AWB monopoly under threat

The single desk for Australian wheat exports has long been considered one of the pillars on which the industry has prospered but in the past month the push to free up wheat exports has gained surprising momentum.

It’s great news for the Pastoralists and Graziers Association, which for many years has been fighting an uphill battle against conservative groups like WAFarmers that want to maintain the single desk.

Leon Bradley, chairman of PGA’s western graingrowers committee, is hopeful the single desk – which is held by the wheat export authority but is managed by AWB Limited subsidiary AWB International – will be scrapped by the middle of this year.

“I would think it’s essential that should occur,” Mr Bradley said.

The Cole Inquiry into the oil-for-food scandal has already inflicted enormous damage on AWB, with its reputation shredded, its chief executive Andrew Lindberg out of a job and its share price plunging about 30 per cent.

Former AWB chairman and WA grain grower Trevor Flugge has also been enveloped in the controversy, though he hasn’t put his side of the story to the Cole Inquiry just yet.

The latest bad news was the Iraqi Grains Board’s announcement this week that it would not deal with AWB but would be prepared to buy wheat from other Australian exporters – if any other company was given permission to export wheat.

With senior ministers like federal Treasurer Peter Costello agreeing the single desk needs to be reviewed, this looms as a serious possibility.

It’s an appetising prospect for the many organisations that could step into the breach, such as WAFarmers cooperative CBH Group, Futuris subsidiary Elders, east coast grain marketers Graincorp and ABB Grain, and international grain traders like Cargill, Louis Dreyfus and Brooks Grain.

Mr Bradley said many farmers already dealt with these companies in the domestic wheat market and he anticipated “a very smooth transition” to deregulated export sales.

Futuris has long been keen to access the export market, with

its chairman Stephen Gerlach describing the situation thus:

“The difficulty with the single desk is that Australian farmers have been told that it gives them the best in terms of service and marketing.

“However the truth of this proposition cannot be empirically tested because no other organisation has been given opportunity to show what they can do for Australian farmers.”

WAFarmers president Trevor De Landgrafft said the group strongly supported retention of the single desk and had tried to put a positive spin on the Cole controversy.

He said the resignation of Mr Lindberg was “in the best interests of Australia’s farmers and for the security of the single desk as a grower controlled wheat export system”.

Mr De Landgrafft was particularly pleased with the appointment of Ian Donges as an independent chairman at AWB International, “putting to rest the criticism of a perceived conflict of interest that a dual position on AWBL and AWBI had drawn in the past”.

“A strong single desk consolidates Australia’s wheat harvest and is an integral tool ensuring competitiveness on global markets whilst preserving our reputation for world class grain with our many international customers,” he said.

“The wheat pool price creates domestic market stability and growers rely on having the single desk as a ‘buyer of last resort’.”

Since 1999, AWBI has vetoed 49 out of 50 applications and the one that was accepted was understood to have been an administrative mistake.

CBH Group was the latest applicant to be rejected, prompting its chief executive Imre Mencshelyi to describe the current wheat marketing system as “clearly inflexible and unworkable”.

CBH had applied to the WEA to export 100,000 tonnes of wheat to its part-owned Interflour mills in Indonesia, Malaysia and Vietnam, which would have delivered an extra $10 per tonne to participating farmers but was vetoed by AWBI.

“AWBI’s claim that the granting of this licence would open the floodgates for other entities to export direct to their flour mills is ridiculous and I challenge AWBI to find one other real example of an Australian farmer co-operative seeking to supply to their own mills,” Mr Mencshelyi said.