December 5, 2006

 

Australia's AWB loses wheat export veto for 6 months
 

 

Australia's monopoly wheat exporter, AWB would lose its right to veto wheat export deals by its rivals for six months, Prime Minister John Howard said Tuesday, Dec 5.

 

The company would go under government control for six months. The latter plans to consult with the industry over the next three months before making a final decision on marketing arrangements for Australia's wheat. One company the government would consult with is a leading grains group , Co-operative Bulk Handling (CBH), said Howard.

 

AWB's monopoly powers have been in the spotlight since a judicial inquiry found the company breached the UN oil-for-food programme by paying US$222 million in kickbacks to Iraq between 1999 and 2003 to secure lucrative wheat sales.

 

Though there has been widespread rage against the company among farmers, rural-based National Party, which governs in coalition with the PM's Liberal Party, supports the single-desk arrangements of AWB.

 

AWB requested a halt to the trading of its shares so that it could assess the impact of the government decision. The stock was down 3.6 percent when trade was halted.

 

Meanwhile, Grains Council of Australia, which represents most of Australia's 35,000 wheat growers, supported the government's decision.

 

AWB last week separated its operation of the single desk from the main group, giving it to subsidiary AWB International, to be owned by growers.

 

According to Howard, the new arrangement would apply for the current wheat crop.

 

Howard said many options were under consideration for the wheat marketing system including a new single desk operator, run by wheat growers.

 

Another included enhanced operations by the government panel, the Wheat Export Authority, which has in the past overseen AWB's veto power.

 

Others wanted complete deregulation of the Australian industry, Howard said.