Hi-jinks mask a deeper malaise at AWB

Last week’s AWB annual general meeting was vaudeville masquerading as corporate business.

From the publicity seeking single desk supporters providing the unlikely sights and sounds of a coffin being carted down La Trobe St to the tune of the bagpipes, to shareholder activist Stephen Mayne delivering his particular brand of self-consciously flamboyant oratory it was always going to be a colourful meeting.

Add to the mix a couple of fired-up shareholders and AWB chairman Peter Polson playing the straight man role, it was difficult to suppress a smile at times as Mr Polson dealt with a wide range of extravagant claims.

It is tempting to laugh off the events of the meeting as simply more eccentricities from a company with a long and proud history of throwing up left of centre situations, yet beneath the hoopla there are some serious issues the company needs to address.

While it is apparent that some grower shareholders may blame AWB for assassinating JFK, their claims that they feel abandoned by the company are legitimate on several fronts.

Since normalisation, AWB has spent so much time trying to assure the market that it is no longer beholden to grower-shareholders that it has forgot to focus on its need to develop loyal grower customers to maintain market share.

We’ve seen the company go with a board heavy on financial and corporate experience, and while the number of grower directors in the old structure was too many, surely there is room for at least one with a real feel for what is going on in the company’s rural heartland.

Staff-wise, in spite of cuts, there is still a huge presence at AWB’s impressive LaTrobe Street headquarters, yet most growers have noted the company has a smaller presence in the field post-deregulation.

In grower relations, where AWB once reigned supreme, other companies are now taking the lead, through simple measures, such as pre-harvest meetings, marketing sessions and just generally getting their field officers out and about and visible to their customers.

Experiments with centralised selling points, both at AWB and other grain marketing businesses, have not been a success. Farmers prefer the contact with a local merchant who understands the unique marketing landscape of their region.

While top of the line commodities traders are invaluable, they’ll be of no use if AWB has no grain to sell.

A second problem involves the management and board’s continued reluctance to accept responsibility for the company’s predicament.

Obviously, post oil-for-food, the market was prepared to be patient with the new management team to get the reeling company back on its feet.

However, it is now over three years since Gordon Davis took over, yet at the AGM, Mr Polson was still referring to the mistakes of the previous administration.

We acknowledge there may have been problems, but AWB Brazil was only set up in 2006, so it is a big call to place the blame squarely at the feet of the previous administration.

Many of the errors that led to the spectacular failure of the international business occurred under the watch of this team.

So while there continues to be focus on bribed directors and lobbying of government to end the single desk, the real issues remain undiagnosed.

AWB is maintaining a strong market share of Australian wheat sales for now, primarily due to the strong reputation forged out for it after years as the statutory exporter.

However, if it continues to make its focus reassuring the wider investor market how far it is moved on since its grower-operated days by focusing on its corporate image, rather than dedicating resources to ensuring a strong brand remains in the grain belt, it is quickly going to find this market share diluted, with a string of hungry new marketers looking to establish a strong regional presence.

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Ted O'Brien
1/01/2010 4:52:38 AM

Why should AWB spend any time trying to assure the market that it is no longer beholden to grower-shareholders? Growers were the foundation of AWB.
1/01/2010 9:09:44 AM

Agree with TED, AWB have lost respect with grain growers. AWB has bitten the hand that made and fed AWB. It has now be asked in the media to explain why was the grower director offered a bride to change HIS stance on removing grower control out of AWB? Well Gordon Davis where are you? It will be said, DENIAL..DENIAL
the 'd' word
1/01/2010 5:40:33 PM

The public company structure is a completely inappropriate structure for the corporately regulated grain trade. Look at how the biggest grain traders are structured.
3/01/2010 10:15:38 AM

You are EXACTLY right Ted! Look where AWB is now! The more management has distanced themselves the more dire the situation has become. They need to look to the past a little further back to see where their future direction ought to be.
Grain of TruthRural Press grains writer Gregor Heard on the big issues facing the broadacre farmers today.


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