GRAIN Growers Association members have quizzed the company on the wisdom of buying three new companies and investing further in GrainCorp after three years of financial losses.
At the company's annual general meeting in Albury last week, GGA chairman John Eastburn said the company had posted a loss of $2.9 million for the nine months ending June 30 last year.
This follows full-year losses of $7.9 million in 2008 and $367,000 the previous year.
Mr Eastburn said the company had bought BRI Australia in December 2008, and technology company Agrecon Pty Ltd last July, and had merged with Kondinin Group the following month.
Last October the company also took up an offer to buy 7.92 million shares in GrainCorp at $5.65 a share, which cost $44.9 million.
Mr Eastburn said GGA had arranged a "bank facility" to pay for the GrainCorp share purchase.
NSW grower Graham McDonald questioned whether GGA was "too top-heavy" in its investment in GrainCorp.
Tottenham grower Terry Fishpool questioned the prudence of taking over the three companies at a time when substantial losses were made.
"How long can we expect to subsidise those companies?" Mr Fishpool asked Mr Eastburn.
"We have had two years of significant losses.
"I am concerned in the long term whether the business plan (of GGA) is going to change."
Mr Eastburn said he expected BRI Australia, Kondinin Group and Agrecon to be profit-making entities in the future.
Each subsidiary ran their operations at arms' length to GGA.
"We bought them at the lower end, when they were at their lowest ebb," he said.
"If they are not performing up to what they should be, we will take it up with them.
"But we believe that what they provide is vital to the Australian grain industry and to agriculture."
Mr Eastburn said the investment in GrainCorp last October was a "very good investment" and was made after seeking professional advice.
The shares were now trading at $6.10 a share.
The GGA financial statements showed the company's investment in GrainCorp at June 30 last year was $63.8 million, or $7.32 a share, while its funds under management were valued at $30.1 million.
Mr Eastburn said it cost about $5.5 million to $6 million to run the normal activities of GGA.
He said that with GrainCorp not paying dividends during the past four years, GGA had to draw on its other investments to cover its operational costs.
He said the external investments were a mix of international and Australian shares and cash, managed by investment manager Providence.
"Providence has outperformed the mid-range super (superannuation) funds by about 3 per cent," Mr Eastburn said.
He said he hoped GrainCorp would soon be paying dividends again.
He said GrainCorp's investment in malting companies had diversified its operations away from its traditional grain-handling base and would help remove its exposure to poor grain-growing seasons.
"The malting companies have put stability back into that company," he said.
