Spitting chips over representaion

A NEW organisation that wants to formally represent potato growers must “step out of the shadows” and reveal its true identity, says Nationals Senator Barry O’Sullivan.
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In a fiery statement to Fairfax Agricultural Media, Senator O’Sullivan demanded public transparency of the “unnamed” potato industry group and its membership.

He accused the group of lobbying to replace AusVeg as the $690 million potato industry’s eligible industry representative body – under federal legislation governing research and development spending – without proper public disclosure.

Fairfax Agricultural Media understands Agriculture Minister Barnaby Joyce has asked for submissions from the two groups vying for the potato industry’s representative role.

They’ve been asked to make final submissions by February 27 outlining their individual credentials based on structure; governance; financing arrangements; membership, and how they’re best-placed to benefit levy-payers.

Mr Joyce has also held private meetings relating to the issue and is expected to conduct due diligence in considering the two applications before making his final response mid-March.

The situation shares sharp similarities to the long-running rivalry between Grain Producers Australia (GPA) and GrainGrowers over the grains industry’s Representative Organisation role.

Currently, GPA has legislative oversight of the Grains Research and Development Corporation which has an annual budget of $180 million; combining grower levies and matching government funds.

But GrainGrowers has waged a long-running campaign to assume the legislated representative role and displace the grassroots-based GPA, citing greater financial grunt and membership numbers.

Senator O’Sullivan said he’d been contacted by multiple potato growers across Queensland recently who’d expressed frustration and anger at the lack of transparency attached to the budding potato industry lobby group’s dealings with government and industry.

He said the lobby group would never have credibility in the eyes of Australia’s 1088 potato growers – which it hoped to serve as the new eligible industry body (EIB) under federal regulations – if they did not reveal their identities, plans and motives before the review was concluded.

“This group is actively lobbying to represent our potato growers, yet they are not willing to tell these same growers who they are,” he said.

“I have had many individual growers contact me fearing this unidentified group are controlled by processors, supermarkets or a cohort of big growers.

“They are demanding that government does not consider this lobby group unless grassroots growers are provided with an opportunity to assess who the group consists of and what their motives are as well as see a plan detailing how it can fairly and equitably represent the interests of the broader potato industry.

“This group will never be trusted by growers unless it is open and transparent about who they are and what they hope to achieve.

“I don’t care if it is potatoes, bananas, widgets or lollipops – without transparency we have nothing – it is time for this group to come clean and face the industry.”

But Potato Processing Association of Australia (PPAA) chair Peter Hardman confirmed he was heading a group that’s making a business case to be the potato industry’s peak body, under federal regulations.

“We’re not challenging AusVeg at all or replacing AusVeg,” he said.

“We are putting up a business case, or submission to the minister that we were asked to do as part of the HAL (Horticulture Australia Limited) review which was completed about 6-months ago.

“HAL have a new structure now but at the time of the review the minister decided it was time the potato industry had their own peak body.”

Mr Hardman said he believed the potato industry was “bit splintered” and had a large supply chain that’s “not fully represented”.

“For an industry worth $690 million, we believe we should have a stand-alone peak body and not one diluted by being under AusVeg,” he said.

“We believe potatoes should be represented as a stand-alone industry and it’s certainly big enough.”

Mr Hardman said he’d seen Senator O’Sullivan’s media statement which made some incorrect claims about his group’s membership and intentions.

He said potato processors and growers are involved in the group but not supermarkets.

“We’re part of an alliance of concerned potato growers and industry groups but the supermarkets are not involved,” he said.

“There are growers of all sizes, big and small.

“Each state is represented and each sector of the potato industry is also represented; seed growers, process growers, and also fresh market growers so that covers the three sectors.”

Mr Hardman – who also works for Simplot Australia – said it was decided not to identify the entire group “because we did not believe it was in interests of our business case”.

“The reason why we’ve kept it reasonably quiet is because we want our business case that we’re putting forward to the minister to be valued on its own merits and the same for AusVeg,” he said.

“We don’t want to get into a political fight or game, which it looks like they (AusVeg) and some parliamentarians are trying to do.

“We don’t want to make it a political fight or in the (media) fight and we want our submission to stand on its merits.

“We hope the minister will make a decision on who will be the peak body for potatoes based on those two submissions and not because of lobbying by parliamentarians and others.”

Mr Hardman said the PPAA was a peak industry body that represented potato industry processors.

He said the potato industry was unique in that growers and processers all paid the same levy of 50 cents per tonne which contributed to R&D projects with matching government funding.

“We were a prescribed industry body when HAL was set up 18 years ago, similar to AusVeg, and others,” he said.

Asked how he rated his group’s chances of becoming the industry’s peak body, Mr Hardman said he only hoped for a fair hearing from Mr Joyce.

“We’d like to think the minister takes a fair view of both submissions,” he said.

“We’re making a statement that we’re going to be an organisation that’s transparent and consultative with our grower base and accountable.

“We’ll be working with the grass roots growers and will look for genuine input from growers into R&D projects because we don’t believe that’s been happening.”

AusVeg CEO Richard Mulcahy said his group had held cordial discussions with the Minister about the matter and was “not particularly concerned by a few people with grumbles, which exist in every agricultural industry, and has always been the case”.

“AusVeg is one of the most successful groups in all of agriculture,” he said.

“We remain focused on getting the best outcomes for our growers.”

At a recent public hearing of the federal senate inquiry into agricultural levies, Mr Mulcahy said AUSVEG was the national peak industry body representing the interests of approximately 9000 Australian vegetable and potato growers who pay national vegetable and potato levies.

He said the vegetable levy contribution from growers for the last year was $7.56 million received and matching a Commonwealth contribution of $7.7 million.

He said potatoes had a much smaller levy, with total income of $926,000 and the government contribution was $808,000.

“Other income was $25,000, giving a total of about $1.75 million,” he said.

Mulcahy said levy funding – which contributed to projects that would otherwise not receive the required attention or investment – was “a major factor in the continued health of our agricultural R&D sector”.

“The R&D projects funded through this system provide very real and significant returns not just at the farm gate but across the industry as a whole,” he said.

“The disbursement of the vegetable and potato levies is subject to strict governance arrangements which ensure accountability and transparency.”

Mr Mulcahy said the levy system was generally working but he believed there are probably too many industry bodies.

“We have 150 commodities yet there are other industries like chestnuts and persimmons that have one industry body for one commodity,” he said.

