee
inquiry.
Senator Glenn Sterle
Chair
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