Single desk selling was an excellent marketing tool for Australian farmers
prior to corporatisation as it is extremely difficult for farmers to compete
against markets that are highly subsidised as markets undercut each other to
drop the price farmers receive. With a single desk, we prevent Australian wheat
undercutting the price of Australian wheat.
Single desk went wrong when
AWB corporatised and I find it too much of a coincidence that the Federal
government passed legislation in July 1999 which is the same month as AWB
approved the deal to pay inland transport fees via Alia to Saddam Hussein’s
regime. Since corporatisation, farmers have been paying higher and higher costs
to pay for the shareholder dividends.
This AWB scandal involved paying
very high “transport costs” and then recouping this by charging a very high
wheat price. AWB was supposedly revenue neutral in this deal as AWB paid the
Iraq government and then got paid by the food for oil UN
Unfortunately, AWB and their staff did profit from farmers with
this deal. With the remuneration bonus and outperformance incentive schemes
based on incentives for higher costs and higher prices, farmers paid AWBL
shareholders and staff large sums of money for something that farmers did not
benefit from. We also paid AWBL interest on the money that was held up for
months at a time between payment of costs and payment for wheat.
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A basic explanation of how AWB works (pools, remuneration bonus etc) can be
found in the GGA submission to the Cole inquiry. The remuneration bonus is on page five. Basically, any price overinflated above the
normal wheat price is considered a good performance and AWB have the capacity to
charge farmers up to 20% of this even if farmers did not get the real benefit.
While there are some very good staff in AWB, farmers should not have
paid a bonus for a benefit we did not receive and farm lobby groups have been
lobbying for honesty and transparency since corporatisation. Yes, AWB has abused
their single desk privilege but it doesn’t mean that we don’t need some form of
market control to prevent Australian wheat undercutting the price of Australian
Julie Newman is vice president of the WA Farmers Grains Council but iswriting on the AWB issue in her capacity as a farmer and not as spokesperson for WA Farmers.