Rebuffed Rival Ready To Swoop
Sydney Morning Herald
Saturday December 2, 2006
ALTHOUGH AWB has plenty of rivals across the nation - including international grain traders Cargill, Glencore and Louis Dreyfus and Australia's ABB Grain and GrainCorp - none has been as proactive as West Australian handler CBH.
The unlisted growers co-operative had previously applied for export licences to ship wheat to its Asian flour mills, but the requests were predictably knocked back by AWB.It has now stepped up its game. Rather than lodge an application to export 100,000 tonnes as refused in the past, it twice requested a 2 million-tonne export licence. Both attempts were quickly vetoed.But if the Government strips AWB of its export veto power this month - possibly turning it over to the Wheat Export Authority - CBH is poised to try again immediately. The amount of wheat which would bypass AWB under the CBH proposal is massive.AWB itself says the severe drought will likely leave Australia with only about 4 million tonnes of export product in 2006-2007. Things are so bad, the eastern states are importing grain from the US, the UK and Canada. So, if approved, CBH's shipments - half of the available export wheat - would by itself dismantle the power of the single desk.CBH has been encouraging WA farmers to hold off on selling their wheat into the national pool. As an incentive, it has offered free warehousing until December 15. By that time, it hopes the Government's near-term plans for the single desk will be made clear.CBH says it can offer growers $20 to $30 a tonne more than the national pool prices. Since CBH owns the Asian flour mills to which the product is shipped, it cuts out all marketing fees. WA Farmers Grain Council president Robert Doney, himself a grower, says about 80 per cent of wheat farmers in his state have taken up CBH's free warehousing offer."I think at this point in time they are quite relieved they can do something without having to make a decision [to sell to AWB]," he says. "But it only holds it off for a short time."In many ways, the debate over the single desk has more profound implications for WA than for any other state. Most east coast growers sell into the domestic market and the vast majority of Australia's export wheat originates from across the Nullarbor. Because the drought has hit the east much harder than the west, it's quite possible that all Australian wheat exported this year will come from WA.But Bob Iffla, a WA farmer and the chairman of the Wheat Growers Association, says it would be a big mistake to allow CBH to export the grain instead of AWB."The AWB's price has always been very conservative," Iffla says, adding he doubts CBH's future price estimates would be similarly conservative. And he says CBH can offer higher average prices than AWB's $248-a-tonne offer for a reason - the co-operative will only accept certain grades of wheat."We're not comparing apples with apples," Iffla says. "They [CBH] won't take soft wheat, they won't take noodle wheat."CBH corporate affairs manager Rhys Ainsworth says the wheat required by his company would not be "an outrageously different blend" from AWB's exports, but he admitted there could be differences. "We've been overwhelmed with the support we've received from West Australian growers this harvest," Ainsworth says.
© 2006 Sydney Morning Herald