The decision to block the foreign takeover of GrainCorp “defies logic” and has been labelled as silly and short-term by the union leader who represents workers at Australia’s largest grains handler.

Australian Workers’ Union boss Paul Howes accused Prime Minister Tony Abbott and Treasurer Joe Hockey of putting the unity of his government ahead of the national interest by scuttling US firm Archer Daniels Midland’s tilt at GrainCorp on Friday.

The decision to block the $3.4 billion takeover is being portrayed by critics as a sop to the National Party, who had actively campaigned against GrainCorp being sold to ADM.

Mr Howes has backed the buyout, saying while it would cause some short-term pain for his union members, they would be outweighed by the long-term gains to the agribusiness sector.

He said Mr Hockey had “wiped out $1.1 billion worth of value in our economy, in four hours”.

“About $650 million wiped off the share market, about $500 million in terms of ADM’s capital investment into Graincorp,” Mr Howes told Sky News on Sunday.

“Can you imagine the hysteria and the outrage if Labor had made a similar decision?”

Mr Hockey on Friday said “now is not the right time” for the takeover because of the impact it would have on competition, and because it risked undermining public support for foreign investment.

The Foreign Investment Review Board was also split on the buyout.

Mr Howes said the “silly” decision “defied logic”, and sent a “terrible, terrible” message to the rest of the world and the agribusiness sector.

“I’m a union leader, a proud member of the Labor party, and leading one of the oldest unions in the country, and even I can see the sense in this deal going ahead,” Mr Howes said.

“For Joe Hockey to make this call it demonstrates that for Tony Abbott, the unity of his coalition is far more important to him than the future of this country.”

Labor’s trade and investment spokesperson Penny Wong said the decision “certainly delighted the National Party and (deputy leader) Barnaby Joyce”.

“They said they’d be open for business,” she told ABC Television.

“It’s quite apparent from the decision that the footnote to the `We are open for business’ sign was only if Barnaby Joyce and the National Party agree.”