AWB Limited (ASX: AWB) is the Australian company that oversees the exports of grain, particularly wheat. Exterior of Australian Stock Exchange on Bridge Street, Sydney The Australian Stock Exchange (ASX) is the primary stock exchange in Australia. ...

The AWB was a government body known as the Australian Wheat Board until 1 July 1999, when the AWB was transformed into a private company, owned by wheat growers. On 22 January 2001, AWB was floated on the Australian Stock Exchange. The AWB was and remains the "single desk" for the sale of Australian wheat. July 1 is the 182nd day of the year (183rd in leap years) in the Gregorian Calendar, with 183 days remaining. ... 1999 (MCMXCIX) was a common year starting on Friday, and was designated the International Year of Older Persons by the United Nations. ... January 22 is the 22nd day of the year in the Gregorian calendar. ... 2001: A Space Odyssey. ... In economics, a monopoly (from the Latin word monopolium - Greek language monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a product or service. ...

AWB exports “into more than 50 countries, with Australian wheat exports worth up to $5 billion per year” (AWB 2006). It is given a near-monopoly by the Government, where it is the largest seller of wheat that is permitted to negotiate with overseas buyers and make export sales. AWB has veto power over any other prospective exporter of wheat, which effectively eliminates competition. However, the Wheat Export Authority, on average, allows around 4% of total wheat exports to be exported, but this is not allowed to be in bulk, only bags and containers.

The principle of the single desk is to prevent Australian farmers from being played off against each other by large corporate customers/grains traders. Of particular concern to farmers are the large US conglomerates, like ConAgra Foods & Cargill. AWB represents all Australian wheat on the world market, hoping to achieve a higher/more stable average sales price for all farmers than would be achieved if they were each competing to sell their own wheat to the same small number of large customers/grains traders. As part of this, all wheat of a given grade is pooled, and farmers are paid in several stages according to the proportion of the pool that has been sold, rather than being paid in full only when their particular shipment of grain is sold. ConAgra Foods, Inc. ... Cargill, Incorporated is a privately held, multinational corporation, and is based in the state of Minnesota in the United States. ...

AWB's subsidiary businesses include GrainFlow to manage collection of grain from farmers to ports, companies to ship the grain overseas to customers, and Landmark rural services.

History of the Board

The AWB was founded in the late 1930's, to regulate the wheat market after the excesses of the Great Depression. The single desk dates to this period. The Great Depression redirects here. ...

The Canadian Wheat Board was initially modelled on the Australian Wheat Board. The Canadian Wheat Board (known at times as the Canada Wheat Board) was established by the Parliament of Canada in 1935 as a producer marketing system for wheat and barley. ...

Corporate structure

AWB Limited is a holding company owning a number of subsidiaries. Its shareholding is divided into two classes: class A and class B. Ownership of class A shares is restricted to currently active wheat growers; they are non-transferrable, and must be ceded upon the cessation of wheat-growing operations. Class B shares are freely traded on the Australian Stock Exchange, with the proviso that no one individual or entity may control more than 10% of all class B shares. The company's constitution provides for 7 directors elected by class A shareholders, two directors elected by class B shareholders, with a further two directors to be appointed by the directors elected by class A shareholders. Thus, the class A shareholders are ensured control of the company. Exterior of Australian Stock Exchange on Bridge Street, Sydney The Australian Stock Exchange (ASX) is the primary stock exchange in Australia. ...

AWB Limited has a number of subsidiaries. Some of these subsidiaries exist due to legislative requirements relating to the operation of the single desk; others exist for the purpose of controlling credit risk. As of early 2006, they are:

• AWB Limited - the holding company
• AWB (International) Limited - the corporation authorised by federal legislation to export wheat under the monopoly
• AWB (Australia) Limited - domestic wheat trading and export of non-wheat grains
• AWB Services Limited - provides services (e.g. finanical services, IT services, asset management) to the rest of the AWB group
• AWB Harvest Finance Limited, AWB Commercial Funding Limited, and AWB Riskassist Limited - provide finance and financial risk management for wheat export transactions
• AWB GrainFlow Pty Ltd - provides bulk grain handling and transport facilities
• Landmark (comprised Landmark Operations Limited and Landmark (Qld) Limited) provides finance, insurance, real estate, commodities trading, farming equipment sales, etc. to Australian farmers (including other agricultural sectors such as wool and livestock)
• Johnstone River Transport Pty Ltd - provides transport services in Qld, specialising in sugar cane, limestone and fertiliser

Arguments for the single-desk

Farmers have been largely supportive of the single desk system, with opinion polls consistently showing over 80% support. Most small-scale farmers support the AWB. The single desk system is controlled by growers (as class A shares vote in 9 of the 11 directors of the board) and has an integrated management and marketing system. A large percentage of the profits made by the operations of AWB Limited go to wheat growers. Throughout the world, governments offer substantial subsidies to their wheat growers, and this causes a distorted trade situation. Wheat growers in the United States receive an average 32% of their income from subsidies; the figure for the European Union is 39%. Wheat growers overseas receive subsidies to the tune of $170 per tonne. The single desk unites Australian farmers and gives the AWB considerable weight in the tough international market, by negotiating as one bloc collectively.

