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Shunned by Hockey, ADM heads to Asia

14 Jun, 2014 04:00 AM
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US agricultural giants ADM are aggressively pushing into Asia unveiling plans to expand their presence in the region.
US agricultural giants ADM are aggressively pushing into Asia unveiling plans to expand their presence in the region.

US agriculture company Archer Daniels Midland is aggressively pushing into Asia after Treasurer Joe Hockey blocked its takeover of Australian grains handler GrainCorp.

The company has unveiled plans to expand its presence in the region which includes building two factories in China.

It comes after ADM bought the 20 per cent it didn't own in European grain business Alfred C. Toepfer for $A119 million.

It said the move would give it more firepower in the Asia-Pacific.

Combined, the pair will deal in more than $US14 billion in commodities a year in the region.

The company had planned to invest $250 million in Australia's grains network if its $3 billion bid for GrainCorp was successful.

But Mr Hockey barred the takeover last November, saying it was "contrary to the national interest", prompting criticism from business leaders and even a Coalition colleague, Victorian Agriculture Minister Peter Walsh, who said it was a decision made "on the hop".

A company spokesman declined to say how much the company was spending on the expansion.

ADM plans to build a sweetener and soluble-fibre manufacturing complex at the port of Tianjin, in northern China, which will open in 2015.

The company's chairwoman and chief executive, Patricia Woertz, said it was responding to increased hunger for high-quality food products from China's rapidly growing middle class.

"As populations and incomes across Asia continue to rise, diets are evolving, " Ms Woertz said. "With that shift comes an increase in demand for crops and other products from agriculture.

"We're taking a series of actions to enhance our ability to

efficiently serve that growing demand."

The company is also building a factory in the country's south.

The move comes as ABARES forecast the national winter crop will fall 12 per cent to about 38.8 million tonnes, compared with last year, as hotter and drier conditions are anticipated.

Wheat production is expected to fall nine per cent to 24.6 million tonnes, while barley is expected to plunge 22pc to 7.5 million tonnes.

Canola is forecast to drop eight per cent to 3.5 million tonnes.

A GrainCorp spokesman said it was too early to predict the effect on

its balance sheet.

"Given the winter crop will not be harvested until the end of the year, it is too early for us to put a figure on our expectations for the harvest," the spokesman said.

"Conditions have generally been favourable in the southern regions and the crop has had a good start there.

But as always, it will need good finishing rains. Northern areas could do with some more rain in the

near future."

NQR

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