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In Australia, wheat farmers fight potential takeover by Archer Daniels Midland

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In Australia, wheat farmers fight potential takeover by Archer Daniels Midland

Tim Wimborne/REUTERS - Freshly cut wheat stands under approaching storm clouds near Roma, 267 miles west of Brisbane in this Oct. 29, 2011, photograph. Australian wheat growers look set to miss out on the full benefits of a spike in prices on the back of the worst drought to hit the U.S. Midwest in more than 50 years after reducing plantings and selling stocks earlier in the year.

By A. Odysseus Patrick, E-mail the writer

SYDNEY — Australia’s wheat farmers are used to adversity: the loneliness of living in a sparsely populated continent, droughts so severe they turn soil infertile for years, swarms of grasshoppers that can strip crops in minutes.

Now they are engaged in a new and different fight — against an American food giant.

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Archer Daniels Midland — its eye on a hungry Asia and Middle East — wants to make the largest acquisition in its history: a $3.3 billion takeover of GrainCorp, the last big Australian agribusiness not owned by foreigners.

If successful, Archer Daniels Midland will extend its influence over the global food chain to the world’s fourth-biggest wheat crop.

The plan makes strategic sense, financial analysts say. The Decatur, Ill.-based company would enhance its ability to shift food staples around the world to respond to fluctuations in demand. Australia’s high-quality wheat, which is popular across Asia for making noodles, is harvested from October to December, while crops in the Northern Hemisphere are growing.

The acquisition would also provide a geographic hedge against drought, giving Archer Daniels Midland greater confidence in fulfilling wheat-supply contracts, which can run as long as 10 years.

GrainCorp controls about 60 percent of the transport and storage of Australian grains — mainly wheat, but also barley and canola. It is the world’s fourth-largest producer of commercial malt, which is used in beer and whiskey.

Australia’s embrace of foreign investment has helped make it one of the most prosperous societies in the world. But the attempted purchase of GrainCorp is causing great angst in rural areas, where the company is viewed as a symbol of national pride. Many of Australia’s farmers hate the prospect of being reliant on a foreign-owned multinational and have begun a fierce campaign to persuade the government to veto the deal.

Some have even invoked a 2009 movie starring Matt Damon, “The Informant!,” which recounts an FBI price-fixing investigation into Archer Daniels Midland in the 1990s that led to a large fine and prison terms for some executives.

“Their history would tell you they are bullies,” said Dan Cooper, a grain farmer from the tiny town of Caragabal, 250 miles west of Sydney. “It will be a monopoly in foreign hands.”

Cooper is helping coordinate national opposition, lobbying government officials and briefing media outlets. The campaign is run by several long-established farmers organizations.

The negative publicity seems to be influencing public opinion. A survey in July in the Land newspaper found that only 5 percent of grain farmers trust the American company’s record.

Questions and accusations

Australia’s antitrust commission doesn’t buy the monopoly argument. It has cleared the deal on the reasoning that GrainCorp wouldn’t be any more powerful under U.S. control than it already is.

That decision hasn’t swayed some lawmakers representing rural interests. When Archer Daniels Midland executives appeared before a parliamentary hearing in June, the chairman of the committee recited the company’s regulatory missteps over the years, including allegations of fraud, tax avoidance and corporate espionage.

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