The Conundrum Of Foreign Ownership
A “conundrum” is a confusing or difficult question or problem.
There are 2 clear sides of the fence in the Graincorp and Warrnambool Cheese foreign ownership challenge.
1. We believe in Capitalism and Free markets. Business (including property/farms) owners should be able to sell to whom and for how much they wish. The market will work itself out.
2. We believe in Socialism and Public Interest. There are more than business owners who should be considered in the sale of a business. Governments are employed to assist in such isues.
The conundrum is that;
people (voters) would like to be able to sell their own businesses/farms to whomever and for what they wish. They also don’t want governments overseeing or involved in their lives as much as possible. However, many of these people live in a society where they share and pay for services with others their society. They also believe that there should be a Public interest considered for many things that go-on in their society. These things might include whether some people pay more or less tax than others, whether tax monies should be spent in certain areas such as health, education, employment opportunities, defence, living standards, etc The conundrum exists because some of these things may be impacted by the sale of businesses to foreign groups. These issues are confronting the car industry as well as they are controlled by foreign interests that impact on social factors including taxes and employment.
Robert Gottliebson rightly asks, “Will pay dirt slip through farmers’ hands?” http://www.businessspectator.com.au/article/2013/11/25/agribusiness/will-pay-dirt-slip-through-farmers-hands He says that, “When an international giant acquires the farmers’ supply chain then, longer-term, local farmers will be in competition with growers overseas for market share — particularly in times of glut.” And, “When your infrastructure is controlled by an international giant it means that rewards pass from farmers to the supply chain — longer term that will apply to both American and Australian grain farmers because one is played off against the other. In sugar, farmers in Brazil have received a beating from this process. In Australia sugar farmers, for the most part, still control the ports so they have been insulated but they are in a weaker position because of the sale of the mills.”
He continues, “City slicker Joe Hockey not surprisingly sided with shareholders and managers in Warrnambool by approving the global bid and making it tougher for the farmers’ Murray Goulburn by deliberately putting them at an unfair disadvantage to the global giant. Hockey is still deliberating on GrainCorp.”
The ongoing challenge for (Australian) farmers is to decide whether as a voting group they wish to throw their weight behind the Joe Hockey’s of the World or be part of a more flexible socially aware group.
What do you think?
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Does Deputy PM Truss Also Oppose Foreign-Owned Livestock Processors?
This Graincorp sale to Archer Daniels Midland (ADM) has extensions that don’t seem to have been made yet. The issue is about the sale of an Australian company as distinct from land holdings.
The current Deputy Prime Minister elect Mr. Truss and his new National Leadership contender, Mr. Joyce, have both opposed the sale. (Former PM, Mr. Rudd also expressed concerns but that is academic now). However, several questions are raised here as Graincorp’s business is buying and on-selling Australian primary commodities as distinct from owning their production on Australian landholdings. It would be interesting to know if Mr. Truss and Mr. Joyce are also against foreign-owned livestock processors dominating the Australian market? The World’s largest processor is also Australia’s largest processor. Brazilian company, Swift, bought Australian Meat Holdings (AMH) not so long ago when the Mr. Truss and Mr. Joyce were last in Government.
One one hand, we have the Liberal Party’s heartland of financial analysts focussed on share-holder returns and money flow around the Globe. They are pumped-up about Graincorp being sold to ADM and talk about US and Chinese capital being attracted to Australia’s primary commodities production. They state is as gospel. However, it is is just one view. There has been a tremendous outflow of Australian rural intellectual property (IP) and seedstock to Indonesia and China over the past several years as they steam-ahead in creating their own massive dairy and beef herds. (Just what does a Chinese dairy herd (based on Australian genetics ) of 100,000 head look like?!!) On the other hand, there is the Truss/Joyce view against the sale of an Australian grain desk.
Global corporates have made vast fortunes in moving their capital globally in two main ways: Purchases of additional revenues (which seems to be the Graincorp rationale) and use of off-shore low-cost land and labour (farm producers and processor hands), which seems to be the AMH processor model). However, the Australian Competition and Consumer Commission has approved the deal on the basis that, because GrainCorp and ADM aren’t competitors in this market, there would be no substantial lessening of competition.
