Western Australian grain handler CBH has launched a new challenge against AWB's export monopoly, announcing a five-year supply deal with its flour mills in South East Asia.
Western Australian grain handler CBH has launched a new challenge against AWB's export monopoly, announcing a five-year supply deal with its flour mills in South East Asia.
But the deal can only go ahead if AWB is stripped of its monopoly export powers over its payment of $290 million in kickbacks to the former Iraqi regime of Saddam Hussein.
The federal government, which granted AWB its monopoly through the Wheat Marketing Act, has said it will not consider changes to the single desk for wheat exports before Commissioner Terence Cole reports on the kickbacks scandal later this month.
CBH is among a number of companies which have made 12 separate applications for export licences to the Wheat Export Authority (WEA), but AWB is likely to exercise its legislated right of veto over all of them.
The latest CBH plan, which will also be the subject of a licence application, aims to export two million tonnes of West Australian wheat to flour mills CBH owns through the Interflour group.
"And that's probably a minimum amount as well," CBH chief executive Imre Mencshelyi said.
"We believe that we can demonstrate a benefit to the growers of Western Australia on an annual basis.
"This is not just about an opportunistic short-term position, this is about a long-term commitment and that's why we invested in those flour mills."
Through its ownership of the Interflour group, CBH has four flour mills in Malaysia, one in Vietnam and one in Indonesia.
CBH already has applied to send two million tonnes of wheat to the mills from this year's drought depleted harvest at prices around $20 a tonne better than AWB is offering.
AWB is under pressure to attract the maximum amount of wheat to its export pool in a year when the harvest is expected to be the smallest in more than a decade.
Growers are angry that AWB has forward sold large amounts of wheat at prices well below current domestic and international levels.
In a bid ease growers' concerns, AWB last week slashed more than $25 million from the annual $65 million base marketing fee it charges farmers.
Mr Mencshelyi said a large number of WA growers remained undecided on what to do with their wheat this year, but at least some did not want to deal with AWB.
"The problem is if they put into the CBH wheat pool and we don't get a licence, we have no alternative but to revert that to the national pool," he said.
"And some of these growers are telling me straight out that they don't want to do that. So a lot of them are just fence sitting."
Mr Mencshelyi also is chairman of Wheat Australia, a consortium of three grain handlers set up this year to export wheat to Iraq when the Cole inquiry lead to Baghdad in February slapping a ban on dealing with AWB.
Wheat Australia has now lodged an application to export 500,000 tonnes of wheat to Iraq next year after AWB, under government pressure, allowed the consortium to make a 350,000 tonne sale earlier this year.
The full text of a CBH announcement is pasted below
CBH GROUP LOCKS IN LONG-TERM SUPPLY FOR WESTERN AUSTRALIAN WHEAT
The CBH Group today demonstrated its commitment to providing a long-term marketing alternative for Western Australian wheat growers by announcing, in conjunction with the Interflour Group, a five year supply agreement.
The CBH Group will now apply to the Wheat Export Authority for a bulk export licence to enable the agreement to be carried out.
CBH Group Chairman Tony Critch said this supply agreement clearly signalled the CBH Group's intention to provide Western Australian growers with competitive wheat marketing options for the long-term and the ability to access increased value from their investment in Asia.
"This agreement locks in a secure and valuable market for Western Australian wheat growers for the next five years.
"Every tonne of wheat the CBH Group is able to sell direct to Interflour means more dollars in the pockets of Western Australian growers.
"Our relationship with Interflour provides growers with improved grain prices and increased profits from the mills coming back through the co-operative.
"How can this be opportunistic? This is simply about giving growers a choice.
"If growers want to access the traditional single desk regime then they should be able to do so. Equally though, those who want better returns for their wheat should be allowed the opportunity to capture that extra value.
"Western Australian growers have very clearly signalled this harvest that they are seeking alternate pathways to international markets that are not weighed down with heavy corporate and administrative burdens and redundant marketing costs.
"We are confident that the CBH Group's minimal overhead structure coupled with the efficiency of controlling the wheat from farm gate to mill will guarantee enhanced value over and above Australia's current wheat marketing arrangements."
Final pricing of this contract will be undertaken on an annual basis at market rates applicable to the year of supply. Annual tonnages are anticipated to be approximately two million tonnes subject to market conditions.