“It just does not seem administratively very efficient.

“There are 43 bodies in horticulture; I would think you could get away with six… but not 43.”

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Sweet and sour side of Kandy

Sweet and sour side of Kandy Xavier Lane (left) and Marlowe Patch feed elephants at the Millennium Elephant park at Pinawella, Sri Lanka
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Sri Lankans gather on the beach at Pitiwella on a public holiday

Sri Lankans gather on the beach at Pitiwella on a public holiday

Jude Lane on a Sri Lankan train

Talking to the locals at Colombo train station: Lleft to right) Jude Lane, Xavier Lane, Melinda McMillan and Ivy Lane.

Xavier Lane at the turtle sanctuary.

Ivy Lane learns to drive a tuk tuk.

Jude Lane on a Sri Lankan train.

TweetFacebookTRAVEL in Sri Lanka with children is not for the helicopter parent, but if you are willing to take some risks, hold on for the ride and let go of your anxiety, it is a great family destination.

I had visited Sri Lanka over the summer of 1994-95 as a 25-year-old backpacker. I spent six weeks at Hikkaduwa, en route to India. My memories were of an unspoilt coast with an incredible surf break.

In Sri Lanka, I thought I had found paradise with very few tourists due to a civil war raging in the north. A war, incidentally, I was oblivious to at the time.

Returning had me filled with curiosity about how much this country may have changed since the end of the war in 2009, and the impact its fledgling tourism industry may be having.

This trip would be very different; I would be taking my children, 9, 10 and 14. I was more than a little afraid. I bought travel insurance and hoped for the best. It was their first overseas travel experience and they could not wait.

There are no direct flights to the capital, Colombo. The most direct and cheapest route is via Kuala Lumpur. We arrived in Colombo after 18 hours in transit, exhausted and ready to sleep.

Our accommodation had been booked online. When we arrived no one at reception knew about it. There was confusion, phone calls, and eventually a room. The lodgings bore little resemblance to the pictures on the website. Exposed electrical wiring, windows that didn’t lock, shards of glass in sills as crime prevention, and a courtyard was filled with rubbish dropped from the floors above. My danger radar went into overdrive.

“Is this what Sri Lanka is going to be like, Mum?”

The next day, with another family from Australia, we made our way by minibus through Colombo’s congested streets, dodging people, tuk tuks and dogs, for the train to Kandy.

Rail is the best way to see this country. Red rattlers with opening windows weave their way along the golden coast and up into hill country. The trains are old and not clean, and packed to the rafters, but they are cheap, and quite an experience.

On board, hawkers walk the isles with snacks – masala vadai, spicy vegetable roti and deep fried prawns – served in old newspapers. I tried not to think about poisonous ink.

Beggars might ask for a few rupee in exchange for a song and the locals love to chat and find out where you come from. The children couldn’t believe the sights and sounds before them on the trains. But it’s the scenery that is breathtaking as the train climbs towards Kandy, the spiritual home of Buddhist community, capital of the former kingdom, and with a sacred lake at its centre.

We spent our first night in a clean, well run, family-owned lodge, where the children delighted at the sight of tiny squirrels darting up trees and monkeys roving across rooftops. And we enjoyed our first home-cooked Sri Lankan meal.

According to travel guides, there are three “must dos” in Kandy: the relic of the Buddha’s tooth, a traditional dancing show, and an elephant sanctuary.

If you visit the relic, purportedly one of the Buddha’s canine teeth, you’ll be charged the tourist rate, wait in a very long queue and weave your way at a snail’s pace up into an very hot attic for a glimpse, from afar, of the tooth, barely visible.

There are several places to see a traditional dance show, five nights a week. I thought it was lacklustre but the kids enjoyed it.

The real highlight was the Millennium Elephant Foundation, near Kandy. It’s home to eight rescued elephants, which the children fed, rode and washed.

But it was Kandy’s bustling street life that really captured their attention: markets, food stalls and women in colourful saris, even an organ grinder with a monkey on a street corner.

The children wanted to be out and among it constantly. But there were dangers: the traffic was crazy and our 14-year-old daughters attracted a lot of male attention.

Determined not to deny the children a full experience, I sat back feeling sick as they stuck their heads and limbs out of trains. When a tuk tuk rider offered to teach my younger two to drive in peak hour traffic, I let them and they loved it.

Frequently, we were the only foreign faces in the crowd, and the locals are curious. There are rip-offs and confidence tricks, but the people don’t yet have foreigner fatigue.

With children, the food was an issue. Everything in Sri Lanka is spicy, even when the cook assures you it is not. It was hard to find foods they could eat.

Outside Kandy, at Aladeniya, we spent four nights at an old whitewashed colonial home called The Mansion. Our arrival was quite British-in-India – we were met by young men in traditional dress bearing cool drinks and cold towels – and the massive rooms were decorated with colonial furniture. We were the only guests and enjoyed breakfast on the lawn and dinners in the courtyard. The food was fantastic. The children spent most of their time in the pool, which was, of course, unfenced. I read a book.

We went back to Colombo for sightseeing and shopping before retiring to a beachside villa at Pitiwella, near Galle, in the southern province. It was monsoon season, and we were blasted by winds and rains, but on the third day blue skies opened up. The surf was too rough to swim, but the pool was good. We made day trips into Galle’s historic fort area, where we shopped, enjoyed seafood and walked among colonial buildings and on the walls of the fort.

I took a day trip back to Hikkaduwa, which had been the cornerstone of my first trip. Sadly, the quiet beachside village had given way to cheap, ugly development. We tried to visit the tsunami museum, but for reasons that never became apparent our driver refused to take us. We had chosen not to stay at the beachside town of Unawatuna due to a bum steer from The Lonely Planet, which said it was over-developed. But when we visited, we discovered a beach protected from the monsoons, quaint streets, restaurants, cafes and a manageable level of tourism. We visited twice and the children finally got to swim in the Laccadive Sea.

On an afternoon trip to Kosgoda Turtle Sanctuary, the children learnt about the breeding program, toured the facility, and at sunset released baby turtles into the ocean. We finished up in luxury at the Hilton Colombo, where they soaked up hours of television, even though it was not in English, and enjoyed the plush rooms, room service and a huge pool.

On our last night we toured Colombo atop an open-roofed double decker London bus. We narrowly missed colliding with overhead wires, but made it back alive.

