A lot of the current response to Treasurer Joe Hockey’s decision to block ADM’s A$3.4 billion takeover for GrainCorp is political rhetoric and doesn’t have to be taken seriously.

But as Jeffrey Wilson wrote in The Conversation, it does raise interesting questions over the criteria utilised by the Foreign Investment Review Board. And Senator Bill Heffernan has flagged that the decision should be followed by a Senate inquiry into the grains industry, including an examination of the powers of the Foreign Investment Review Board (FIRB).

So where does GrainCorp go now that it has been granted some breathing space?

On the first issue of the protection of the national interest, no government should have to apologise for standing up to foreign interests if a vital part of the national economy is at stake. Perhaps surprisingly that is exactly what Hockey has done in this case. To treat it as a matter of caving in to National Party interests or to “agrarian socialists” is to miss entirely the point that governments are supposed to intervene to protect national interests from being sold off to the highest bidder. Try mounting a bid to take over all the grain-exporting ports in the US or China and see how far the bid would go.

The fact is that GrainCorp (and similar Australian commodities organisations) have long been a target for American interests. In the negotiations over the Australia-US Free Trade Agreement (not really about “free trade” – but let that rest) the two biggest US demands were to dismantle the Australian Pharmaceutical Benefits Scheme (at the instigation of the US pharma industry) and the Australian Wheat Board (at the instigation of US grain export interests).

Sensible Australian blocking of these demands led to much gnashing of teeth on the US side – and the launch of further long-term strategies to achieve the same ends. Over the past decade the PBS has been systematically attacked and undermined at every turn by US Big Pharma. The AWB itself, weakened by the scandal over its “oil for wheat” deals with Saddam Hussein, did not long survive as an independent company. It was sold to Canadian commodities trader Agrium in 2011 for just A$1.2 billion. This was a sorry end to a once-great Australian institution.

GrainCorp now is a different entity but with a similar history. It originated as the Grain Elevator Board in 1917, formed by the NSW government as a means of protecting farmers’ interests from price-gouging private elevator operators. It continued to do its job, building a network of rail and port terminals; it became known as the Grain Handling Authority and was then privatised in 1992 and listed on the ASX.

It extended into other states, becoming a national entity, and then in the 1990s expanded into the US with the purchase of United Malt Holdings and into the European Union with the purchase of GermanMalt GmbH&Co. As a multinational commodities dealer it has attracted the attention of ADM. It is the closest that Australia has to a multinational commodities trading house like ADM and Cargill from the US, South American agribusiness Bunge, or Europe’s Glencore.

Why is GrainCorp (and the former AWB) such a target for sustained US attack?

The answer is: such bodies are effective. One of the reasons that Australia became a successful post-war exporter of farm commodities like wool and wheat is that farmers formed collective organisations to take responsibility for exports – protecting farm-gate earnings and leaving the farmers free to improve productivity. In the case of the AWB the body achieved monopoly control over exports (the “single desk”), in the name of protecting farmers’ incomes.

Organisations like the Australian Wool Board, the Australian Wheat Board along with state-level bodies like CaneGrowers, were all formed on the principle of creating collectively owned commodity houses that could build stockpiles or provide infrastructure services to even out the earnings of rural producers. This was actually an Australian commercial innovation and one of the most important of the 20th century. Bodies such as the Canadian Wheat Board were formed to emulate it. Developing countries around the world today – in sugar, coffee, and other commodities – attempt to replicate these early movers, with differing levels of success.

GrainCorp through its various manifestations, has continued this tradition. Had Australia capitulated to US pressure to allow GrainCorp to be sold to ADM, this would have been tantamount to the US obtaining the whip hand over Australian grain farmers in international markets – precisely the long-term goal of US grain interests.

But as Senator Heffernan’s intervention makes clear, all is not well with the Australian grain trade. GrainCorp has under-invested in infrastructure like rail and port terminals – giving ADM its initial point of advantage in promising investment of $500 million. Now that the ADM bid is (temporarily) postponed, the level of investment in grain handling and export activities will have to become a matter of public concern.

It is notable that Hockey’s rejection of the total ownership bid was sweetened by an invitation to ADM to keep raising its ownership level, up to an allowable 24.9%. So a further round in this ever-lasting trade war can be anticipated.

To ward off any further commercial interest from ADM or other US interests like Cargill, GrainCorp will have to step up with its own proposals for investing in a strong future for grain trade infrastructure. It has to turn around the negative market sentiment that has greeted the Treasurer’s decision (amplified by the unexpected resignation of CEO Alison Watkins, who had clearly expected the ADM bid to succeed).

Investment in infrastructure does not depend solely on foreign direct investment nor on taxpayer funded programs. As the Chinese case shows, it can be pursued through government guided bank lending and access to the world’s debt markets. GrainCorp now has to demonstrate that it too can protect its own and the national interest with a credible investment program.