AWB falls in line

31 May, 2006 08:45 PM
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AWB has bowed to industry pressure and is now committed to making further changes to the management of Australia's single desk wheat marketing system.

Last week's announcement by AWB that it will adopt all the additional governance recommendations from the 2004 review into management of the single desk, raised a welcome response from various sections of the grains industry.

AWB executive chairman Brendan Stewart said the company would further separate the license holder of the single desk - AWB International - from the manager, AWB Limited, by accepting changes recommended in the 2004 review.

Mr Stewart said AWB would, "consult with stakeholders to explore other options for greater separation between AWB and the owner of the single desk licence, provided it is in the best interest of growers and shareholders.

"Most of the recommendations have already been implemented but AWB is now looking at putting the remaining measures in place to achieve more functional separation of the accountability lines, in terms of the board of AWB International," Mr Stewart said.

Mr Stewart's comments came as AWB reported a $46 million first half net profit hit one-off items such as costs relating to the Cole inquiry.

O'Connor MHR Wilson Tuckey claimed the announcement as a "first victory".

"Notwithstanding the pleading of WA farmer organizations, it has taken the threats of legislative change to force AWB Ltd to abandon its arrogant stand and agree to reduce the conflict of interest between AWB Limited and AWBI as identified in the 2004 wheat marketing review", Mr Tuckey said.

"It raises the question as to who is the villain now and what credibility have the roundtable advocates in their message that wheat growers have never had it so good.

"I also repeat, if AWB Limited services are so good, who would be silly enough to go elsewhere, and should Government legislate to protect them from their own foolishness?

"I will monitor progress but I am not diverted from the need for AWB Limited's operations to face the full scrutiny of a grower influenced WEA board through the export licensing process.

"Such a change does not prevent AWB Limited from supplying all the services it does today, and any change would be its decision.

"For instance any restriction on its pool operation would supply direct grain to other operators and thus improve their case for export permits which AWB could not prevent."

WAFarmers grains section president Ray Marshall said the decision was a positive step and one the majority of growers in WA had been calling for.

"The recent public meeting in Cunderdin sent a clear message to AWB that growers wanted increased separation between AWB International and AWB Limited and it is encouraging that the company is responding to their concerns," Mr Marshall said.

"WAFarmers has been instrumental in urging AWB to deliver greater separation between AWB and the 'single desk' manager AWBI, in line with the 2004 review.

"This is a good start and a big win for growers and WAFarmers looks forward to seeing further progress to ensure the future of the national single desk".

The 2004 wheat marketing review was conducted by an independent panel chaired by Ms Alice Williams.

The panel consisted of Martine Pop and Barry Watts and was appointed by Warren Truss, the then Minister for Agriculture, Fisheries and Forestry.

At the time Ms Williams was a consultancy group director and a member of the Australian Accounting Standards Board while Dr Pop was a past director of WA Grain Pool and chair of the WA Meat Industry Authority.

Mr Watts was previously world head of packaging for Southcorp Limited.

The report's terms of reference were to assess AWB International's performance as the commercial manager of the wheat export single desk and its obligations to maximise returns to growers; to examine the performance of the Wheat Export Authority and to review the operation of the export consent arrangements.

The panel received 292 submissions to the review and undertook face-to-face consultation with industry and other stakeholders.

The panel found that AWBI and the WEA had performed well, but identified areas needing improvement to help maximise grower returns.

The 2004 wheat marketing review's recommendations fall into three broad categories.

The first is to increase AWBI's independence from AWB Limited with flow-on improvements to its governance and operations.

The second is to improve the export consent system and introduce longer-term consent to allow development of new marketing opportunities that will enhance returns to growers and the wider community.

And the third is changes to the WEA, including the adoption of a more strategic "top down" approach towards monitoring AWBI, improving the WEA's relationships with its stakeholders, and reassessing its capabilities and resource use.

The Government's response to the report was to maintain the framework of the current wheat marketing arrangements under the Wheat Marketing Act, with AWBI continuing as the commercial manager of the wheat export single desk.

When releasing the report Ms Williams said that AWBI should consider improvements to enhance its role as the single desk manager and help maximise returns to Australian wheat growers.

"Some of the key recommendations in the growers' report include a call for more independence for AWBI, changes to the consent arrangements for exporting wheat in bags and containers, and a more strategic focus for the WEA," Ms Williams said.

"Greater independence for AWBI would help ensure the services payments to AWB Limited are transparent and appropriate, and give growers the confidence that they are getting value for money.

"Allowing longer-term consents for wheat exported in bags and containers would benefit growers and the wider Australian community. In short, it would give traders greater certainty, and growers increased options.

"Changes to the WEA would also enable the consent process to be streamlined and allow the Authority to place a greater focus on the important task of monitoring AWBI.

"While the recommendations provide industry and the Government with some distinct challenges, they can also maximise returns to growers without changing the single desk arrangements."

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