Communist Party of Australia

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Issue #1618      November 13, 2013


Farmers hit by global agribusiness

With the rapid growth in trade with China and other Asian nations, there is increased interest by foreign and local corporations in agricultural production. Dairy produce is already Australia’s third largest source of agriculture exports after beef and wheat.

There is a battle for control over Warrnambool Cheese & Butter (WCB) group with Bega Cheese, Murray Goulburn (owned by Australian dairy farmers), the Canadian giant Saputo, New Zealand-based Fonterra and the Japanese Kirin Corporation in the front line.

The multi-billion dollar Saputo empire is the 10th largest dairy producer in the world and has been looking for some time to find a way to penetrate the Australian market as a means of boosting exports to expanding Asian markets.

Bega, Murray Goulburn and Lion already own around 45 percent of shares, posing problems for Saputo or Kirin to gain a majority share-holding for absolute control. WCB manufactures a range of products for Lion including the Coon and Cracker Barrel brands. Kirin already owns National Foods and through it the Dairy Farmers company in NSW.

The signing of free trade agreements with China, Japan and South Korea, and the Transpacific Partnership Agreement could also see bidding for Australia companies escalate.

The National Party is up in arms over the possible outcome of a free trade agreement with China. China is asking for the same treatment as the US when it comes to investment. Any investment proposal over $1 billion from a US company for farmland has to be referred to the Foreign Investment Review Board and then approved by the government. At present, the threshold for the same investment by a Chinese company is $248 million. The National Party is strongly opposed to raising it. Victorian Nationals are proposing that there should be a limit of $15 million on foreign ownership of rural land, regardless of its country of origin.

Some National Party members have come out strongly against Archer Daniels Midland’s plans for a $3.4 billion takeover of GrainCorp. ADM is a large US-based global food processing and marketing corporation which also handles transportation and storage of grain. GrainCorp would suite its Asian expansion plans.

GrainCorp is the largest publicly listed agri-business on the Australian stockmarket with control of about 60 percent of the transport and storage of Australian grains – mainly wheat, but also barley and canola. It has its origins in the Australian Wheat Board which provided a single marketing desk for Australian wheat exports. For many decades it protected farmers during periods of drought or low prices on global markets with an averaging system of payments over good and bad years.

Its monopoly over exports provided considerable market power and efficiencies and was of huge benefit to growers. The single desk removed counterproductive competition, such as preventing a downward spiral of prices by desperate farmers competing for sales when prices were low.

Competition policy saw deregulation of wheat marketing in 2008, including the removal of the single desk and entry of other competing players. Already a number of smaller growers have gone out of business or been taken over as the agro-industrial businesses move in.

Deregulation will continue to drive smaller farmers off their land, whether it be wheat, milk or other products. The lifting of restrictions on imports, which has already crucified so many fruit farmers, will continue to take their toll.

Competition and deregulation policies are feeding and empowering the global agribusinesses and putting Australian farmers out of business. The sell-off of millions of dollars of land to foreign interests, in fact to private interests, is further removing control over the usage of that land by the Australian people. The profits will be largely exported, providing little benefit to the people.

The distinction between Chinese investment capital or US or Japanese capital is not the key question. Once it is privately owned and profit and market domination become the prime motives, the nationality of capital is secondary. Private ownership, lack of planning, monopolisation and deregulation are the key questions.

Next article – How much is a wharfie’s life worth?

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