Sri Lanka was hard work with children. I had one goal: keep them alive. But they were blind to my fear, and experienced a culture unlike anything at home. It opened their eyes to another world and another way.

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How would Jason Day spend $10 million?

Some would splurge on a luxury car. Others would add to their investment portfolio. How would Jason Day spend $10 million? He’d get down to a local mall and pick up a few V-neck jumpers.
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“I might buy a few more V-necks from Target, that’s what I usually do,” the Australian said, when asked what he might do with the epic payday that potentially awaits him in a few days’ time.

Then, asked

how he would describe his playing style, Day produced another killer quote that sums up why he is becoming one of the country’s most admired sporting figures..

“It’s like Jordan Spieth and Rory McIlroy had a baby – and I was it,” said Day, pointing out how his powerful ball-striking, or “length”, was comparable to that of world No.2 McIlroy, while his putting and chipping, “short game”, was comparable to that of world No.3 Spieth – golf’s new world order.

Day is so hot right now, he is even being ranked No.1 in the world for press conferences.

The PGA Tour’s media department have called the Spieth-McIlroy “love child comment” its quote of the year.

Day has the unwavering self-confidence – or “swagger” as the Americans call it – that you simply must have to become the world’s best golfer.

He didn’t even blink this week when described being “in the zone” right now, an American-ism sportspeople use for that magical mental state one enters and, once there, can do no wrong.

But that brashness does not define his public image (if fact it doesn’t even come close) because of the other side of Day – call it the “V-neck” effect – that portrays the humble qualities that make up a champion who has just as many kind words for those around him, as he does for himself.

His humility overpowers to the point where any cockiness that might unwittingly slip is endearing rather than jarring.

It’s why very few Australians would begrudge him possibly banking the biggest single-day payout a professional sportsperson from this country has ever seen.

Even though he is already a millionaire several times over – all up his career-earnings exceed $US28 million – we will be happy to see his him break the bank over and over.

Day has had some big days already this year.

But this Monday could be his biggest – maybe not in his eyes, but likely in those watching him back home in Australia.

Put simply, he could enter rare air. It’s not all about the money, clearly. But winning $16 million in one day (Australian dollars, that is) will create a lot of headlines back here and give him a unique place in our sporting history.

The $16 million bounty is the prize for becoming the first Australian to win the “FedEx Cup”.

The “grand final” for that end-of-season trophy is the last event of the PGA Tour – the “Tour Championship” – which starts on early Friday morning, Australian AEST, and ends early Monday.

Day cannot be the first Australian to win the Masters. He wanted to be, so much, and planned to scatter some of his father’s ashes at Augusta once he did to fulfil his dying wish.

He is world No.1 and Australia’s youngest ever, but he wasn’t the first, and we won’t know for a long time whether he can ever eclipse Greg Norman’s mark of 331 weeks as “the man”.

Those are the two achievements, winning a green jacket (which he hasn’t done yet) and becoming world No.1, Day holds closest to his chest.

He admitted this week that the money would probably “pop into his brain” (how could it not) but it’s never been what he plays for.

“I don’t really spend money, mate,” Day added to his “V-neck” comment.

“I mean I have some nice stuff. I might buy some new clothes because I’ve still got clothes five years old that I wear today. I am a very simple man. Just be able to put it away and save it.”

Yet it’s impossible for the Queenslander to know how big a story winning the FedEx Cup will be, for no one has done it in this country.

It does not have the history that makes the Masters so sacred. The concept of the FedEx Cup – golf’s version of the AFL premiership – was only introduced in 2007. But in time it will, and who knows how big its prestige might grow.

In terms of prizemoney – the $US10 million cheque handed to the winner is five times that of the Masters or any other of the other majors.

Looking back in 50 years’ time – when that $US10 million could be goodness knows how much – Day might think it neat he was the first Australian to climb this particular mountain. But first he must get there, and he will certainly need his swagger to swing it.

Part of the reason why the FedEx Cup does not sit at the same level as the majors in the Australian sporting public’s collective consciousness is the convoluted nature of its qualifying system.

Over the past three weeks, the world’s top 125 golfers have been cut to fields of 100 and then 70 over three “play-off” tournaments, leaving just 30 to contest this week’s Tour Championship.

Day has won two of those three events – The Barclays and the BMW Championship – amassing FedEx Cup points along the way that have ranked him No.1 in the standings.

He comes into this week on 6680 points, which is 2288 points more than his nearest rival, Spieth, and a seemingly insurmountable lead given the final event only offers a maximum of 2000 points for the winner.

However this is the kicker for Day. All points earned up to this week are actually wiped and then “reset” for the final event, based on each player’s final ranking.

It means Day’s No.1 position gives him the greatest chance of winning as compared to any of his 29 fellow competitors, but not an exclusive one.

Day will start the tournament at a “reset” points total of 2000, ahead of Spieth on 1800, Rickie Fowler on 1600, Henrik Stenson on 1440 and Bubba Watson on 1280 – the top five players in the standings who are close enough to snatch the cash from Day with a victory this week.

If none of those other four players actually win the event, the prime No.1 position essentially gives Day more scenarios in which he can to still finish on top of the standings – and claim the $US10 million bonus – should he also fail to win the Tour Championship.

For instance, Day can finish as low as 29th in the 30-player field and still win provided the right player wins for that to happen. Spieth, on the other hand, can only finish as low as sixth and still win provided all other placings fall his way. And so on.

Here are a few other need-to-know facts about the event that could become Jason’s biggest Day.

– The player who entered the Tour Championship ranked No. 1 – which Day has this year – has won the FedEx Cup three times out of eight times. No one has done it since Tiger Woods in 2009.

– Day would not be the first player to win two “play-off” events but not the FedEx Cup. McIlroy won the second and third lead-up events in 2012, but American Brandt Snedeker stole the big prize by winning the Tour Championship after solid placings in the other play-off events put him in the frame.

– Day would be the only player ever to win three out of the four play-off events if he were to add the Tour Championship to his wins at The Barclays and BMW Championship.

– A score of 13-under in the Tour Championship would elevate Day’s combined under-par score for the four play-off events to 60-under, which would beat Woods’ current record of 59-under set in the 2007 play-offs.

