July 2, 2007

 

Australia's new wheat association may impose new export regulations 
 

 

Australia's newly-formed Wheat Export Marketing Alliance will meet this week to consider possible sources for seed funding to start a new grower-owned company to control wheat exports, Geoff Nalder, a spokesman for the alliance and president of the grains group Victorian Farmers Federation, said Friday (June 29).

 

Despite favouring putting control of a single desk over wheat exports into a de-merged international unit of AWB Ltd., Nalder said the alliance also has been casting around for funding sources for a possible new company to manage exports.

 

However, this process has already run into some fire with Ron Greentree, Australia's biggest wheat grower, arguing against industry and government-funded Grains Research & Development Corp., or GRDC, tipping any funds into the process.

 

Nalder said other sources approached include banks, the government and AWB. State farming organizations driving the process aren't in a financial position to materially assist.

 

The meeting on Monday (July 2) will receive presentations from a merchant bank and a commercial bank "as to their possible assistance and their vision how they can assist us in this program," Nalder said without naming the banks.

 

The alliance will announce after the meetings next week its future direction and who will be involved, he said.

 

GRDC indicated a willingness to listen to the alliance's needs and will further consider its position after next week's meeting in light of its own project funding criteria, he said.

 

Greentree, who wants wheat exports deregulated, warned GRDC against seed funding any new wheat company from a compulsory levy it collects from growers, as this is for research and development purposes.

 

"Not all growers are in favor of a grower-owned single desk and GRDC needs to keep out of politics," he said by telephone.

 

If GRDC does provide seed funding, with a figure of A$200,000 having been mentioned, growers might have to rethink the levy and put more stringent criteria on its use, he said.

 

AWB spokesman Peter McBride said the company is still considering possible seed funding for the alliance.

 

AWB will meet the alliance early next week with seed funding one of a range of issues to be discussed, he said.

 

McBride said the AWB board held constructive talks this week about its de-merger proposal, pool arrangements for the harvest later in the year and future marketing arrangements.

 

"That work is continuing," including with Deutsche Bank, which is advising AWB on the de-merger and other issues, he said.

 

The alliance represents five state-based wheat grower lobbies that are deciding on future arrangements for export marketing of their product, which can be valued at up to A$5 billion a year.

 

Prime Minister John Howard told growers in late May to come up with a new entity by March 1, 2008, to manage the wheat export single desk, which could be a completely new entity or a completely separated and de-merged international unit of AWB.

 

AWB will control export marketing of wheat from the next harvest in November and December while the Agriculture Minister will hold a power of veto over export proposals by other entities until July 1, 2008.

 

Incidentally, Greentree doubts the alliance will be able to make the March 1 deadline given the complexities of the task, not the least of which is identifying a source of capital, on which commercial returns would need to be paid.

 

US$1 = A$1.17