We all know personal relationships make the World go ’round and parliamentary parties are just tools to enable the promotion of personal philosophies. The Foreign Investment Review Board simply provides advice to the Treasurer, which means Joe Hockey can now approve the deal. However, Tony Abbott is his boss and a free marketeer (as long as it suits him electorally given he has also spoken about socialistic farmer assistance). Mr. Abbott is also a close personal friend of Mr. Joyce, attending the elite Sydney Catholic school, Riverview. with him. Mr. Joyce also has a close friend in mining magnate and free marketer, Gina Rinehart. Given the votes are now in and rural votes are not needed for a few more years, these cards would seem to be falling towards a sale.
What would you do?
Please leave your comments below.
A Moree Farmer Is A Greens Candidate Against Negligent Nationals
With Labour vs Minor Parties’ Coalition running at around 50:50, The Greens could well have a role in another hung parliament scenario.
Their initiative on rural Australia policy in the Federal election may be worth checking-out. (Unfortunately, Labour or the minor parties’ Coalition haven’t yet presented something of substance to be considered here).
Moree husband and wife cotton farmers, Rob and Penny Gurley have joined the Greens with Penny running for the Senate. They claim that the Nationals have failed in protecting Australia’s valuable water and land resources. http://www.theland.com.au/news/agriculture/general/elections/moree-farmer-joins-greens-ticket/2667701.aspx?src=rss
Their new party, as distinct from yet more political rhetoric, have pronounced several food security moves that are fully costed by the Parliamentary Budget office*:
– Increase Commonwealth funding for agricultural research and development by 7 per cent each year (cost, $300 million);
– Fund a national network of 180 agricultural extension officers ($76.5 million);
– Award grants to rebuild local food systems connecting communities to their farmers ($65 million);
– Lower on-farm costs by funding the switch to renewable energy and greater energy efficiency ($100 million);
– Establish an independent National Biosecurity Authority and Biosecurity Commission ($30 million);
– Run a national food waste reduction campaign, increase funding for food emergency relief, and provide funding for research into financial mechanisms to avert avoidable post-harvest food waste ($20 million);
– Fund up to 800 new school kitchen garden projects and increase funds for adult nutrition education programs ($35 million).
* From a summary in www.businessspectator.com.au
I wonder whether this might change the rural culture of deriding The Greens as “nutter tree-huggers”. Perhaps they might help farmers to hug the trees and land to the benefit of both themselves and the nation.
At least two rural producers have decided it’s time to consider some alternatives to the City-based Team Abbott & Bishop who yet again seem to be assuming complacent minor party rural support without offering anything solid in return,
What do you think?
Please leave your comments below>
Conflicts Of Interest In (Rural) Directorships
Some natural enemies are obvious;
– Guns & Hippies
– Wild dogs & Lambs
– Coal miners & Grandchildren
– Livestock farmer producers & Processors
– Telco’s & Phone users
(That is why it is strange that Meat and Livestock Australia is paid by by both producers and processors to represent both their interests when there are obvious conflicts – It hasn’t added agents…yet)
There are other less obvious conflicts. Chemical companies work to maximise usage and profits from farmers who are increasingly finding alternatives such as minimal-till fallow (cropping). Similarly, grain companies work to maximise their usage and profits from farmers who wish to minimise grain handler fees and maximise sales channels. Telephone companies like Telstra have long been viewed by many as gouging rural constituents for higher revenues than city counterparts.
It can seem unfair and un-Australian to pick on an individual. We only refer to Donald McGauchie as an example to question how Australia’s producers seem to want an improvement in their lot while allowing groups run by people like Mr. McGauchie to flourish at their expense.
Mr. McGauchie came to light when a past president of the National Farmers Federation he formed a joint venture with Patrick Stevedoring with a call to decrease dock workernumbers by 50%. (Interestingly, despite their support, most stock producers don’t have a need for wharves and ships).
His actions gained him accolades from Australia’s conservatives, including its farm producers.
Mr. McGauchie has since worked for several groups who aim to maximise their usage and profits from farmers. This includes Chairing Telstra, Nufarm, AACo, GrainCorp…
This is not dissimilar to people like farmer and former National Party Head and Deputy Prime Minister John Anderson who heads-up fracking in an industry that has been criticized for commandeering of farm lands and concerns over subterranean water supplies.
The general public wants to support farmers but farmers make it difficult. While they continue to blindly accept such conflicts from within their ranks they will always find it difficult to gain priority support from the majority of Australia’s voters who are also their end-consumers and ultimately determine government policies.