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Southern sales start 2015 on high

THE drenching rain across parts of NSW, Queensland and Victoria in December and January helped set the stage for an extraordinary opening to cattle sales, in both store and physical markets, for NSW and Victoria.
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January commenced with rainfall in the Riverina and outer regions of up to 300 millimetres. The extensive rain raised the hopes of producers who were struggling to cope with the debilitating dry spell in some regions.

The biggest issue up until the deluge of rain was surface water, with reports of producers destocking sections of farm land in order to alleviate the shortage of ground water. The most affected areas of the Riverina were from Wagga Wagga to Hay in NSW.

Victoria’s Annual Blue Ribbon weaner store sales in January got off to an unprecedented start, reflecting the unusual rain event across the eastern states. Early sales of up to $1100 a head for yearling steers were more the rule than the exception. Over 65,000 cattle were sold at store sales throughout Victoria for the month of January with two thirds of the cattle trucked to various destinations throughout NSW and Queensland.

At Wodonga a large contingent of store buyers travelled from Queensland, northern NSW and the New England, while feedlots were well represented from both states. Despite the large field of restockers, feedlot buyers were the market drivers and dominated most categories, which forced restockers to compete for the lighter weight steers.

Steers purchased by lot feeders reached a top price of $1170/head, to average 241¢/kg lwt. Medium weight Steers returning to the paddock averaged 250¢ to 257¢, with the lighter weight portion reaching a top price of 282¢/kg lwt, an estimated live weight equivalent of $886/head. A significant portion of the lighter weight steers were purchased by store buyers from Dubbo, Moree, Walcha, Inverell, Tamworth, Armidale, Glenn Innes and Benambra.

Interestingly, the number of females offered at the annual store sales had notably declined to previous years, which resulted in stronger competition over all weight classes. The bulk of well-bred heifers to feed on made from 211¢ to 239¢, to average 229¢/kg lwt. Heifers purchased by producers topped at $885/head, with only limited numbers returning to the paddock.

Rain inspired restockers and lot feeder buyers at physical markets in January as supplies tightened in Queensland and northern NSW. The physical markets opened strongly with lot feeder demand driving prices significantly higher. The higher prices led to a record yarding of 7,057 head at Wagga, and over 3,700 steers and heifers were purchased for grain feeding, while many lighter weight cattle returned to the paddock. Steers to place on feed, weighing 400kg to 500kg, averaged 236¢, reaching a top price of 249¢/kg. Medium weight heifers suitable to lot feed averaged 218¢/kg lwt.

Confidence, driven by northern rain, lifted cattle numbers at Wodonga mid-way through the month to 5045 head. Prices through January were very solid over all categories, with bidding intensifying from lot feeders. Last week however, prices lost traction with falls generally between 15¢ to 22¢/kg, with plainer cattle most affected. There were several lot feeder orders absent from the market which contributed to the cheaper trend for cattle which lacked finish.

While northern export processors remained under pressure for numbers, both Wagga and Wodonga’s cow supplies surged on the back of strengthening markets further north. Wodonga’s cow market broke their long standing record with the market offering 2,060 cow’s mid-way through January.

The substantial increase in numbers did test the market, with prices slipping 17¢ to 23¢/kg. Last week cow numbers halved to 1,021 head at Wodonga and prices lifted 17¢ to 35¢, to average 400¢/kg cwt for heavy well finished lines. Store cows have been keenly sought at both Wagga and Wodonga markets over January with a significant portion purchased by Dubbo and Forbes producers.

Light weight young cows returning to the paddock weighing 375kg reached a top price of 196¢/kg lwt, the equivalent of $735.28/head.

The Eastern Young Cattle Indicator is at a record 451.25c a kilogram today, up from 340c in November.

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Nufarm’s McGauchie not so hard

Chairman Donald McGauchie at the 2013 AACo AGM.IT IS not clear why Donald McGauchie has a reputation as one of the hard men of Australian business, given that he has allowed at least three chief executives to stay in the job too long.
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As chairman of Telstra he should have moved much faster to rid the company of Sol Trujillo, the American CEO who tried to teach Canberra how to play toxic politics.

That was a dumb strategy considering telecommunications is one of the most heavily regulated industries in the country. It resulted in the departure of Trujillo in February 2009 and McGauchie in May 2009.

McGauchie’s replacement as chairman, Catherine Livingstone, had to rebuild the relationship with Canberra from scratch.

She showed how astute she is by hiring Russell Higgins as a non-executive director. Higgins is a former secretary of the Department of Industry, Science and Resources and served on the boards of a wide range of government business enterprises.

He quickly smoothed the troubled waters in the nation’s capital.

The most important positive development to come out of the McGauchie debacle at Telstra was the appointment of David Thodey as chief executive.

Telstra shares fell 36 per cent under McGauchie’s reign as chairman. The stock has doubled under the stewardship of Livingstone and Thodey.

McGauchie’s tendency to have unflinching loyalty to his CEOs was on display in 2012 when he was chairman of Australian Agricultural Company.

He sat back and did nothing when AACo’s CEO David Farley delivered what is arguably the lowest, gutter-level remark ever made by the head of an Australian public company.

While outlining plans for a new abattoir to process old cows, Farley was quoted as saying: “So the old cows that become non-productive, instead of making a decision to either let her die in the paddock or put her in the truck, this gives us a chance to take non-productive animals off and put them through the processing system. So it’s designed for non-productive old cows. Julia Gillard’s got to watch out.”

McGauchie, who has always declared a commitment to equal opportunity and diversity, sat back and watched.

At the time the remark was made, AACo had no women non-executive directors or top managers, even though 36 per cent of its staff was female. It still does not have one female non-executive director.

Farley did not leave the company until almost a year after his outrageous remarks. His departure in July 2013 marked a turning point in the company’s fortunes. The stock has since risen about 52 per cent.

Loyalty in the way of senseTo his credit, McGauchie did not rush the CEO appointment at AACo. He did the usual international search then appointed as CEO Jason Strong, who was the former general manager of marketing.

Once again loyalty appears to have stood in the way of common sense. Nufarm is the latest example of McGauchie standing by while a CEO stays too long.

Doug Rathbone, who founded Nufarm and has been its CEO since 1987, clearly should have gone long ago. The company has performed poorly for years despite a succession of restructurings and asset disposals. Rathbone moved the deck chairs but failed to take really tough decisions.

The company was blindsided by the shift by farmers in Australia to the use of generic glyphosate herbicides.

