AWB under pressure

28 Sep, 2006 07:00 PM

AWB Ltd is under increasing pressure to release details of a plan that will provide growers with enough confidence to deliver their wheat into the 2006 national wheat pool.

AWB has until October 1 - the official starting date for the 2006 national wheat pool - to devise a plan of action that will protect growers from the mounting costs of the Cole inquiry and the subsequent fallout over AWB's conduct in Iraq.

Grower lobby groups are also seeking assurances from AWB that growers will be protected from costs relating to other legal challenges facing AWB, including shareholders' class actions, in Australia and the US.

There are also fears growers could be forced to foot the bill for a controversial "break fee" that would see AWB compensated in the event that it lost control over the single desk, as well as a back-dated claim from the Australian Taxation Office.

If AWB fails to provide a satisfactory plan to protect growers from these costs, it could face an immediate backlash from wheat growers who fear they will be forced to foot the bill once they transfer ownership of their wheat into the national pool.

WAFarmers, Pastoralists and Graziers Association and the Grains Council of Australia have called on AWB to release details of the break fee.

The farmer lobby groups have also cautioned growers to be wary of delivering their wheat into the 2006 pools until they are satisfied AWB's legal costs will not be deducted from it.

Directors of AWB Ltd (AWBL) and AWB International (AWBI) are due to meet in Melbourne this week with the issue of protecting growers' pockets from these costs the number one item on the agenda.

While AWB staff and directors stopped short of saying a guarantee on costs would be given following this week's meetings, it appears highly likely that a plan of action will be announced.

AWBL chairman Ian Donges said a decision on who would pay for the various costs needed to be made before October 1, the start of the 2006 pool, to give growers enough confidence to deliver their wheat to AWB during harvest.

Mr Donges said while that guarantee could not come from AWBL because it was up to parent company AWBI to make the final decision, work was being done behind the scenes to address the issue.

"Growers can be assured that their message has been heard loud and clear," Mr Donges said.

AWBL and AWBI director Chris Moffet stood by comments he made at the Morawa single desk rally in March, when he declared that AWBI, the growers' national wheat pool, would not foot the bill for the Cole inquiry.

Mr Moffet, who is also a Morawa wheat grower, said AWBL would pick up the tab.

At the time the cost of the Cole inquiry was estimated to reach $16 million, however, that figure has risen substantially as the proceedings have been further delayed.

The cost of the alleged break fee is estimated to be between $100m and $400m, while the pending class action in the US is estimated to be worth hundreds of millions of dollars.

"The pool is not picking up a penny for the costs associated with the Cole inquiry," Mr Moffet said at the Morawa rally.

"All costs associated with the inquiry come from the parent body and it will not cost you - the poolers of wheat - a penny.

"The board has made that decision."

When contacted this week, Mr Moffet confirmed the issue would be the number one topic of discussion at this week's AWBI and AWBL directors meetings.

"My unequivocal duty is to protect the interests of wheat growers and that's my primary concern," Mr Moffet said.

"As far as I'm concerned I have not flinched from my belief that wheat growers should not be forced to pay the costs of something that they had nothing to do with.

"This is an issue that should be solved by commonsense."



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