Breeder acquisition sparks concerns
Plans to place two key crop breeders under the same corporate umbrella have been labelled “concerning” by the competition watchdog and WA grain groups.
Australian Grain Technology kick-started negotiations to acquire wheat and barley seed breeder InterGrain in December.
Both companies have spruiked the potential transaction as a way to ensure the Australian grains industry benefits from world-class breeding operations.
But the Australian Competition and Consumer Commission released a statement last week which said its “preliminary view” found the plan concerning.
It said the takeover could substantially lessen competition for breeding and developing barley seed varieties for the Australian market.
ACCC commissioner Mick Keogh said the price farmers paid for wheat and barley seed could rise.
“The proposed acquisition would combine the only two significant players in the breeding and development of barley in Australia,” he said.
“The ACCC is concerned the loss of competitive tension may allow the combined entity to reduce investment in the research and development of new barley seed varieties.
“(It could also) raise the levels of the royalties it charges farmers for using its seeds.”
The ACCC has circulated a range of questions to grower groups and called for second submissions.
WAFarmers’ grains section submitted a proposal to the ACCC in February.
Section president Duncan Young echoed ACCC concerns about a breeding “monopoly” and potential “price gouging”.
“Our main concerns were a monopoly on breeding ... the vast majority of barley lines would be owned by one entity, lessening competition,” he said.
“Our second concern was because the lessening of overall competition in the market place, there could be a potential for price gouging for royalties.
“We will put in a second submission and will make comment on their next lot of questions, and wait to see the outcome in May.”
AGT is Australia’s largest wheat breeder and also operates an expanding barley breeding program, supported by the world’s largest wheat breeder Limagrain.
InterGrain operates a number of wheat and barley breeding programs at its breeding facilities in Western Australia, South Australia, and Victoria.
One of the crop breeding industry’s key competitors, University of Adelaide, stopped its barley breeding program last April.
The move meant AGT and InterGrain became the two key wheat and barley breeders in Australia.
AGT, established in 2002, is owned by the Grains Research and Development Corporation and France’s Limagrain.
Intergrain, established in 2007, is owned by the State Government and GRDC.
In announcing the negotiations in December, AGT chief executive Haydn Kuchel said the deal would deliver better genetic results to farmers.
“Bringing InterGrain wheat and barley breeding expertise, germplasm and people into AGT will help to strengthen our breeding team while accelerating our impact in barley and on noodle wheat genetics,” he said.
In December, InterGrain chief executive officer Tress Walmsley said growers could be excited about the future of cereal breeding based on combined expertise.
“It is early days but there is potential for this transaction to ensure the Australian grains industry is serviced by a plant breeding company with the resources, expertise and scale to develop the best possible new varieties for local conditions over the long-term,” she said.
The ACCC will accept second submissions until April 19 and hand down its final decision on May 25.
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