Nufarm holds the unenviable record of consistently surprising the market with earnings on the downside for the past seven years. Rathbone and McGauchie cannot be blamed for big structural shifts in markets but it is only with Rathbone’s departure that the cost base is being brought into line with revenue.

McGauchie said on Wednesday that the management team at Nufarm would pursue a $100 million “reduction and continuous improvement program” as well as “a separate program to aggressively reduce working capital to meet the company’s target of 40 per cent average net working capital to sales by the end of the 2016 financial year”.

To be fair, the company’s performance has suffered from volatile weather. However, earnings per share are today half what they were 10 years ago. Nufarm shares have gone nowhere for about five years.

Rathbone has had his fair share of controversy. In 2011, Rathbone sold 4.5 million shares just two months before Nufarm downgraded earnings. That prompted fund managers to steer clear of the stock. Another lowlight was in April 2010, when Nufarm completed a $250 million equity raising only to breach its banking covenants and suffer a credit rating downgrade weeks later, prompting an ASIC investigation and a shareholder class action, which was settled for $46.6 million in 2012.

McGauchie has been in a difficult situation at Nufarm because as founder and major shareholder Rathbone was, in effect, more powerful than chairman and board.

As one fund manager told Chanticleer, while McGauchie was an independent director by name he had no hope of moving Rathbone along until recently, when his shareholding was reduced to levels carrying little influence.

If you read between the lines of the Nufarm announcement revealing Rathbone’s decision to step down, it is clear McGauchie finally had to nudge Rathbone out the door.

The company says it is on a growth path and that is backed up by analysts’ forecasts for earnings, according to data compiled by S&P Capital IQ.

The lesson for investors is to closely examine the track record of company chairmen and CEOs before trusting that the corporate governance systems will work in your favour.

Superannuation fee squeezeA new paper on superannuation and behavioural economics being released on Thursday by Industry Super Australia presents strong arguments in favour of union-aligned default super accounts.

In a nutshell, it says the Wallis Inquiry 13 years ago got it wrong when it assumed consumers would act rationally. The assumption was that when faced with free choice in super, consumers would find and understand all relevant information and make informed financial decisions.

Industry Super Australia, which represents industry funds, concludes workers “forced” into default super options achieved better performance than those who made active choices about where to place contributions or who were sold retail super funds.

The flaw in this analysis is that it does not take account of the big shift to self-managed super. Also, it does not include sufficient analysis of the new MySuper products. They just have not been around long enough.

The Industry Super Australia analysis conveniently ignores recommendations made in relation to improving the governance of industry funds.

Another factor that needs to be taken into account when assessing default super using industry funds is the looming structural changes which will force up fees.

Analysis by Alun Stevens at actuaries RiceWarner says there are two big trends that will force up fees: increasing numbers of retirees and account consolidation.

Stevens says that the shift to an increasing number of retirement accounts caused by baby-boomers entering the retirement years will lift costs because these accounts are much more costly to administer.

He says the level of service demanded by pension accounts and retirement accounts is much higher than that demanded by accumulation funds which have significant scale benefits from dealing in bulk via employers. “The large numbers of members retiring from the system will have an impact on fees as funds will need to increase their resources to service their members approaching and in retirement,” he says.

He says another factor is the shrinkage of the number of accounts within funds, which will impact heavily on industry funds with flat rate fees. Stevens says funds which deploy a flat-fee model and expect to pay for everything within that fairly inflexible pricing structure will be found wanting.

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Asia’s noodle hunger drives demand

AUSTRALIAN wheat farmers will face an increasing challenge keeping up with their neighbours’ appetite for bread and noodles.
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Demand from Indonesia, the Philippines and three other Southeast Asian nations is set to jump 40 per cent to 13.2 million tonnes by 2020, said Greg Harvey, chief executive officer of Interflour Group, one of the region’s biggest flour millers.

That may outpace Australia’s ability to supply the wheat variety used in soft bread and noodles, he said in an interview in Singapore. Australia is the world’s fourth-biggest wheat shipper.

Faster growthFaster growth and an expanding population are boosting consumption of everything from wheat and sugar to cooking oils in the region, which has more people than the European Union. Indonesia will become the world’s second-largest wheat importer this year and has overtaken India as the top user of palm oil, the US government estimates. The US, Canada and Russia could fill any shortages in Australian supply, he said.

“It’s a bullish story for Australian wheat,” said Harvey, whose company is a venture between Salim Group in Indonesia and CBH Group, Australia’s biggest grains shipper.

“There will be more demand in 2020 than the ability to supply, at least on paper. That’s a good problem to have.”

Wheat in Chicago entered a bear market last month as world stockpiles of grains excluding rice head for the highest since mid-1980s, the International Grains Council estimates. Prices fell 13 per cent this year to $US5.1575 a bushel on Wednesday.

Hottest springWestern Australia and South Australia, which are top producers of the low-protein white wheat used in noodles and soft bread, are the country’s main suppliers to south-east Asia, Harvey said.

His projections assume that farmers will have difficulty increasing exports from the 11.1 million-ton annual average over the past five years.

Dry weather and limits on the amount of land suitable for cultivation are already curbing supplies.

Total wheat shipments from Australia may drop 7.2 per cent to 16.99 million tons in the 12 months to June 30, the lowest in five years, after the hottest spring on record, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

While wheat imports by south-east Asian countries from all origins will reach 17.75 million tons in 2014-2015, or 8.6 per cent more than the average in the past five years, exports from Australia are estimated to be 8.2 per cent below the five-year average, US Department of Agriculture data show.

“We have a productivity growth rate at about 1 per cent a year and I hope this will continue,” said Simon McNair, chief executive officer at Australian Grain Growers Co-Operative. “There’s a finite amount of farmlands. There’s competition from other agricultural products like cattle, and other crops.”

Rising consumptionSouth-east Asian nations are still expanding. The International Monetary Fund forecast last month that growth in the five biggest economies will accelerate to 5.2 per cent in 2015 and 5.3 per cent in 2016, from 4.5 per cent last year.

Demand for wheat flour will increase at the fastest pace in Indonesia, Vietnam and the Philippines, with the average exceeding 7 per cent a year in the decade through 2020 according to Interflour’s Harvey. Consumption per person in the region will climb to 29 kilograms in 2020 from 20 kilograms last year, he said.

