AWB: Symbolism doesn't equal reality

AWB: Symbolism outweighs reality

The news that growers candidates for the AWB board wish to oppose the normalisation of the company is completely understandable.

Who wants to hand over control of a company to a corporate sector that does not have the growers’ interests at best heart? It’s an emotive topic for growers already set to lose the safety net of the single desk.

However – at closer inspection, this symbolism is outweighing the reality of the situation.

To all intents and purposes, grower control has already left the building – with the obligation to maximise returns to shareholders AWB’s major focus.

The executive team form the power base and there is little to suggest the grower directors have done much more than rubber stamp the official party line.

But the attitude prevalent among the farming community remains that in order to have a company focused on grower needs, there needs to be grower control – which is not the case.

There is an attitude that farmer satisfaction and an agribusiness making a healthy profit margin are mutually exclusive – that agribusinesses need to gouge the growers to make their money. Its an absolute fallacy.

By creating a healthy AWB, which is able to compete on the open market without the millstone of the dual share structure around its neck, farmers will see a company that is able to further its investment in the grains industry.

And if they don’t like it, if AWB does turn out to be a corporate monster that exploits growers, then go elsewhere – AWB will have to make itself attractive to growers if it wants to win its share of the wheat trade.

The relationship between agribusiness and farmer need not be parasitic – there is scope for a win-win there, even without the scrutiny of a grower-controlled board.

Relinquishing symbolic control of AWB is a hard step for growers to take, but the reality is that even if the constitutional amendments are not passed, the shareholders will always take precedence.

But remember, shareholder and grower satisfaction need not be mutually exclusive.

Meanwhile – long-time grains industry analysts have noted the delicious irony in AWB being faced with the backlash of single desk hardliners.

For years, AWB cultivated this single desk ideology and raised a fanatical band of grower support – a wedge of rusted-on agrarian socialists that are now diametrically opposed to AWB’s reforms.

AWB knowingly raised the gorillas – now they’re out the cage.

Date: Newest first | Oldest first

READER COMMENTS

max
23/01/2008 2:38:06 AM

AWB have an uphill batle to reform their business structure.Grower control is a myth built up over sixty years of propaganda by AWB. What do they expect? They brainwashed gullible growers to belive them. The backlash against AWB will be now at their own detriment. Informed growers with vote for on changing the A class of shareholders but alas many sensible growers hold a grudge against AWB for how they have been treated and how AWB raped the growers for many years. They will vote no on principle to punish AWB. The ill informed majority of growers will oppose the restructure because they still believe in AWB previous propergander. Whoops AWB you killed your own business. What a shame.
Grain grower
24/01/2008 4:47:58 PM

Max, my sentiments exactly!!
Grain farmer
28/01/2008 11:56:38 PM

Max, my sentiments exactly!!
NSW farmer
7/02/2008 2:31:57 PM

Max, yours is a short sighted view. Look at the facts. The AWB is a victim of circumstances. It was set up to give growers a united approach to compete against corrupt practices in world grain markets which saw Aussie growers ripped off by traders in times of over supply. In theory that is at harvest time every year that supply outstrips domestic usage. A big reason for this rip off is that USA & EC pays subsidies to their graingrowers allowing them to sell their wheat at unreal/undercut prices to traders who then onsell at below market values. Believe it or not, that same "market corrupting" situation still exists today. Over the years Australian growers have justifiably sought updates and modernisation to the wheat market system in Australia. We now have a system with much more flexibility than ever before, but still have the comfort a a Single Desk fallback. Some growers have sought changes because they thought it was the AWB (Single Desk) that was limiting their income. The AWB (Single Desk) has never been a perfect system, and it has therefore always been under attack for one or another reason. Just because it is not perfect does not mean it should be sacked. It is till better than anything else available to Australia's whaet industry. Market corruption still exists today. It is still a fact that USA & EC causes wheat sales prices to be artificially lowered because or their subsidies to growers. This is the villain of greater proportion than any AWB (Single Desk) shortcoming. Growers who want to blame the AWB for reducing wheat incomes are looking in the wrong direction and will only find this out when it is too late. In a world wheat market trading around 100 million tonnes across the ocean annually, the AWB (Single Desk)can not raise prices above the USA/EC subsidised levels, but it can save Australian growers from driving them lower by pooling wheat at harvest time and holding wheat off the market so that it does not create a December grain flood every year. At the same time growers are not prevented from accessing any of today's futures options and forward contracts if they feel they can improve their prices by punting the future. In fact they access such markets with the Single Desk as a solid fallback. Why throw away that comfort? If you have a complaint why not make your Single Desk better instead of drowning it?
Single Rip-Off
15/02/2008 7:17:45 PM

Sounds like NSW Farmer is stuck in the past. Build a brige mate and look to the future, it is 2008 not back 1940s where you are with your outdated ideas. I will not stop you marketing your grain however you see fit but don't ever forcably make me participate by Govt. Legislation in your crackpot schemes ever. Great comment Max, I agree.
Jock
10/03/2008 2:21:05 PM

NSW Farmer is spot on - Max and co will not know what hit them if the industry is deregulated. How could you possibly imagine that the large multi national organisations will protect your interests?
Young Farmer
24/03/2008 4:17:11 PM

Have you looked at the past performance of the pool? I mean compared the performance against world prices? From my perspective, the pool's performance has been abysmal in recent years. The pool's a bit like communism, works in theory, not in practice. The reality is that any pool existing in australia, will only effectively be a "cash" pool. No pool manager can effectively manage a marketing strategy without a guaranteed amount of grain going into the pool. How can you hedge if you don't know how much you are hedging? De-regulation will expose grain to full competition. Do die-hard pool supporters honestly believe that international companies will conspire together to buy grain at low prices? How ridiculous. Has anyone noticed the sharp hike in grain prices recently? Particularly in SA & Vic? Isn't it strange that a week after de-regulation is announced, grain prices jump? Up-country basis has jumped considerably. There will not be any last minute change in the policy of the labor government. The pool is dead, long live the farmer!
Grain of TruthRural Press grains writer Gregor Heard on the big issues facing the broadacre farmers today.

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