April 9, 2008

 

AWB mulls role as wheat exporter under new law

 

 

Australian agribusiness AWB Ltd. plans to continue in a role as a leading exporter of wheat after changes to export arrangements come into force from July 1, but is still finalizing some details, company spokesman Peter McBride said Wednesday.

 

AWB has already announced plans to shift focus to export margins from shipment volumes, but has not settled on the structure or geography of any new collective sales pool arrangements, he said.

 

"It is obvious we will lose market share because there will be a range of competitors and exporters out of Australia," McBride told Dow Jones Newswires.

 

"We have to work out what our commercial appetite is on how much we accumulate, but we intend to be a leading grain exporter out of Australia," he said.

 

Under new export arrangements the government plans to introduce from July 1, multiple wheat exporters will be accredited - ending a protected system that since World War II saw AWB or its predecessor, the Australian Wheat Board, either operate an export monopoly or remain the dominant exporter.

 

At stake is a share in an annual export trade that has at best reached nearly AUD 5 billion (US$4.6 billion) in value and almost 18 million tonnes of wheat, or more the 15 percent of annual world wheat trade. 

 

AWB intends to apply for accreditation as a bulk wheat exporter under the new arrangements.

 

While it will accumulate wheat for export through pools, if it is beneficial to pool participants AWB will sell to other industry participants who want to buy free-on-board (FOB) or on rail track in capital cities, McBride said.

 

The company also plans to maintain an active ship chartering operation out of Australia, but the scale of this operation will in part depend on customer needs and whether they buy FOB or cost-insurance-and-freight basis, but the company will continue to offer the service, he said.

 

"The beauty is we've got the majority of structures in place: people on the ground, very good spread across the wheat-belt, payment systems and grower relations and international customer relations," said McBride.