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Fresh blood needed at Nufarm

Casting a long shadow: Doug Rathbone made a shock exit from Nufarm yesterday.WAS that blood seeping out from under the CEO’s door at Nufarm, or was now former boss Doug Rathbone just sharing a farewell red with his long-time chairman, Donald McGauchie?
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We shouldn’t read too much into the fact that the weed and bug killer’s boss stepped down with no warning on Wednesday after 15 years as CEO, and with no permanent replacement.

Or, the fact that he received a $1.643 million “termination payment” on top of his statutory entitlements.

And it isn’t like McGauchie has form. He swears that he did not – in his role as AACo chairman – dispatch the beef farmer’s chief, David Farley, to its abattoirs in 2013.

“Doug believes that new leadership can bring a fresh perspective and energy to driving important change in the business. Doug and the board have agreed that now is the right time to make a change to new leadership,” McGauchie said in a statement from Nufarm.

I wonder whether it would have been the same outcome if Rathbone hadn’t been forced to sell down his 18 per cent stake in Nufarm in recent years to support his rather expensive wine hobby, which soaked up an estimated $100 million as he acquired wineries like Yering Station, Xanadu and Mount Langi Ghiran.

The share sales certainly caught the attention of his fellow investors.

In May 2011 Rathbone was forced to explain to the market that a $23.7 million share sale to Japan’s Sumitomo Chemical Company at an 11 per cent premium to the prevailing share price “avoids any market disruption that might result from the on-market sale of Nufarm shares owned by me”.

In March and April 2010 he offloaded $94 million worth of shares at up to $14 a share. Not long after, the debt-laden Nufarm announced a profit downgrade which sent the stock below $4.

A real point of interest is whether the ASX forces Nufarm to revisit a speeding ticket it issued last week after Nufarm’s shares rocketed from $5.04 to $6 in a matter of days.

Nufarm said at the time that it was not aware of any information in its possession that would explain this sudden surge in share price and trading volumes.

Nufarm also announced a $100 million cost reduction program on Wednesday. Just saying.

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Nats back Abbott as PM

Nationals leader and Deputy Prime Minister Warren Truss.NATIONAL Party leader and Deputy Prime Minister Warren Truss says the Coalition agreement would need to be renegotiated if Tony Abbott was removed as Prime Minister.
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Mr Truss spoke to media today as the National party gathered for a meeting in Wodonga, Victoria, to prepare battle plans for the year ahead, with a specific focus on regional issues.

However, the National party’s key planning session also arrived with mounting pressure on Mr Abbott’s leadership amid tightening scrutiny from Liberal colleagues.

Opposition leader Bill Shorten said the Liberal government was “absorbed with fighting over their own jobs and they have forgotten about Australia in the process”.

“The last two weeks have been shambolic and chaotic and in the meantime real Australia is doing it hard,” he said.

“It’s long overdue that the Liberal government in Canberra stop worrying about who is going to sell their unfair message (and) they go back to keeping their promises they made before the last election, the basis upon which they hold power in Australia.

“And they need to remember that cost of living is far more important than whether or not it’s Julie Bishop, Malcolm Turnbull or Tony Abbott as chief salesman for this Liberal government.

“What matters is for Tony Abbott or any of his people who are circling him looking for his job, is they say clearly to Australia ‘we will keep our promises we made before the last election’.

“Just dumping the salesman of the broken promises doesn’t change the truth of the broken promises.”

Nats would renegotiate CoalitionMr Truss reiterated his support for Mr Abbott and conceded a different Coalition agreement would be needed if a new leader was appointed.

But he also said, “At this stage, I don’t think that’s likely to be an issue”.

“The Coalition agreement is actually between Tony Abbott and me and that’s an agreement that we submitted to the Governor-General so that she was able to commission the government,” he said.

“So that is an agreement between the Nationals and the Liberals, but particularly it’s an agreement between Tony Abbott, as leader of the Liberal Party, and me, as leader of the Nationals.”

Mr Truss said the leadership issue was an issue for the Liberal Party to resolve but he’s made it “absolutely clear that I’m happy to be working with Tony Abbott”.

“I think he’s doing a good job and I would like his leadership to continue,” he said.

Asked whether he’d been sounded out from any third party in the Liberal Party on whether he’d support any leadership change, Mr Truss said, “no”.

“I think everyone should support the leader; they should make it clear that they will back this government and they’ll work constructively with Tony Abbott to make sure that we deliver for the people of Australia,” he said.

Mr Truss also played down questions about whether the Nationals could work with former Liberal leader Malcolm Turnbull, who they rejected when he was beaten by Mr Abbott in a leadership ballot in 2009, if he became PM.

“I don’t think there will be any other candidates,” Mr Truss said.

“I think Tony Abbott is the leader, he should remain the leader and everyone should get in behind him.

“I hope that shortly you might get around to asking us questions about the Nationals and what we’re doing and our determination to work as a united team who contribute constructively to the government and also, in particular, to deliver good policies for Australia.

“Now, we’ve got ministers who are involved in some of the key areas of the economy and service provision in this country and we have, therefore, a vital role to play and we’re determined to do that in a constructive way and we want to get on with that job.

“And therefore we want to talk about policy issues not distractions about leadership or other questions.”

Rather than ongoing distractions, Mr Truss said it was important to have strong and stable government and therefore important that the leadership issue is “settled and settled quickly”.

“I’ve regarded as a privilege to work with Tony Abbott,” he said.

“He’s got a strong commitment to our country, a vision and determination, he works hard and he has been a good partner for the Nationals.

“So it is important that those issues be resolved and be resolved promptly and then we get on with the business of delivering strong, stable and assured government.”

Regional Australia agendaMr Truss said the party’s agenda for today’s meeting included “a wide range of issues of importance to regional Australia” including health care, improved education for country residents, delivering the government’s $50 billion infrastructure commitment for roads and railway lines, regional communications .

“We all know the regions contribute enormously to our nation’s wealth and when the regions are strong so is our country,” he said.

“And so for that reason it is vitally important that we have strong and healthy and vibrant regions to guarantee that our country will get through the difficulties, the economic difficulties that are confronting the globe at the present time and indeed problems with commodity prices et cetera that are affecting our own profitability as a nation.”

The Melbourne to Brisbane inland railway line was also a key focus to the party’s meeting today which Mr Truss described as “a nation changing project”.

“Essentially the road transport task or the transport task for our nation is expected to double over the next 20 years and treble over the next 30 years,” he said.

