AWB will not trim hedge

12 Jul, 2007 07:00 PM
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AWB says it will hedge this year¹s wheat crop, after copping a public bollocking from Federal Agriculture Minister Peter McGauran last week.

Ongoing concern from growers and grower organisations prompted Mr McGauran to make a formal statement that tore strips off AWB.

Mr McGauran said AWB¹s decision not to commence its hedging program for the 2007-08 wheat crop was flawed and exposed growers to price risks they would be forced to manage themselves.

He said while it was a commercial matter for AWB to determine whether or not to hedge the crop, growers expected the single desk operator to handle risk management functions for them.

³AWB¹s decision not to pursue its normal hedging program leaves risk management to growers,² Mr McGauran said.

³This is an unfortunate decision by AWB given growers, and AWB itself, have consistently argued that one of the benefits of the single desk is that it allows centralised risk management.

³By leaving this to individual growers at a time when they are experiencing the effects of drought reflects the contempt with which AWB treats growers.

³AWB expressing concern about other permits I may issue is not an adequate explanation for its decision.²

Mr McGauran said AWB had always had to cope with volume uncertainty in its hedging strategy, as was seen last year due to drought.

³Such uncertainty has not prevented it from hedging in the past and is not a convincing enough reason this year,² he said.

³It also says a lot about AWB¹s confidence in its ability to attract wheat from growers this year.

³If AWB offers an attractive product to growers then growers will deliver to it ‹ irrespective of how many other bulk permits may be issued.²

Mr McGauran said he would examine AWB¹s decision to see if he could direct the Wheat Export Authority (WEA) to investigate the matter further.

His recently bestowed power to direct the WEA to investigate such matters was recently inserted into the Wheat Export Marketing Act.

AWB hit back with its national media manager Peter McBride saying there definitely would be hedging on the 2007/08 National Pool for the coming harvest.

But he said AWB had not finalised what, how and when it would be done.

He said the rules of pool management had changed in light of the new wheat marketing legislation and AWB needed to modify the way it managed the pool in the future.

³Once AWB has finalised the way it manages the 2007/08 National Pool it will inform Australian wheat growers,² Mr McBride said.

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