AUSTRALIA’s Competition and Consumer Commission (ACCC) will not oppose the proposed acquisition by GrainCorp of Cargill Australia’s bulk grain storage and handling facility in Gilgandra, NSW, the competition regulator announced today.
ACCC chairman, Rod Sims, said the ACCC conducted extensive market inquiries with market participants, including grain growers, grain traders, exporters, and competing suppliers of storage and handling services in the Dubbo region in order to approve the project.
“Growers and other market participants were not generally concerned about the proposed acquisition,” Mr Sims said.
“Despite the transaction resulting in the removal of a close competitor to the existing GrainCorp site in Gilgandra, based on market feedback, the ACCC considered that there will be effective competition from other suppliers of storage and handling services in the region.”
He said on-farm grain storage was also increasing, but would not be a “complete substitute” for up-country bulk storage and handling facilities.
In arriving at its decision, the ACCC also considered GrainCorp’s ability and incentive to discriminate between grain growers by charging more or offering poorer service to growers that have fewer alternatives for storage and handling.
Based upon market inquiries, the ACCC considered discrimination between different growers was unlikely.
“In forming this view, the ACCC noted that GrainCorp publishes a schedule of fixed storage and handling fees on the east coast. In addition, GrainCorp would continue to have an incentive to deliver efficient services to growers in order to maximise throughput in its facilities.”
Cargill’s Gilgandra site is one of five NSW grain centres AWB opened in 2002, and opened as a GrainFlow facility before transitioning to Cargill ownership.
Gilgandra is a significant receival point for milling wheat, as well as canola and barley. The combined capacity of the Gilgandra sites is more than 200,000 tonnes, of which the Cargill site can hold 100,000 tonnes.
In other Cargill news, the Minnesota-based parent company reported a fiscal 2017 first-quarter (June-August) rise in net earnings of 66 per cent to US$852 million, compared with US$512 million in the year-ago period.
A summary by business segment:
Animal Nutrition & Protein: Up sharply from the prior year, largely because its beef business benefited from the North American market’s ongoing transition to increased cattle supplies as well as renewed consumer demand for beef.
Origination & Processing: Rose moderately due to improved soybean processing margins, solid performances from Brazilian and North American grain exports, canola in Canada, and biodiesel in North America and Europe.
Food Ingredients & Applications: Earnings from starches and sweeteners, and edible oils lifted segment, and cocoa and chocolate products contributed to the upturn.
Industrial & Financial Services: Profitable over the quarter, with returns from Cargill’s asset management investments offsetting weak performance in other parts of the segment. Petroleum and metals results were impacted by low global demand
Cargill has corporate aspiration towards sustainability, food security and nutrition, with projects in the US and beyond, including one in Qingshen in south-western China involving Cargill and Heifer International. About 100 family-owned poultry farms will receive chicks, business training, and access to nutrition expertise and veterinary support. Plans provide for expanding the program over time as each farming family gifts livestock to a family in need, and to make this project a template for others.