FOREIGN investors are circling Australian agribusinesses, just waiting to make their kill, writes KATE DOWLER
Global companies are carving up Australia's agricultural processing and export businesses at an unrelenting gallop.
And some fear consolidations will lead to duopolies, similar to the supermarket sector.
From beef processing to grain exporting, no sector has been untouched.
Earlier this month the Federal Government gave the green light to Cargill's acquisition of the AWB commodity management business from Canada's Agrium.
And, last week, the US company announced plans to buy the Packer family's 50 per cent stake in Teys Bros, Australia's largest family-owned beef processing and exporting company.
The joint venture will have a kill capacity of 1.5 million cattle a year, hot on the tail of Brazilian-owned JBS at 1.98 million head.
The moves have concerned locally owned processors.
Two companies now control almost half the Australian beef industry.
Teys-Cargill will account for 21 per cent of the beef market, while JBS Australia has 25 per cent.
According to a recent meat industry report, IBISWorld, consolidation will continue.
This is expected to lead to productivity gains for processors hurt by recent high saleyard prices.
IBISWorld tips that "over the next five years, the (processor) industry will also benefit from declining saleyard prices of most livestock".
"Beef cattle prices and lamb saleyard prices are forecast to decrease at a marginal rate per annum over the next five years," it said.
Founded in 1865 in Iowa, in the US, Cargill is a privately held company employing 131,000 people in 66 countries, which last year earned US$2.6 billion.
The company's Australian investments now exceed $US250 million.
As a privately owned company it is not subject to the same transparency as listed companies.
This worries Nationals senator Fiona Nash, who warns Australia could end up owning "very little" processing, which could threaten the nation's food security.
Senator Nash said the strength of Cargill and Graincorp in the grains industry, and Cargill-Teys and JBS Australia in the meat business, could "potentially mirror the duopoly of Coles and Woolworths in the supermarket sector".
Cargill's takeovers reflected a "disturbing trend of foreign ownership in the agricultural sector", she said.
But some analysts told The Weekly Times they saw little problem with foreign companies owning Australian-based processing facilities and that global companies often had better marketing skills and were well placed to take Australia's produce to the world.
Assessing the true state of Australian processor ownership is almost impossible.
The scarcity of detailed data prompted the Federal Government to recently announce foreign ownership of land and agribusiness would be monitored.
Reports are due by the end of the year.
But at the moment, National Farmers' Federation president Jock Laurie says, "there's no list, nobody really knows".
Which may partly explain why farm groups seem unsure of whether to welcome foreign ownership or spurn it.
The NFF has stopped short of condemning the takeovers.
Mr Laurie said the Government must scrutinise foreign purchases, market impact and state of competition as a result.
"People (are) getting nervous ... the Government needs to sit down and look at what is going on and work out if it is in Australia's interests and ensure there's competition so growers don't get squeezed," Mr Laurie said.
Historically, foreign investment in processing helped develop industries and maintain land values, he said.
And foreign investment in the beef industry had been around a long time.
Cattle Council of Australia is having an each-way bet.
Chief executive David Inall points to concerns about the increase in foreign ownership of feedlots in the 1980s and 1990s.
This investment proved a "real boon for the industry" and created strategic alliances and more vertical supply chains with countries such as Japan, he said.
"However, we always consider these matters on the case-by-case basis and will always look at the implications of mergers and joint ventures on the beef production sector," Mr Inall said.
A spokesman for Treasurer Wayne Swan said the Government "applies a rigorous national interest test to all foreign investment applications".
He said foreign investment had long been important in developing industries and helped stimulate jobs in regional towns.
SOURCE: http://www.weeklytimesnow.com.au/article/2011/05/18/333711_business-news.html
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