wheat, gmo
Transaction would bring together two strong, local Australian-based plant breeding companies.
URRBRAE, SOUTH AUSTRALIA — Australian Grain Technologies (AGT) is in negotiations to acquire InterGrain Pty Ltd., a merger the companies claim will strengthen Australian-focused cereal breeding by bringing together two strong, local plant breeding companies focused on the development and adoption of improved varieties.

Australian Grain Technologies Haydn Kuchel CEO
Haydn Kuchel, AGT chief executive officer.

“Bringing InterGrain wheat and barley breeding expertise, germplasm and people into AGT will help to strengthen our breeding team while accelerating our impact in barley and udon noodle wheat genetics,” said Haydn Kuchel, AGT chief executive officer. “We want to see the InterGrain germplasm used by AGT to deliver the most value possible for Australia’s growers. Our company will take the latest in breeding technologies and scientific knowledge and combine it with teams who live and breathe Australian farming, to help improve the prosperity of Australian grain growers, especially those within InterGrain’s heartland, Western Australia.”

Tress Walmsley, CEO of InterGrain, said growers should be excited about the future of cereal breeding, including in noodle varieties and barley, based on combined expertise of InterGrain and AGT.

Intergrain Tress Walmsley CEO
Tress Walmsley, CEO of InterGrain.

“We have entered into formal negotiations with AGT but I want to make it clear that this is a long way from being a done deal and many steps (including due diligence, commercial negotiations on the terms and regulatory review) need to be completed before a transaction occurs,” Walmsley said. “It is early days but there is potential for this transaction to ensure the Australian grains industry is serviced by a plant breeding company with the resources, expertise and scale to develop the best possible new varieties for local conditions over the long term.

“This would achieve the combined goals of making grain growers more internationally competitive and able to meet the needs of consumers here and overseas.”

AGT and InterGrain hope to have the transaction finalized in time for the 2017 field season, but it remains subject to regulatory review by the Australian Competition and Consumer Commission.

On Dec. 8, Grain Producers Australia (GPA) expressed caution and flagged many questions about the proposed transaction.

“Our first reaction is one of concern for the potential loss of competitive tension in breeding of wheat and barley varieties for Australian conditions,” said Andrew Weidemann, chairman of GPA. “That said, the combination of InterGrain and AGT could bring the benefit of larger critical mass in putting the expertise of two plant breeding teams together along with each company’s germplasm.

“There are many questions to be asked and answered from the perspective of what is in the best interests of Australian growers.

“We understand the Australian Competition and Consumer Commission will be reviewing the proposed transaction and we will be asking them to examine issues with growers, as the customer for cereal seed, foremost in their consideration.

“With the ACCC’s Agricultural Advisory and Enforcement Unit being in existence for just over 12 months, this is a test for the ACCC to show they better understand agricultural markets.”

Weidemann said he expects the ACCC to collaborate with GPA and its relevant state members during the inquiry and for the ACCC to transparently test their findings.

Among the questions to be explored will be how the expanded AGT would influence the delivery of new plant varieties to the market, how end-point royalties (EPRs) might change, what regional focus would continue on varieties, what gains may be made from the larger organization, and how the new company would stand against other international plant breeding businesses.

“As consumers of seed, growers need to know much more about the overall situation in order to feel confident about the proposal,” Weidemann said. “Growers already have stake in both AGT and InterGrain via the Grains Research and Development Corporation, so it is legitimate for us to ask these questions. AGT is a large and successful Australian-based business producing many good varieties, although we recognize there are international players with greater resources.

“Would the expanded AGT face sufficient competitive pressure from these other companies to ensure top performance?

“If after the merger AGT was more attractive to an international player would we risk losing the entire business to an offshore owner and what would that mean for Australian growers?

“We look forward to learning more about this proposal from the various companies and participating in the ACCC process.”