Grains handler GrainCorp says it will “rationalise” its storage and logistics network, in the wake of Treasurer Joe Hockey’s rejection of a $3.4 billion proposed takeover by US-based Archer Daniels Midland.
Chairman Don Taylor said the company’s storage and logistics network needed upgrading, but GrainCorp would now have to do that without the significant funds ADM was prepared to provide.
“What’s recognised by everyone is that our country network – storage and logistics – is going to need some work done on it in terms of improving our customer service offerings,” Mr Taylor told reporters on Monday.
“That, obviously, is going to require some rationalisation.”
Mr Taylor said it was too early to say what effect the rationalisation may have on jobs.
The rationalisation would be around the storage and handling network; GrainCorp had no intention of selling its malting or edible oils businesses.
ADM said it would spend $250 million on GrainCorp’s business if it took over the company, including $200 million on its storage and logistics business.
The money was on top of $250 million already earmarked for investment by GrainCorp in November 2012.
Mr Taylor said that despite the rejection of the ADM takeover proposal, GrainCorp still had a very rosy future.
GrainCorp would like to further internationalise its business given that the domestic market was mature and competition regulations made it difficult to expand in Australia.
Chief executive Alison Watkins, who on Monday announced she would leave GrainCorp in January to become group managing director of Coca-Cola Amatil, said the rejection of the ADM proposal was “an opportunity lost for the industry”.
“Ultimately, it will be to the detriment of pursuing the many opportunities that we have in agriculture in Australia,” she said.
Mr Taylor said Mr Hockey had made his decision and now GrainCorp had to live with it.
But, he said, any suggestion GrainCorp had a monopoly in grains handling in the eastern states clearly was in correct.
“We have enormous competition, he said.
“Anyone who wants to go out into the bush today during harvest can see the options that the farmer has.”