So much for wishing for a peaceful future after the recent AACo board upheaval. Does the drama ever end? And should Australians be concerned? Australia is the largest exporter of red meat in the world and the largest exporter of beef, in value terms. (Second, in volume terms, to Brazil.) Increasing world food shortages are predicted, if the world’s population continues to increase. The Australian Agricultural Company is Australia’s largest beef producer and owns more Australian land than anyone else. So for the latter reason alone, yes all Australians should take notice of AACo management and ownership, for environmental sustainability reasons, food production security reasons, and export income protection reasons. It is reasonable for all Australians to expect that ASIC, ASX and the FIRB are paying attention and doing their jobs thoroughly.
Dubai-based IFFCO Poultry is apparently 100% owned by the India-based Allana family (although for some reason, the ownership of IFFCO Poultry Limited is not clarified in the voting information mailed to shareholders prior to the AACo AGM, nor is it spelt out on the IFFCO website, at least it isn’t in English). IFFCO Poultry purchased a 14.9% share in the from AACo majority shareholder, Futuris (now known as Elders) earlier this year. This was later increased by a further 5% purchase of shares. This week, less than 7 days after the AACo AGM huge upheaval, IFFCO Poultry transferred their shares in the AACo to their wholly owned subsidiary based in Kuala Lumpur, IFFCO Poultry Co SDN BHD (IPCSB). Then on Thursday 18th June, a ‘substantial shareholding notice’ was filed by IFFCO. IPCSB has apparently onsold the 19.9% share in the AACo to Felda IFFCO SDN BHD (FISB), a pre-existing joint venture between IFFCO and Malaysian Government owned Company, Felda. I am not sure who owns what percentage of Felda IFFCO SDN BHD (it hasn’t been spelt out, anywhere I looked), so it is not clear what percentage of the AACo is now effectively owned by the Malaysian Government.
The Felda head office is located in Kuala Lumpur, and there is a marketing office in London. ‘Felda’ stands for ‘Federal Land Development Authority’. To quote directly from the Felda website: “The Felda Land Development Authority and the Felda Investment Co-operative (Koperasi Permodalan Felda or KPF) have joint ownership of Felda Holdings. KPF has a 51% stake while FELDA holds 49% equity. Meanwhile, the Government of Malaysia, through the Minister of Finance Incorporated, has one Golden Share.” I have no idea what a ‘golden share’ is, but in plain English, it seems that Felda (and all associated companies) are wholly owned by the Malaysian Government. It seems odd that they just don’t spell this out in one sentence.
Felda Holdings BHD manages 60 companies, of which 50 are active and 10 dormant. The prime business is stated as palm oil production, with secondary but related agricultural businesses such as rubber, cocoa and fertiliser production – and ‘cattle raising’.
It is stated that: (Felda) “is tasked with ensuring the success of agricultural development in Malaysia, particularly the land settlement programmes conceived in 1956 as a means of eliminating rural poverty.” Very worthy aims. One has to wonder precisely what the joint venture purchase of almost 20% of Australia’s largest beef producing company has to do with those aims. Reading through the website, it would certainly appear that its primary objective is to make a large profit. Whether this actually benefits poor agricultural land settlers, isn’t clear.
Ever since IFFCO was mentioned in relation to the AACo, the media have been asking if Malaysian-Government owned Felda will be involved in any way. However it wasn’t until after the AACo AGM that the sale of shares to the IFFCO/Felda joint venture happened, and became public knowledge.
Given that the Australian Federal Government’s Foreign Investment Review Board (FIRB) has to assess overseas ownership of this size, to check that it is actually in the best interests of the Australian public, questions will naturally be asked as to why the plan for this deal was not made public earlier. Surely shareholders should have been told prior to deciding who to vote onto the AACo board?
Questions should also be asked about the precise ownership and intentions of all companies that own (directly or via shares in a publicly listed company) large tracts of Australian land and agricultural export businesses. There is nothing else as important as food security and land/resource ownership.
In a newsletter sent to shareholders pre-AGM, it is stated that ‘IFFCO would like this iconic Australian company to remain majority Australian owned and to achieve its long term potential of being a profitable and leading global company in the sector with an increasingly valuable rural land bank.’ Well I guess they would say that sort of thing, wouldn’t they. MLA has some interesting figures on the Malaysian importation of beef, for example this MLA graph comparing the origin of Malaysian beef imports.
There are several Australian newspaper articles written over the last two days that are well worth reading on the subject – at last they’re a lot more intent on raising some scrutiny. For example ‘New investor crops up in AACo’, ‘Felda shadows AACo’ and ‘AACo denies capital raising plan’.
I know of one shareholder who binned all AACo voting material recently mailed to them, in exasperation, saying that they did not want to vote for any of the would-be directors. It will be interesting to see where this all ends up, and to speculate how differently AACo shareholders may have voted had IFFCO intentions been made public prior to the recent AGM. If the Malaysian Government owns the majority share in Felda IFFCO SDN BHD (FISB) then I presume the Foreign Investment Review Board (FIRB) will be assessing whether this ownership is in Australia’s best interests or not. The Chinese Government-owned Chinalco proposal to buy into Rio Tinto was rejected by shareholders as it was deemed unwise to have a major customer buying into the Australian-owned production company. One would think that FISB’s majority shareholding in the AACo would be viewed in the same light. And as important as steel is, broad scale land management and food production is infinitely more important. The IFFCO purchase of AACo/foreign ownership of agriculture issue was being raised as a discussion topic by Senator Barnaby Joyce two months ago, on April 24.