It might seem radical to some but it is logical to many non-farmers in 2013, that Australia’s farmer producers have more in common with the daily-grind of wage-earning suburban middle Australia than the likes of the Corporate Donald McGauchies and John Andersons of the World.
Australia’s farmers are now competing more with;
– the supermarket duopsony
– massive chemical costs
– fuel costs
– grain-handling costs
than Brazilian and Indonesian labour rates against which their personal labour is measured.
Elastic-sided boots and check shirts are fine as fashion choices but just as Statesmen and LTD cars are relics of past fuel standards, voting for people who are conflicted with the best interests of farmers should be relics of past glories.
Australia’s farmer producers should call-out those who are eating at them like internal cancers and move with the times into a brave new World of politics. It would benefit both them and their markets’ consumers.
What do you think?
Please comment below.
New $420 million Farmer Loan Package Won’t Fill The Food Bowl
This Government is attempting to assist maintenance of Australia’s farming operations but in fact it has high-lighted that Australia is far from being a realistic Asian food bowl.
80 farming operations worth more than $1 million across the nation are either in receivership or some kind of financial distress. http://www.businessspectator.com.au/news/2013/4/29/agribusiness/australian-farmers-under-pressure-report
Large corporates operate with tax concessions, supposed economies of scale and grants from groups such as MLA e.g. MLA’s grants to AACo. but still they struggle to operate profitably. What hope for smaller farms?!
Loans are appreciated in that they will assist in keeping the banking wolves from the door. However, loans, new machinery and more land won’t change trading conditions such as the fierce control of the Supermarket duopsony or low costs of competitive overseas labor markets that Australian farms will never match because slavery is wrong, (would you seriously be happy to use 457 Visas to better your situation on the backs of less fortunates!)
And that’s without discussing the Graincorp sale to overseas interests who can afford to aggregate and cost-average production facilities globally while Australians simply provide labor to their huge hedge-fund-like operations.
[Makes you think farmers should have woken-up years ago and instead of aligning themselves with the silver-tailed private schoolboy ruling class, chosen perhaps the Bill Kelties of the World to examine their plight on a global labor basis rather than on “dead” capital land values. Let’s face it, those farmers who have been voted-in by their supposed farmer ‘peers’, ended-up selling them out e.g. John Anderson is now fracking the place as far as he can see!]
What do you think?
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The ‘Food Bowl of Asia’ Is Fool’s Gold !
There is a difference between wishing our primary food production will become the “Food Bowl” of Asia and its actually possibility.
Politicians have a way of pushing our deep-seated emotional buttons, even at the expense of our logical rationality. We might want to believe our rural industries have a golden era just over the other side of an election, but do we really believe it?
Politicians will be hitting us hard with promises they can’t keep (and have no intention of keeping!) over the next several months but there are several simple reasons why it is just not realistic.
1. Our arable regions are becoming drier – Whether you are a client skeptic or not you will be waiting a long time for more reliable rainfall in most of Australia.
2. The Northern regions may get wetter but still only in a short Summer time “window”.
3. We don’t have extra production capacity
i) Can your farm hold more cattle, sheep, pumpkins or carrots?
ii) Farmland is being taken-up by “Hobby” acreages & home subdivisions.
For more information click to read this Businessspectator article
Primary production including cattle, sheep, fruit and vegetables parallels digging dirt out of the ground and sending it off to China and India where they add value. We currently create product as inexpensively as possible. However, our inputs are always going to be high. As long as we continue to be a successful economy our dollar will always better Third-World competitors. And our labor costs will also always be higher – if we want to have a good standard of living and consumers who can afford to buy our product at Home. And this will hold no matter which political party governs!
The only way to combat this is to value-add. It’s a simple proposition and one primary producers refuse to address. The news from Victoria today is that 3 quarters of a million stone-fruit trees are being plowed into the ground around Shepparton, the home of stone fruits. Local produce can’t compete even within Australia with cheap overseas imports. The solution, value-add the product or give-up.
Unfortunately, political opportunists working to our base human fears, biases and dreams, prolong the pain by irresponsibly promoting unrealistic goals, such as Australia being the food bowl of Asia or the World!
We need to think much harder about addressing the issues than simply voting-in governments who sell us something that sounds good but has no hope of rewarding us.
What do you think?
