Australia & US: Sale of AWB’s grain business to Cargill approved by the Australian Competition and Consumer Commission

The sale of Australia’s former monopoly wheat exporter AWB's grain business to US agriculture giant Cargill is getting closer, ABC communicated on March, 18.

Canadian company Agrium bought AWB last year and within a month announced plans to sell the commodity part of the business to Cargill.

The Australian Competition and Consumer Commission (ACCC) has now approved the sale.

Cargill Australia general manager Robert Green says he expects the sale to proceed before the end of the financial year.

"When the sale and purchase agreement was signed and the initial investment was made, we were expecting a completion in the first half of 2011," he said.

"At this stage, until we have all the regulatory approvals, we are still expecting the sale to be finalised in the first half of 2011."

The deal includes AWB's 22 GrainFlow grain storage sites in Victoria, NSW, South Australia and Queensland, its half share in the Melbourne port terminal, plus rail agreements and rolling stock.

It also includes AWB's share in the Shenzen business in China, but does not cover its interest in the Five Star Flour Mill in Egypt.

Victorian Farmers Federation grains group president Russell Amery said he was more comfortable the grain operations would be controlled by an entity with a history in the industry rather than Agrium.

"Cargill is a grain-marketing company which has been operating in Australia for 25 years and a lot longer globally," Mr Amery said.

But NSW Farmers Association grains committee acting chairman Peter Cannon said it was "a sad day for Australian grain farmers".

The NSWFA argued the purchase of AWB's grain operations would reduce competition in the market and increase the chances of collusion and monopolistic price-setting behaviour.

Mr Cannon said he could not understand the VFF supporting the sale.

"How can you be comfortable with AWB going into foreign hands?" he said.

The ACCC said the existing competition between Cargill and AWB was focused mainly in NSW in grain trading and to a lesser extent, grain storage and handling.

It said GrainCorp - the largest grain trader and grain-storage provider in NSW - and a number of competitors with a smaller presence in that state were in competition with Cargill and AWB.

The purchase still has to gain approval by the Foreign Investment Review Board before it can be approved.

23 March, 2011