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Treasurer Joe Hockey has prohibited US food giant Archer Daniels Midland’s takeover bid for GrainCorp.

Mr Hockey said his decision on the $3.4 billion offer was reached after “long and careful” deliberations.

“Since coming into government, I’ve made decisions on a number of foreign investment proposals and those decisions have facilitated a significant amount of new and welcome foreign investment in Australia,” Mr Hockey told reporters in Sydney on Friday.

Of 131 significant foreign investment applications the government has dealt with, “this is the only application we have prohibited”, he said.

Junior coalition partner the Nationals and some rural Liberals have opposed the GrainCorp sale.

Mr Hockey said the Foreign Investment Review Board (FIRB) was split on the takeover.

“The proposed acquisition of GrainCorp has been one of the most complex cases to come before the FIRB and it is one of the most significant proposed acquisitions of an agricultural business in Australia’s history,” he said.

While acknowledging foreign investment had underpinned Australia since settlement, Mr Hockey said members of the FIRB could not agree on a recommendation in relation to the proposal.

“For me to reject this proposal, I had to determine that the acquisition of GrainCorp by ADM is contrary to the national interest,” he said.

“Based on all the available information, I have now made that decision.”

Mr Hockey said 85 per cent of eastern Australia’s bulk grain exports are handled through GrainCorp’s ports network.

He said Graincorp owns more than 280 up-country storage sites and seven of the 10 grain port terminals in New South Wales, Queensland and Victoria.

Growers in eastern Australia have expressed concern that the acquisition could reduce competition and impede growers’ ability to access the grain storage, logistics and distribution network, Mr Hockey said.

“Given that the transition towards more robust competition continues and a more competitive network is still emerging, I consider that now is not the right time for a 100 per cent foreign acquisition of this key Australian business,” Mr Hockey said.

He said allowing the sale to proceed could risk undermining public support for the foreign investment regime.

Mr Hockey said his decision was made in the full knowledge of ADM’s enhanced takeover offer, made public earlier this week.

The treasurer acknowledged that the law allows him to approve foreign takeovers with conditions.

“I have carefully examined this option but consider there are no appropriate conditions that would mitigate the national interest concerns associated with the proposed acquisition,” he said.

“Indeed, imposing conditions would have meant introducing additional regulation for one market participant and this would not be in the interests of the Australian grains industry.”

Mr Hockey says ADM – which currently owns just under 20 per cent of GrainCorp – has advised him it wishes to be involved in the Australian marketplace for the long term.

He said he had also decided not to cap ADM’s shareholding of GrainCorp at its current level.

“I’m inclined based on current circumstances to approve any proposals from ADM to increase its shareholding in GrainCorp up to an interest of 24.9 per cent,” he said.

That would also allow ADM to build stakeholder support for potentially greater participation in the future, he said.

He denied his decision was a vote of no confidence in the ACCC, which did not oppose the takeover. He said his considerations had been much broader than those of the ACCC.

And he rejected any suggestion that the decision sent a message that the government was “closed for business”.

“The fact of the matter is we need foreign investment, we welcome foreign investment but it’s got to be investment that is not contrary to the national interest,” Mr Hockey.

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