MURRAY BRIDGE, Aus. — Large agribusinesses are aggressively looking for ways to expand their footprint in the South Australian grain industry, said grain producer and businessperson Leighton Huxtable of Karoonda, South Australia.
He said corporate investors are seeking ways to secure a larger stake in the state’s grain industry.
“I think all grain companies are looking to have a slice of the action and they’ve got quite significant dollars to invest as well.”
Huxtable is leading a small group of South Australian farmers that has proposed building a new bulk grain handling facility near the community of Tailem Bend, S.A.
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The idea was initially promoted as a co-operative venture with 100 percent grower ownership, but Hux-table said capital requirements needed to build the facility were prohibitive.
A core group of growers has since decided to find a corporate partner that could provide start-up capital.
The group estimates that $1.2 million would be needed.
Huxtable said interest among potential corporate partners has been brisk, including farmer co-operatives already operating in Australia.
“There’s plenty of interest among the corporates, absolutely,” he said.
“And there’s plenty of interest among the corporates to do something at the ports as well.”
Stewart Gall, a grain producer from north-central New South Wales, said lack of competition in Australia’s bulk grain handling industry is a prevalent concern.
It was widely assumed by proponents of deregulation that an open market would lead to more grain companies and greater competition for farmers’ grain.
There are more grain companies. But in many cases, that hasn’t translated into more competition.
“I think in general we’ve got enough storage and handling capacity in the country,” said Gall.
“It’s just that in a lot of areas, it’s all owned by the same company.”
Peter Mailler, a farmer from Goon-diwindi, N.S.W., shares a similar view. He said deregulation eliminated Australia’s national export monopoly and replaced it with a handful of regional monopolies.
Today, Australia’s grain handling landscape is dominated by four or five large bulk handing companies that control the vast majority of country and port capacity.
Mailler, who also serves as chair of Grain Producers Australia, said lack of competition in the country and at port is a touchy issue among Australian growers. Later this year, the Australian government is expected to wind down the operations of another government-run regulatory agency, Wheat Exports Australia.
That agency reviews the credentials of grain export companies and issues export certificates.
It also monitors Australia’s export activities and reports those activities to the industry on a regular basis.
To Mailler, the decision by government to strip away another level of regulation is problematic, especially while the industry is still adjusting to the new environment.
“Clearly, there’s an ongoing evolution in the wheat marketing system and we haven’t reached an end point yet,” said Mailler.
“To take another level of regulatory capacity away before you reach that end point is a bit let getting out of the car before you stop.”
