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All eyes on PGG Wrightson takeover

Federated Farmers of New Zealand

Friday 4 February 2011, 4:50PM

By Federated Farmers of New Zealand

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Federated Farmers is considering media reports that Canadian agricultural giant, Agrium, may be the latest suitor for rural services company, PGG Wrightson.

“We’re watching these overtures for PGG Wrightson because the maintenance of competition is a must,” says Philip York, Federated Farmers economics and commerce spokesperson.

“We want New Zealand’s farmers to have the most cost effective rural services sector possible. The fact the suitors are Chinese and Canadian again raises big questions over the depth of New Zealand’s capital markets.

“Farmers spend over $13 billion each year on farm inputs so maintaining a highly competitive rural services sector is vital.

“We need to look especially closely at Agrium because it already owns 50 percent of rural services company RD1.

“This means we need to get our heads around what this means for combined branch networks when mapped against the major cooperatives, Farmlands and CRT.

“Another factor is the grain and seeds sector in general, given Agrium acquired Australia’s AWB last August for AUD1.2 billion. Simply put, it’s a major player in Australia.

“Ensuring we get level playing field for our grain and seeds farmers is something I will be talking to Ian Morten, Federated Farmers Grain & Seed chairman about.

“But it frustrates me ‘New Zealand Inc’ seems to miss the opportunities in global agriculture that overseas investors just seem to get.

“Out of the top ten exports, agriculture accounts for an astonishing 74 percent, or $20.9 billion out of $28.1 billion. This underlines the agricultural sector’s importance to the national economy.

“So shouldn’t we be the ones making moves like this?” Mr York concluded.