One of the greatest factors is that having only one Australian company in the international market ensures that there is no competition amongst other Australian growers. Since Australian wheat growers are not competing amongst themselves to export their wheat, lowering each other’s prices; which in turn decreases the income of Australian wheat growers exporting overseas. Competition is the act of striving against another force for the purpose of achieving dominance or attaining a reward or goal, or out of a biological imperative such as survival. ...

“Australia produces about 3 per cent of the world's wheat but has 15 per cent of global wheat trade” (The Age 2006). The single desk system gives AWB has greater bargaining power as, together, it is very large and can negotiate collectively for the benefit of its members. The large volume of exports handled by the AWB gives Australian wheat growers an advantage as it has the scale to compete directly with global grain giants, which together, have a 73% market share (AWB 2006). These include Cargill, Union Elevator, ADM, and ConAgra. The size of the national pool also means that the Australian wheat industry has the ability to secure reductions to its transport and storage costs within Australia, another result of its increased bargaining power.

AWB was able to reduce its supply chain costs by $5.41 per tonne (equivalent of $86 million) between 1999 and 2005 by developing the GrainFlow system, a network of 22 storage centres on the east coast and South Australia. The single desk gives Australian farmers an average “premium of $13 per tonne” (Vaile 2006) and it is estimated that the single desk brings back to the wheat industry an extra $200 million a year. Emblems: Hairy Nosed Wombat (faunal); Leafy Seadragon (marine); Piping Shrike (bird: unofficial); Sturts Desert Pea (floral); Opal (gemstone) Motto: United for the Common Wealth Slogan or Nickname: Festival State Other Australian states and territories Capital Adelaide Government Const. ...

The AWB offers financial security to wheat growers by being the buyer of last resort, meaning that they buy any wheat that is of an acceptable quality, so that all 36,000 wheat growers have the certainty of an income and access to the export market. It also acts as financier of last resort and is obliged to provide a payment option for all pool deliveries. It also manages wheat pools of behalf of growers and has the benefit of operations on a large scale and decades of experience.

AWB Ltd, by its Constitution, is obliged to ensure that wheat producers receive the highest possible returns for their wheat. This obligation is unique amongst companies around the world and is the reason for being of the company.

The Australian Commonwealth Government, which is responsible for trade, is supportive of the AWB and the single-desk system. Minister for Trade Mark Vaile said: “We will stand by the single desk, because it benefits Australian wheat growers. It is not an export subsidy, it does not distort trade.” Also, he said that “there may come a day when we no longer need a single desk for Australian wheat growers”, but only when world trade barriers in agriculture, such as subsidies and tariffs are broken down. The government of Australia was established in 1901 by the Australian Constitution. ... A fruit stand at a market. ... Hon Mark Vaile Eric William Day (born 18 April 1956), Australian politician, is the leader of the Nationals and Deputy Prime Minister of Australia. ...

Arguments against the single-desk

Those who are against the concept of a single-desk marketing Australia’s wheat include some of the larger grain growers, most other Australian grain distributors and marketers, and foreign wheat companies. In recent months, some ordinary growers also are having doubts about AWB, in light of the Iraq oil-for-food scandal.

It is usually smaller wheat growers that favour the single-desk policy. However, larger producers are confident that they can market their wheat well and gain higher prices for it for export, and favour deregulation. Deregulation is the process by which governments remove restrictions on business in order to (in theory) encourage the efficient operation of markets. ...

With the single desk, farmers have to take what they get; individual farmers cannot go outside the structure to find buyers that the single desk does not deal with. There is no freedom to choose to whom they will sell their wheat. In addition, they cannot negotiate their own price for their produce. As a monopoly, the AWB (and its branch AWBI) have total power in controlling what deals farmers get if they want to sell overseas. The AWB charges about $300 million a year to run the single desk, which is a very substantial amount when figures from the Minister for Trade show the estimated benefit is only $200 million per year.

