August 1, 2008


CWB: Benefiting from privatisation of Australian Wheat Board



Officials with the Canadian Wheat Board, or CWB, said sales gained by Canada following the dismantling of the Australian Wheat Board highlight the advantages of and the need for single-desk marketing.


At the CWB's annual crop year-end news conference, CWB President and Chief Executive Officer Ian White said since the Australian Wheat Board, or AWB, was privatized and lost its grain marketing monopoly, a number of countries had turned to the CWB because it's able to guarantee a year-round supply of wheat, barley and durum.


"At the present time, we're seeing a deregulation environment in Australia, where the AWB is now just going to be one of the players marketing wheat. What we're seeing in the marketplace is that countries who had previously been AWB customers, because they could get year-round supply, are looking to Canada to get that supply," White said.


Because the AWB is no longer able to ensure how much grain farmers will deliver to it, it's unable to forward contract to the same extent as it did when it enjoyed a marketing monopoly, he explained.


Referring to durum, White said, "it is probably fair to say that we were the only durum marketer in the world in 2007-08 that was able to provide a consistent supply around the year. This was a win-win scenario."


Looking ahead, White said it will be interesting to see how the privatization of the AWB plays out, especially for Western Canadians.


He also said the CWB's strategic marketing approach, combined with its disciplined sale pace allowed it to take advantage of high prices that appeared later in the 2007-08 crop year and resulted in high producer returns.


Many US farmers, for example, contracted their wheat at $6.00 or $7.00 a bushel thinking that it was a great price historically. In contrast, some western Canadian producers used CWB pricing options to secure prices as high as $20.00 a bushel, he said.


At the year-end conference, CWB reviewed 2007-08 prices and revenues and also released revised production estimates as well as export forecasts for the 2008-09 crop year, which begins Aug. 1.


For 2008-09, wheat prices will be lower than in 2007-08, partly due to increased global wheat production but also because normal grade patterns are expected for Canadian wheat this year. Cool spring and early summer weather in many regions across the prairies delayed crop development, and the late maturity will likely result in some quality downgrading, CWB officials said.


When asked by reporters after the conference to comment on a study released July 30 by Informa Economics that was critical of the CWB, White said he had not yet had an opportunity to work his way through the study. The 90-page report found that the CWB's marketing monopoly provided no real benefit to Western Canadian farmers and in some instances even offered lower prices than producers from other countries received.

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