16 May, 2008                                                                                                           CANEGROWERS  GPO Box 1032  BRISBANE  4000 
                                                                                                                                                      Phone (07) 3864 6444 Fax (07) 3864 6429
                                                                                                                          enquiry@canegrowers.com.au  www.canegrowers.com.au

FERTILISER AMALGAMATION MAY LIMIT GROWTH

CANEGROWERS expressed alarm this week about the continuing concentration of industries servicing agriculture within Australia. This follows news that the ACCC would not oppose the proposed acquisition of Dyno Nobel Limited by Incitec Pivot Limited. The merged body will be a dominant player in the already concentrated fertiliser supply chain.

“Concentration of supply rarely leads to better prices for buyers,” said Ian Ballantyne, CEO of peak sugarcane growers group, CANEGROWERS.

“At a time when fertiliser prices are off the chart, the proposed acquisition does not augur well for those relying on services of agri-providers.”

Farmers are already grappling with reduced revenue for the sale of their product particularly where export dependent industries have come under pressure from the strong Australian dollar.  On the domestic front, Australian farmers are increasingly serviced by concentrated and monopoly acquirers of product and the inherent imbalance that brings.  Add increases in water, fuel, interest rates and fertiliser to the mix, and we are looking at a potentially escalating cost of producing food, with little scope for offsetting revenues.

“This also comes at a time where there is international alarm at rising food prices, and demands to contain those prices,” said Mr Ballantyne.

“By way of examination of some of the pressures being felt at the farm gate, across Australia there has been an average 107% increase in the price of fertilisers over the past 12 months, with some mixes having trebled in the same period.  The same report tabled by the National Farmers Federation in April, reported similar price increases in chemical prices during this same period. 

“Unleaded fuel prices have increased by over 40% in four years.  FuelTrac surveys show substantial 12 month increases in regional areas - Cairns prices have increased 13%, Townsville 12% and Mackay and Bundaberg 11%.  Diesel price increases have exceeded those of ULP.  There have been hikes in water prices – the Bundaberg area alone has reported at 9% increase – and we have not even touched on the profit-eroding effect of climbing interest rates.

“These sorts of increases in the cost of farming are well beyond the control of any efficiency measures, or technology or management systems,” says Mr Ballantyne.  “Our farmers are a resilient bunch, but it important to recognise the difficulties they face in trying to control costs in this environment.”

Mr Ballantyne understood that the potential acquisition of Dyno Nobel and Incitec Pivot makes good business sense for the companies and shareholders involved, but it was highly unlikely those benefits would flow on to growers.

For further information: Ian Ballantyne CANEGROWERS CEO on 0418 781 011 or Alf Cristaudo CANEGROWERS Chairman on 0418 181 204 or call the office on 07 3864 6444.