The AWB has been accused of providing kickbacks to the order of $290 million to Saddam Hussein in Iraq as part of the oil-for-food programme, and in the process, violating UN sanctions. This alleged deception is being invested by the Cole Inquiry, ordered by the Australian Government. In February 2006, managing director Andrew Lindberg resigned after outrage from the press and from growers. This whole scandal has left a black mark on AWB’s reputation throughout the world and puts into question how reliable it is and how well suited it is to represent and market nearly all of Australia’s wheat overseas. In addition, it is being sued for $1 billion compensation by farmers in North America for alleged “bribery and other corrupt activities to corner grain markets” (NEWS.com.au 2006).

This event had an impact on Australian wheat growers. Chris Kellock, spokesman for Eastern Wheat Growers said: “Growers had a lot of trust in AWB. They had a lot of comfort in the system and the system has failed them,” (Australian Broadcasting Corporation 2006). When the system that has worked so long fails, the question must be asked whether all wheat growers who want access to the export market should be forced to go through AWB. Laurie Black, a wheat grower said: “Any monopoly becomes power drunk and they make the rules and it's like the power of veto of export. If they hadn't have had that power of veto and had allowed some exports of grain, which I think were appropriate to occur, then we wouldn't be in as big a mess as we are today,” (Australian Broadcasting Corporation 2006).

As a result of this scandal, AWB has been blacklisted in many countries, including in Iraq (however, a compromise has since been reached where “another entity [Wheat Australia] would continue to export wheat” (Australian Broadcasting Corporation 2006). As Australian wheat is discredited by the organisation that presents its face and image, Australian growers suffer as other countries avoid AWB wheat.

Foreign multinationals, like Cargill, want deregulation of the single-desk system so they can gain further access to the world market in a more competitive environment. In a similar way, the Australian Grains Exporters Association, a group of seven international grain traders that operate in Australia, would like to see the end of the single-desk system so that they may have more business opportunities in exporting grain out of Australia, and have the opportunity of making money from it. They propose a system where the Government licenses exporters to bulk-export, based on their experience and skills. This would result in many competitors in the Australian wheat export market. In addition, Australia-based domestic traders such as GrainCorp and ABB Grain would have increased opportunities if deregulation were to occur.

A key criticism of the single-desk AWB system is that it strangles competition. Farmers are not given a choice amongst several marketers that offer it the best price. Instead it can only go through AWB, with a set price.

In addition, the lack of competition can lead to inefficiency, high costs, lack of innovation and substandard management. Competition can be a way to make the industry more efficient and cost-effective. “The structure of single desk marketing takes away the “live or die” incentive to reduce costs,” (Sims 2006). As there is no competitor, AWB does not suffer many, if any, ill effects if it does not try its best to reduce costs. In addition, competition “forc[es] standards of quality and service to rise” {Sims 2006) as competitors try to offer better services to outbid one another. Also, “[c]ompetition leads to openness and transparency” (Sims 2006).

Oil for food scandal

Previously a low profile organisation, the AWB made headlines in late 2005 when it was alleged that it had knowingly paid kickbacks to the Iraq Government, defrauding the UN and violating sanctions. At the insistence of the Iraq government of dictator Saddam Hussein, the AWB agreed to pay 'transportation fees' of around $AUD 290 million. At the same time, the price per ton paid from the UN Oil-for-Food program was raised by an amount slightly above the 'transportation fees'. Saddam Hussein Abd al-Majid al-Tikriti (Arabic: , [1]; born April 28, 1937[2]), was the President of Iraq from July 16, 1979 until April 9, 2003, when he was deposed in the United States-led invasion of Iraq. ... The Australian dollar (currency code AUD) has been, since 1966, the currency of the Commonwealth of Australia, including the Australian Antarctic Territory, Christmas Island, Cocos (Keeling) Islands, Heard Island and McDonald Islands and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu. ... The Oil-for-Food Programme, established by the United Nations in 1995 (under UN Security Council Resolution 986) and terminated in late 2003, was intended to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humanitarian needs for ordinary Iraqi citizens without allowing...

