Australia food security not at risk from ADM deal-GrainCorp

Reuters

* Australia not risking food security - GrainCorp CEO

* Adjusted net profit A$175 mln vs A$205 mln

* Still awaiting regulatory approval for A$3 bln ADM bid

* Sets final dividend of 20 cents per share

By Colin Packham

SYDNEY, Nov 14 (Reuters) - GrainCorp's chiefexecutive said fears Australia would risk its food security byallowing a A$3 billion ($2.8 billion) bid for the grain handlerby Archer Daniel Midland Co are misplaced, as itforecast a tougher year ahead.

Some Australian farm groups and politicians from within theruling Liberal-National coalition opppose the takeover, which isawaiting a final decision by Treasurer Joe Hockey after advicefrom the country's Foreign Investment Review Board.

"Australia of any country in the world has the least to beconcerned about when it comes to food security," GrainCorp ChiefExecutive Alison Watkins said on Thursday, as the group revealeda 15 percent fall in adjusted full-year net profit to A$175million.

Deputy prime minister Warren Truss, the leader of therural-based National Party, said earlier this month the bidraised questions about Australia's capacity "to make decisionsabout whether we want to expand our grain industry, whether wewant to be the food bowl of Asia."

Hockey has imposed a deadline of Dec. 17 for his decision,but a rejection of the bid would fly in the face of the newlyelected government's pledge that Australia is open for business.

Watkins said Australia exported two-thirds to three-quartersof the food it produced.

The full-year profit for GrainCorp, the largest handler ofgrains on Australia's east coast, was in line with analysts'forecasts after a smaller harvest dented revenues, but Watkinssaid the current season would be challenging for many growers.

TOUGH YEAR

"Drought conditions in Queensland and northern New SouthWales have negatively impacted yields in those regions, whilerecent frosts have affected many areas further south," she said.

"After a couple of big years, GrainCorp's storage andlogistics network must be well prepared for the much tougherperiod ahead."

GrainCorp is one of numerous Australian agribusinesses tohave attracted international interest in recent years, withbidders betting on the country's ability to supply fast-growingAsia with quality food.

ADM is looking to increase its geographic reach, whileGrainCorp is the last available independent asset of scale inAustralia, the world's second-largest wheat exporter and anattractive market due to stable policies and links to Asia.

GrainCorp, which also has malt and oils units as well as itsgrains marketing operations, and storage and logisticsbusinesses, said the U.S. agri-giant had so far secured 28.3percent of acceptances for its offer.

It declared a dividend of 20 cents per share and said itplanned to pay out the remaining 55 cents per share of dividendsallowed under ADM's offer before the deal went unconditional.

Shares in GrainCorp eased one cent to A$12.19. ADM'stakeover bid is also awaiting regulatory approval from China.

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