“So unless we’ve got a better rail system, unless we’ve got better shipping arrangements the reality will be that our road system will simply be unable to cope.

“So projects like this are vital to ensure that our economy will be mobile and able to move freight around the country in the decades ahead.”

Mr Truss said the government had committed $300 million to prepare the project for the construction phase and begin early construction, via a committee headed by former party leader John Anderson.

“They’ve been doing work on identifying some of the key issues to be addressed in relation to the route and I’m pleased to announce today and additional $29 million commitment to that process,” he said.

“This $29 million will help to complete the business case for the project, identify routes (and) deal with some of the challenging engineering issues particularly in this instance in Country New South Wales and Southern Queensland.”

Mr Anderson said the project was in the order of a modern snowy mountain scheme in terms of its scope, size and its cost.

“I would say that we need it as a matter of national priority now as construction jobs in the mining sector are lost, this can soak up a great deal of unemployment that would otherwise occur,” he said.

“That’s in the short term.

“In the long term this hooks up the most productive regions of Australia in a way that will help them enormously boost their existing businesses, build new businesses.

“It will for the first time give a modern economy a modern rail network.

“Whilst there’ll be enough jobs for the truckies to keep them busy forever, because of the expanding economy, this will take about 100,000 truck movements a year off the corridor, it will free up Sydney’s rail and road network, so there’s a great benefit for a very crowded city in that and of course trains are environmentally friendly and particularly fuel efficient.”

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National lamb supply surges

Supply surges with resumption of full trading weekNATIONAL lamb supply increased 76 per cent week-on-week, following last week’s shorter trading week, at 116,217 head, with all states except Tasmania yarding larger numbers.
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National sheep supply jumped 92pc, to 61,823 head, with increased numbers in NSW, Victoria and Western Australia this week.

Heavy weight lambs well-supplied across NSW and VictoriaThere were large numbers of well-presented trade and heavy weight lambs penned at Tamworth, Bendigo and Ballarat this week. At Dubbo, there were some excellent lines of heavy weight lambs along with good numbers of well-finished Merinos, while trade weights were in limited supply.

Heavy and extra heavy weight lambs made up the majority of the offering at Forbes, while at Muchea, store and light weight drafts made up a large percentage of the yarding. Increased buyer activity at South Australian Livestock Exchange supported a dearer trend across all categories, with trade and processor demand creating strong competition for restockers.

At Bendigo, there were several runs of heavy crossbred ewes, along with well-presented Merino wethers and ewes. Medium and heavy weight lines were well supplied at Tamworth and Inverell.

Prices climb higherAt the close of Tuesday’s markets, the eastern states restocker lamb indicator increased 9¢ last week’s levels, on 555¢/kg cwt. Merino lambs were up 32¢ on 524¢, while light lambs jumped 21¢ on 553¢/kg cwt.

Trade lambs gained 23¢ on 568¢, and heavy lambs were 31¢ higher on 584¢/kg cwt. The mutton indicator finished 10¢ dearer on 358¢/kg cwt.

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Cattle throughput up 78pc

Numbers returnBY Wednesday, national throughput at National Livestock Reporting Service-reported saleyards had lifted 78 per cent to 52,241 head, on the back of a resumption of a full trading week following last week’s public holiday.
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Throughput in Queensland lifted 38pc to 12,086 head, with the return of both Toowoomba sales and Roma Store lifting 700 head.

Numbers in NSW more than doubled to 21,745 head, with the return of Forbes, Tamworth and Wagga. Victorian cattle supply almost doubled to 13,641 head, with Ballarat and the Monday Pakenham sale returning and all other saleyards recording increased or steady throughput.

Yardings in South Australia doubled to 2535 head, while Western Australia eased slightly to 2019 head. Tasmania yarded 215 head, up 100 head week-on-week.

Feeder demand remainsLotfeeders continued to be the major yearling buyers at Warwick and lines experienced quality related price variations, while restockers showed strong interest in well-bred yearling steers.

At Roma Store, good numbers from the south-west and several consignments from the central-west parts of the state were yarded and prices remained high, trending either side of firm.

Feeder buyers, with some from northern NSW, dominated most yearling lines and pushed prices dearer at Wagga. Heavy grown steers were also keenly sought by lotfeeders and export processors and a SA processor drove the cow marker higher.

There was an increased number of heavy yearlings, suitable for the trade and feeder buyers, at Wodonga and interstate lotfeeders, joining the usual panel of buyers, drove prices dearer.

Prices edge higherAt the close of Tuesday’s markets, the Eastern Young Cattle Indicator was up 3.75¢ week-on-week, finishing at 451.25¢/kg cwt. Trade steers eased 6¢ on last week, averaging 230¢, while medium steers improved 1¢, averaging 217¢/kg.

Feeder steers were firm, averaging 247¢, while heavy steers improved 8¢, finishing at 237¢/kg. Medium cows averaged 197¢, up 6¢/kg week-on-week.

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Nufarm slashes Euro operations

HOT on the heels of Doug Rathbone’s departure as Nufarm long-running managing director, the crop protection company has announced major cuts to its European manufacturing activities.
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Mr Rathbone had led the company for 15 years. He will receive a termination payment of $1,643,193 plus statutory entitlements. A search is already underway for his replacement, said chairman Don McGauchie, with group executive for commercial operations, Greg Hunt appointed chief operating officer and acting CEO.

Mr McGauchie yesterday reiterated the company’s “aggressive” plan to rein in costs, announcing a $100 million cost reduction program alongside a separate program to reduce working capital.

In the past two years Nufarm’s ­earnings have been battered by severe dry weather in Australia.

“The changes will result in a more efficient manufacturing base in Europe and will improve our competitiveness on a global basis”Closure of the manufacturing plant in The Netherlands and efficiency programs in France and the UK are proposed to shave about $23 million a year from Nufarm’s business costs.

The rationalisation will involve one-off restructuring costs of about $44m and will take place in the next 18 months.

It follows a similar re-organisation of Nufarm’s Australian and New Zealand manufacturing businesses last year, which involves cutting six production site down to three.

Plants at Otahuhu in NZ and Lytton in Brisbane will close before June 2016 and the Welshpool site in Western Australia closed at Christmas, to achieve annual savings of about $16m.

In Europe Nufarm is aiming to slash unit costs of one of its most important herbicide products, MCPA, as well as several other crop chemical products distributed globally.