The government-sanctioned Cole Inquiry into the company's role in the scandal is underway as at April 2006 and is still continuing. There is some political sensitivity surrounding the payments to Saddam Hussein's regime, given Australia's contribution to military action against Hussein in the 2003 invasion of Iraq. However, the scandal has only marginally affected the Australian Government in polls conducted by Newspoll and ACNielsen wherein the leader of the Opposition, Kim Beazley remains at all-time lows for preferred leader. In any case, Andrew Lindberg resigned as managing director on 9 February 2006 and from the board of directors on 22 February 2006 under intense public and media pressure [1] [2]. The Cole Inquiry or more properly the Inquiry into certain Australian companies in relation to the UN Oil-For-Food Programme is an inquiry set up by the Government of Australia under the Royal Commissions Act 1902 in November 2005 to inquire whether decisions, actions, conduct or payments by Australian... Saddam Hussein Abd al-Majid al-Tikriti (Arabic: , [1]; born April 28, 1937[2]), was the President of Iraq from July 16, 1979 until April 9, 2003, when he was deposed in the United States-led invasion of Iraq. ... Combatants Coalition Forces: United States United Kingdom South Korea Italy Poland Romania Australia Denmark others. ... Hon Kim Beazley Kim Christian Beazley (born December 14, 1948), Australian politician, has been Leader of the Australian Labor Party and Leader of the Opposition since 28 January 2005. ... Andrew Lindberg (born Scotland circa 1954) B.Sc. ... February 9 is the 40th day of the year in the Gregorian Calendar. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... February 22 is the 53rd day of the year in the Gregorian Calendar. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ...

The Oil-for-Food program UN resolution 986 was passed on 1995-04-14 and the program ran from late 1996 until 2003-03-20. 1995 (MCMXCV) was a common year starting on Sunday of the Gregorian calendar. ... April 14 is the 104th day of the year in the Gregorian calendar (105th in leap years). ... 2003 (MMIII) was a common year starting on Wednesday of the Gregorian calendar. ... March 20 is the 79th day of the year in the Gregorian Calendar (80th in Leap years). ...

On the 11th of July 2006, North American and Canadian farmers are claiming $1 billion in damages from AWB at Washington DC, alleging the Australian wheat exporter used bribery and other corrupt activities to corner grain markets. The growers are also claiming that AWB used the same techniques to secure grain sales in other markets in Asia and other countries in the Middle East.[3] Flag Seal Nickname: DC, The District Motto: Justitia Omnibus (Justice for All) Location Location of Washington, D.C., with regard to the surrounding states of Maryland and Virginia. ...

References

• "AWB halts Iraq wheat trade", Australian Broadcasting Corporation, 2006. Retrieved on 2006-06-24.
• "Grain exporters wants AWB monopoly removed", Australian Broadcasting Corporation, 2006. Retrieved on 2006-06-10.
• "Wheat farmers consider the future of single desk policy", Australian Broadcasting Corporation, 2006. Retrieved on 2006-06-11.
• AWB: Single Desk – Fact Sheet 1 (2006). Retrieved on 2006-06-10.
• "AWB faces $1 billion damages lawsuit", News Limited, 2006. Retrieved on 2006-07-12.
• Sims, F. (2006). Perspectives on Single Desk Marketing. Retrieved on 2006-06-12.
• "The pros and cons of the single desk", The Age, 2006. Retrieved on 2006-06-10.
• Mark Vaile (2006). The Single Desk in the Doha Round. Retrieved on 2006-06-23.

The Australian Broadcasting Corporation (ABC) is Australias national public broadcaster. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... June 24 is the 175th day of the year (176th in leap years) in the Gregorian Calendar, with 190 days remaining. ... The Australian Broadcasting Corporation (ABC) is Australias national public broadcaster. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... June 10 is the 161st day of the year in the Gregorian calendar (162nd in leap years), with 204 days remaining. ... The Australian Broadcasting Corporation (ABC) is Australias national public broadcaster. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... June 11 is the 162nd day of the year in the Gregorian Calendar (163rd in leap years), with 203 days remaining. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... June 10 is the 161st day of the year in the Gregorian calendar (162nd in leap years), with 204 days remaining. ... News Limited was the principal holding for the business interests of Rupert Murdoch until the formation of News Corporation in 1979. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... July 12 is the 193rd day (194th in leap years) of the year in the Gregorian Calendar, with 172 days remaining. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... June 12 is the 163rd day of the year in the Gregorian calendar (164th in leap years), with 202 days remaining. ... The Age is a broadsheet daily newspaper, which has been published in Melbourne, Australia since 1854. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... June 10 is the 161st day of the year in the Gregorian calendar (162nd in leap years), with 204 days remaining. ... Hon Mark Vaile Eric William Day (born 18 April 1956), Australian politician, is the leader of the Nationals and Deputy Prime Minister of Australia. ... 2006 (MMVI) is a common year starting on Sunday of the Gregorian calendar. ... June 23 is the 174th day of the year (175th in leap years) in the Gregorian Calendar, with 191 days remaining. ...

External links

Wikinews has news related to:

Former AWB chairman paid almost $1,000,000 by AusAID

• The AWB website
• Landmark rural services
• UN Oil-for-Food program
• Inquiry into certain Australian companies in relation to the UN Oil-For-Food Programme (Cole Inquiry)
• Claims of AWB involvement in the live export trade
• The Australian Wheat Board scandal