Lure of cash may split grain industry

Brad Thompson, COMMENTThe West Australian
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COMMENT: It is a question that has the potential to drive a wedge between families and farming neighbours — do grain growers take the cash or stick with the co-operative?

Plenty of growers were doing the sums after Australian Grains Champion launched a guide to what growers might get if its GrainCorp-backed bid to corporatise CBH succeeds.

It was described as a calculator on the AGC website but it was in reality a big carrot. If you keyed in $3 billion as the value of CBH, it showed the average grower delivering 2500 tonnes of grain a year would get $650,000 from a public listing.

If you keyed in 30,000t, the figure skyrocketed to $3.95 million, with $790,000 in cash and $3.16 million in shares.

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Some will see that as pie in the sky, and the initial reaction from growers on social media yesterday was mainly negative.

GrainCorp chief executive Mark Palmquist admitted it would be tough to win over 75 per cent of WA growers and make the proposal work.

The proposal would create an ASX-listed agribusiness based in Perth, with GrainCorp as biggest shareholder. GrainCorp’s biggest shareholder is US conglomerate Archer Daniels Midland, which had its $3.4 billion takeover bid blocked by the Abbott government but sees a ray of hope in Malcolm Turnbull.

Critics of the AGC proposal will raise the poor state of grain infrastructure on the east coast, where many growers envy the CBH network in WA.

Supporters will argue that CBH’s value will diminish as competitors enter the market and that, just like selling a tonne of grain, timing is everything to get the best price.

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