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Are We Scared Of Foreign Farm Investments?
Foreign investment in farming is a tricky issue. Many believe that if you own something you should be able to sell it to whomever you wish. That’s part of the capitalist system. However, being part of a society means we have all sorts of responsibilities to others who live in the society and there are rules that govern our behaviour. As a result, no land title holder is actually allowed to do whatever they like with their land. e.g. They can’t farm drugs on it and they can’t denude it of native bush. The assets in fact, are not to be used against the national interest. So, presumably, if foreigners buy Australian land, they need to follow the same rules as if Australians owned it. I guess this why David Olsson: Lawyer & Chairman of the China-Australian Chamber of Commerce, Beijing stating that,
“Just because a company is owned or controlled by foreigners does not mean that the assets cannot be utilised in the national interest”, is a bit of a furphy.
It sounds feasible on the surface and I would like to think it possible. However, I wonder how it works in practical terms. Is it similar to Alcoa that has received multi-millions in Australian government assistance to employ Australians but is able to ship its profits off-shore? Wouldn’t it be better if we could keep the profits in Australia to spread across even more jobs? I think there are other related issues to consider as well. e.g. For years Australian dairy & beef seedstock has been sent to China & Indonesia? With the exception of the immediate sales value, how does that help our Australian society?
If the created wealth of a country isn’t kept in that country my first thoughts are that apart from that country e.g. Australia, not benefiting as fully as possible from the success of the venture (as profits are put to work off-shore), the country is open to other abuses. Australia has a problem at the moment in that because of its high standard of living, its labour costs are relatively high. If they weren’t then the economy would be in the same shape as Europe and the USA as there would be even less flowing funds than there are. My concern with carte blanche foreign farm/asset investment, is that Australia again gets screwed on price which in turn relates back to labour rates which puts us at a severe disadvantage to 3rd World countries who will always beat us on labour rates. Ha! Even China is now apparently losing labour to Mexico and Africa now.
Read David Olsson’s article here
And just so we don’t all go beating-up on China as a leading global culprit here, Prof Mike Peng, Uni of Dallas Texas, discusses the difference between various national investors. here
What do you think?
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Video First: Beef Costs, Farm Gate to Retail Shelves
The Australian Beef Association believes the ACCC and politicians are wrong about complexity in the meat supply chain. It says this is why politicians continue to neglect the supermarket meat issues.
In what it believes to be a first, the ABA have posted on their web site a power point presentation to give an insight into the cost of a live beast at the farm gate to meat on retail shelves.
See what you think? And leave a comment below.
MLA AGM: Fiduciary Responsibility or Farcical Tragedy?
fiduciary. 1) n. from the Latin fiducia, meaning “trust,” a person (or a business like a bank or stock brokerage) who has the power and obligation to act for another ….
The question is whether the power ceded MLA by Parliament and overseen by ASIC, is being used as intended? I am sure MLA wouldn’t be intentionally acting against the best interests of its funder tax-paying members. However, the way it seems to measure its effectiveness is through advertising indicators, I would suggest its producer members would prefer different measures e.g. real on-property returns and price/kg paid by processors since the advent of MLA.
Producer members on the whole don’t vote at the MLA AGM, (last year 2.5% of levy payers obtained their voting entitlements) leaving huge voting power in the hands of their natural enemies, the processors who can and do also vote and some large producers, many according to Australian Beef Association receive MLA funding. (Processors have their own organisational and political Association but are allowed to vote at MLA because their pre-slaughter holding areas have a PIC).
This obviously means that MLA has a serious philosophical conflict as it is not going to be able to focus just on the needs of producers if it has also to listen to its processor members.
Why was MLA implemented? I think it was to look after producers who in turn would pay a tax to support such. I don’t think producers were to be taxed to have MLA look after the processors as a primary goal alongside producers. (Of course processors need to be considered as an important part of the supply chain but from a producer’s perspective).
I think it would help MLA to side-step the political brawling it is involved in with producer groups and start again with a focus on the producer. However, it would seem the only way this is now possible is to dump MLA and replace it with a new group with a producer focus. It happened in the Wool Industry and perhaps the time has come for meat livestock.
(The MLA AGM is at Longreach on November 17. Australian Beef Association is urging all producers with voting entitlements to forward them their proxies to be used to gain a focus on producer needs Ref:ABA Website).
What Do You Think?
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