“The changes will result in a more efficient manufacturing base in Europe and will improve our competitiveness on a global basis as well as reduce supply chain complexity,” said operations group executive, Elbert Prado.

The move was in support of efforts to improve the herbicide, pesticide and fungicide company’s working capital across its global network.

Capacity at the Wyke plant near Bradford in Yorkshire and Gaillon in France will be increased to compensate for the closure at Botlek in Holland, which will involve the loss of 50 jobs.

Nufarm’s European executive general manager, Hugo Schweers said the commitment to increase capacity in Wyke and Gaillon would support strong growth in the company’s European business brands in coming years.

“We will strengthen our capabilities and capacity in key product areas including insecticides and fungicides as we continue to expand our presence in European markets,” he said.

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WA drags national crop up

WESTERN Australia bucked the trend of lower than average production for 2014-15, with State bulk handler CBH recording its fourth biggest year of receivals on record.
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The surprisingly good performance in the west was critical in dragging national crop production for 2014-15 to near average levels.

CBH general manager of operations David Capper said WA growers delivered 13.52 million tonnes into his company’s network this season.

He said this figure was higher than expected, especially considering some areas had issues with a dry spring and others faced losses due to heavy harvest rain.

WA Farmers grains section president Kim Simpson said the production was a good result.

“There was obviously a fairly wide area that did have a good year, although there were people who did miss out, but it balanced out to be a fairly substantial harvest, although not as big as the year before.”

Mr Simpson said a key reason behind the production gains over the past few years had been a substantial increase in acreage in potentially high yielding areas.

“The more marginal areas have had their problems, but where we have seen the big changes is in traditionally grazing areas.

“With the good prices over the last few years, many have made the decision to switch some land from grazing to cropping.

“It’s important to overall production, because it is in the higher rainfall areas where they can grow big amounts of grain.”

Mr Capper said the harvest was about 3mt more than CBH’s 10 year average.

He said the run of good years would mean CBH is now cashed up to embark on a large capital expenditure program.

“To have had three above average crops over the past four years, that has given us the opportunity to invest in both maintenance and upgrade the network,” he said.

He said the most significant upgrade last year was a $15 million upgrade at Esperance, bringing in automated sampling spears and the ability to sample and weigh at the same time, speeding up turnaround times.

The harvest itself was one of the longest on record with rain events holding up proceedings and some growers still delivering small quantities of grain in the Esperance and Albany zones.

Mr Capper said other challenges this year were created by the closure of Tier 3 rail lines by Brookfield Rail, forcing CBH to outload the previous year’s record harvest via road before this year’s receivals began.

CBH and Brookfield Rail are currently undergoing negotiations for future rail access through the Economic Regulation Authority.

CBH is now entering a heavy export program until April and Mr Capper said he expected work to start on a new CBH Albany site in the coming weeks once final approvals were received.

Mr Simpson said there would potentially be a small drop in WA acreage for the 2015-16 if there was no late summer rain in reaction to both falling grain prices and rising livestock prices.

However, he said he did not think it would be a dramatic change in planting size.

“There may be some small changes, but those guys who have got out of livestock will probably struggle to get back in, given store livestock prices at present, and the vast majority of the area planted is locked in year after year.

“A lot depends on the next two or three months, if we can get the tail-end of a cyclone and get some soaking rain to put moisture into the profile leading into the 2015 plant.

“If we can get a good summer rain, it sets us up with the potential for a big crop.”

He said different parts of the State had recorded different standout crops.

“In the dry areas, it was the cereals that were better, as you would expect, but we also had some reports of very good yields in canola in areas with a bit better spring.”

He said the vast majority of the State’s crop was in the CBH network.

“There’s been a couple of loads go out through Bunge’s Bunbury terminal and there is some grain on-farm, but not a lot.

“The grain stored on-farm will mainly be by mixed farmers looking to store some feed grain in case of a dry autumn.”

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ACCC ‘out of touch’ on JBS, says Williams

NSW Nationals Senator John Williams is seething at the Australian Competition and Consumer Commission’s (ACCC) decision to not oppose the takeover of the Primo Group by JBS Australia.
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In a strongly worded statement today, Senator Williams accused the ACCC of being out of touch with market reality.

The decision is likely to cause headaches for the Nationals and Coalition government facing under increasing pressure to implement reforms that will alleviate pressures on livestock producers from constricted supply chain competition.

Senator Williams said the ACCC’s decision to not oppose the proposed $1.45 billion acquisition of Primo was “very disappointing in my opinion”.

He said as part of the review process, he lodged submissions on behalf of concerned people in the livestock industry and their “common worry” was that the takeover would lessen competition at the saleyards.

Read more: ACCC green lights JBS takeover

Senator Williams said the ACCC agreed there was “some lessening” of competition – but then claims “it is not a substantial lessening”.

He said the ACCC also claimed Primo wasn’t a strong competitive restraint on JBS and tried to justify the distance of more than 500 kilometres between Primo’s Scone abattoir and JBS’s Queensland abattoirs to support its case.

“This is out of touch with reality because cattle can and are transported many hundreds, even thousands of kilometres,” he said.

“I find it confusing that on one hand the ACCC will not oppose this acquisition, yet in the next breath says it is wary of the potential impact of the further consolidation of abattoirs.

“If that is true, why didn’t it act in this instance?

“From talking with farmers and those in the livestock selling industry I know this decision will be met with dismay and only time will tell whether it is right.”

Keeping an eye on future bidsThe ACCC received submissions from “a range of interested parties”, who expressed concern that the proposed acquisition would result in less competition in the fat cattle market in northern NSW and Queensland.

Farmers and meat retailers are increasingly frustrated by consolidation of meat processing activities which are limiting the choice of independent meatworks bidding for livestock or offering service kill options to producers or butchers.

“The ACCC undertook a detailed assessment and determined that Primo is currently not a strong competitive constraint on JBS,” ACCC chairman Rod Sims said.

“Furthermore, the increase in market share as a result of the proposed acquisition would be relatively small and JBS would continue to be constrained in the market for the acquisition of fat cattle by a number of alternative abattoirs and supermarket chains, in the northern NSW and southern Queensland region.”

While the ACCC determined that, in this instance, the proposed acquisition would be unlikely to raise significant competition concerns, the watchdog is wary of the potential impact of further consolidation of abattoirs.

“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” Mr Sims said.

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