FARMERS have "grave concerns" the proposed merger of GrainCorp and AWB will harm competition, NSW's peak farm body says.
NSW Farmers’ Association Grains Committee chairman Mark Hoskinson said growers needed to be assured the merger would not cause monopolistic price gouging in areas of freight costs, storage and handling fees, or adversely affect access to ports.
Growers were also concerned about the loss of the AWB brand arising from the merger and the effects on the marketing of Australian grain, Mr Hoskinson said.
"Farmers are calling on Federal Minister for Agriculture Tony Burke and Opposition Leader Tony Abbott to explain how the proposed merger would increase competition in the supply chain and reduce grower costs," Mr Hoskinson said.
"Tony Burke promised more competition and certainty in the market place – this hasn’t been forthcoming. Growers are concerned that this merger would represent less competition."
The Association would also seek clarification regarding the actions of the Australian Competition and Consumer Commission in relation to this proposed merger.
"The ACCC may have to look at forcing GrainCorp to sell some of its assets to regulate its monopolistic powers. It would also have to ensure that such divestment of assets will actually increase competition," Mr Hoskinson said.
"Growers also need assurances that measures are put in place to ensure that the new GrainCorp is not swallowed up by a foreign company.
“The Association believes this merger will make this new entity more attractive to foreign acquisition and is calling on the Foreign Investment Review Board to provide appropriate foreign takeover protection.
Mr Hoskinson said the Association was adamant that a grower owned and controlled body was vital to manage the marketing of Australia's export wheat.
"We acknowledge that the merger may provide efficiencies through co-ordinated aggregation, hedging and market promotion, however we're concerned over the monopolistic power that this may bring with it," he said.
AWB and GrainCorp announced plans last Friday to merge under the GrainCorp banner to create Australia's largest diversified agribusiness with a market capitalization of about A$2 billion and annual sales of more than A$7 billion.
GrainCorp Chief Executive Alison Watkins said talks had started with the ACCC about the implications of the merger.
A spokesman for GrainCorp said neither company operated rail grain haulage, while the addition to GrainCorp existing up-country storage capacity of AWB's network amounts to only 5%.
GrainCorp, which operates a monopoly over grain export terminal facilities on the east coast, already operates under an open access agreement authorized by the ACCC.
- with Dow Jones Newswires
