Grain chief: no way Jose
16 May, 2011 12:00 AM
A PUERTO Rican grain company locked in a bitter dispute with Ebro has slammed the Spanish giant's "ruthless" attitude and warned growers off accepting its $610 million takeover bid for SunRice.
Pan American Grain claims its operations were plunged into chaos last year when Ebro suddenly terminated a 10-year processing and packaging contract signed in 2006 citing a "fundamental change in circumstances".
The company's chief operating officer Jose Gonzalez Freyre told The Area News last week he believed local growers would expose themselves to a similar "betrayal" if they handed control over to Ebro.
He said the rider attached to Ebro's seven-year commitment to purchase local rice at the Californian medium grain price ? subject to "material adverse change in business or regulatory conditions" ?essentially rendered it "worthless".
"These people will walk away from a contract with a clause or without a clause," Mr Gonzalez Freyre said.
"They just use their huge power and all their financial muscles to push you over. The contract is only for their benefit, but it doesn't mean anything.
"The growers are little people, in an economic sense. They will not be able to withstand the pressure of a big company with monopoly power guaranteed by law."
Although neither Ebro nor SunRice would comment on the accusations given the matter appears headed to court, The Area News understands it is precisely Pan American Grain's market monopoly that lies at the centre of the dispute.
Ebro alleges Pan American Grain used its monopoly - which has been the subject of an inquiry by the Puerto Rican senate - to ratchet up the price of its services when a new supplier could do it for significantly less.
Mr Gonzalez Freyre, who admitted to a run-in with the law when in 2009 he was convicted of making an illegal contribution to a political campaign in his home country, denies Ebro's allegations and said local farmers should see his company's experience as a cautionary tale.
"I don't really understand why growers (are considering selling SunRice because) right now they've got what every grower in the world wants, which is control from the farm to the supermarket shelf," he said.
"I don't understand why they would want to walk away from that. Ebro are not investing all this money as a gift, they're looking at a 20 to 30 per cent return on investment.
"The people they are going to screw are the farmers because they'll get the rice from wherever it is cheaper.
"The brand and the distribution network of SunRice they're never going to lose. They'll keep that and just put someone else's rice in the bag.
Pan American Grain claims its operations were plunged into chaos last year when Ebro suddenly terminated a 10-year processing and packaging contract signed in 2006 citing a "fundamental change in circumstances".
The company's chief operating officer Jose Gonzalez Freyre told The Area News last week he believed local growers would expose themselves to a similar "betrayal" if they handed control over to Ebro.
He said the rider attached to Ebro's seven-year commitment to purchase local rice at the Californian medium grain price ? subject to "material adverse change in business or regulatory conditions" ?essentially rendered it "worthless".
"These people will walk away from a contract with a clause or without a clause," Mr Gonzalez Freyre said.
"They just use their huge power and all their financial muscles to push you over. The contract is only for their benefit, but it doesn't mean anything.
"The growers are little people, in an economic sense. They will not be able to withstand the pressure of a big company with monopoly power guaranteed by law."
Although neither Ebro nor SunRice would comment on the accusations given the matter appears headed to court, The Area News understands it is precisely Pan American Grain's market monopoly that lies at the centre of the dispute.
Ebro alleges Pan American Grain used its monopoly - which has been the subject of an inquiry by the Puerto Rican senate - to ratchet up the price of its services when a new supplier could do it for significantly less.
Mr Gonzalez Freyre, who admitted to a run-in with the law when in 2009 he was convicted of making an illegal contribution to a political campaign in his home country, denies Ebro's allegations and said local farmers should see his company's experience as a cautionary tale.
"I don't really understand why growers (are considering selling SunRice because) right now they've got what every grower in the world wants, which is control from the farm to the supermarket shelf," he said.
"I don't understand why they would want to walk away from that. Ebro are not investing all this money as a gift, they're looking at a 20 to 30 per cent return on investment.
"The people they are going to screw are the farmers because they'll get the rice from wherever it is cheaper.
"The brand and the distribution network of SunRice they're never going to lose. They'll keep that and just put someone else's rice in the bag.
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