September 19, 2007

 

Australia wheat-growers' lobby seeks more export permits

 

 

A Western Australia state-based grower lobby Wednesday renewed last year's call for the government to license more wheat exporters so growers aren't lumbered with big costs charged by AWB.

 

Without more export licenses, growers would be forced to deliver their wheat to AWB and face lower prices and higher costs from the collective export sales arrangements AWB operates, said Leon Bradley, chairman of Western Wheatgrowers.

 

Losses to Western Australian growers this year could double to A$200 million from A$100 million last year if they are forced to deliver their wheat to AWB, because of the difference between current prices and AWB's estimated returns on export sales, he said.

 

Agriculture Minister Peter McGauran announced Monday unlisted Western Australian grain company Cooperative Bulk Handling, or CBH, has been granted a license to export 500,000 metric tonnes of new crop wheat for the second year in a row.

 

At the time, the minister said he was withholding rulings on other export permits.

 

On Tuesday, the state's wheat crop to be harvested October through December was estimated at 5.7 million tonnes, about half the record output but up from an actual 5 million tonnes from the 2006 crop, said the government's Australian Bureau of Agricultural & Resource Economics.

 

Bradley said that with a limited market within the state and only CBH as an alternative exporter, growers are forced by law to deliver most of their wheat to AWB, thereby incurring price and cost penalties.

 

About 80 percent of the state's growers initially withheld their wheat from AWB last year until they were forced to deliver, he said.

 

"Allowing more competition into the wheat market would immediately resolve many of the mounting problems of Western Australian wheat growers," he said.

 

Under changes in place to the Wheat Marketing Act, McGauran holds a power of veto over applications for bulk wheat exports by non-AWB exporters until June 30, 2008. AWB will -- for the last time -- control the single-desk wheat export arrangements for the coming harvest before a new company takes control for the 2008 harvest.

 

Late last year, growers successfully lobbied AWB to cut a base service fee it charges to the collective wheat export sales pool to A$39.5 million from A$65.1 million, arguing that with sharply lower output they faced a high per-tonne cost for what were compulsory AWB services.

 

AWB, which sells the wheat it receives through the year, will charge A$39 million to manage the 2007 harvest pool.

 

A break fee to finalize AWB's operation of the pool, which would include provision for AWB to write down assets associated with the pool and pay labour separation costs or redundancies, is believed to be around A$16 million.