April 2, 2024

 

Australia approves GrainCorp's acquisition of XF Australia

The Australian Competition and Consumer Commission (ACCC) has given the green light to GrainCorp Limited's acquisition of animal feed supplement supplier, XF Australia (Performance Feeds), Beef Central reported.

 

Both GrainCorp and US-owned XF Australia are major providers of molasses-based liquid animal feed supplements to the livestock industry across eastern and southern Australia.

 

Initially, concerns were raised regarding the consolidation of ownership in the livestock liquid feed supplement sector when the takeover was announced in November last year.

 

During its review, the ACCC assessed the competitive landscape between GrainCorp and XF Australia, focusing on the potential impact of XF Australia's removal on competition in regional markets across eastern Australia.

 

Another key consideration was whether the acquisition would empower GrainCorp to restrict molasses sales to other distributors and competitors.

 

ACCC commissioner Stephen Ridgeway said after carefully examining the molasses supply arrangements between GrainCorp, XF Australia, other animal feed supplement suppliers, and sugar mills, they concluded there would be no substantial lessening of competition.

 

GrainCorp sources molasses from sugar mills for its feed supplements, selling surplus amounts to distributors, competing producers, and farmers. XF Australia purchases molasses for its supplements but does not resell to third parties.

 

The ACCC's decision followed consultations with various market participants, including feedlot operators, graziers, competitors, distributors, and sugar mills.

 

Despite the merger, the ACCC said that GrainCorp will continue to face competition from other supplement manufacturers like Bundaberg Molasses and Riverina. Additionally, the acquisition was not seen to grant the combined entity the ability to reduce molasses supplies to downstream players.

 

-      Beef Central