US forum questions AWB performance: Bradley

25 Jan, 2005 10:00 PM
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THE activities of monopoly grain trader AWB Ltd were criticised at a meeting of leading global agribusiness minds in the US, according to Pastoralists and Graziers Association grains chairman Leon Bradley.

Mr Bradley attended the recent annual Harvard Business School agribusiness seminar with 160 delegates from around the world, where AWB was one of 12 case studies investigated.

Mr Bradley said AWB was chosen because the organisers were interested in its transformation from a statutory marketer to an organisation becoming more involved with free enterprise activities through a number of steps.

He said delegates considered the relevance to grain growers of the wheat industry benchmark used by AWB to assess its achievements in price and deliveries.

³The general conclusion was that it wasn¹t as useful as it could be,² he said.

³It wasn¹t based on net prices, instead it was based on gross and it was seen as being determined by the people that it benefits - it had more of an unnatural bias than if it were determined independently.

³During the question and answer session people said it was a peculiar arrangement and questioned why growers would be satisfied with it.²

Mr Bradley said attendees, many of whom were Harvard Business School alumni, questioned the merits of AWB¹s takeover of rural service provider Landmark.

³One person called it a desperate measure at an inflated price because they paid so much for goodwill,² he said.

He said the price, $825 million, was thought to be usually high considering AWB started to write off Landmark immediately after purchase.

³AWB was desperate to diversify from being a pure monopoly because it was vulnerable to modification of its export powers,² he said.

³People then posed the question Œwill it benefit? Should it continue to diversify?¹²

Mr Bradley said some people argued AWB should be devoting fewer resources to retaining its privileges and more to performing.

³It¹s spent an enormous amount of money on media, public relations, lobbying government, taking out full page advertisement which don¹t make much sense to me because they¹ve got the farmer¹s business already.

³They¹ve done that instead of trying to advance their real business performance.²

Mr Bradley said the conference also discussed Brazil¹s successful complaint to the World Trade Organisation (WTO) about the effects on South American and African growers of the oversupply of cotton caused by US grower subsidies.

³It showed that South American companies are not only going to be agricultural powerhouses, but they are going to be influential in the WTO as well,² he said.

However, AWB state manager Paul Ryan said Harvard Business School chose to study AWB because it was one of the most innovative, unique and successful agricultural companies in the world.

³We received a very positive response to our participation in the Harvard seminar and the view of the majority of participants was that AWB was performing well in managing the single desk and acknowledged the benefits it delivered to Australian growers,² he said.

He said the main criticisms of the Australian wheat single desk and AWB came from Mr Bradley himself.

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