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ADM dodges a bullet

By David Leyonhjelm - posted Friday, 6 December 2013


To give yourself a fast start towards critical mass, you might also like to pick up some existing grain accumulators, of which there are now quite a few.

The point I am making is, the Treasurer's decision has screwed GrainCorp. The company needs capital to maintain and enhance the assets that underpin its competitiveness, and it needs a big brother to compete on equal terms in the global marketplace. The decision ensures it has neither.

But it has not screwed you. I know you will take a haircut if you sell your 20 per cent holding in GrainCorp, but my suggestion is do it now before the share price falls any further. There are no circumstances under which I can see it improving. Use the proceeds to set up in opposition to GrainCorp.

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If you would like to be a little Machiavellian, you could offer to sell the shares to CBH. This company, a co-operative that similarly has problems raising capital, has delusions of grandeur arising from its near monopoly status in Western Australia. Buying your GrainCorp holding would weaken its financial position and make it even more vulnerable to competition in the west.

Within five years, everything will change. GrainCorp will have lost much of its value, something the Treasurer and his xenophobic colleagues can do nothing to prevent. Nor can they prevent you from hastening that loss by setting up in opposition, or from encouraging others (such as CBH) from doing so.

And when GrainCorp has shrunk to the point where nobody thinks it is worth keeping out of foreign hands, and perhaps CBH has over-reached and is suffering a similar fate, you may be able to pick up either or both of them relatively cheaply.

But if you prefer to leave Australia and its wheat export industry to those who think foreigners are wicked and untrustworthy and Australia has no need of their capital, knowledge or expertise, I could hardly blame you. In the end, the reality is that Australia is only a modest grain producer and there are plenty of other opportunities in the global market.

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This article was first published on FarmOnline.



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David Leyonhjelm is a former Senator for the Liberal Democrats.

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