Michael Pascoe writes:

For any other organisation, AWB’s claim
that its internal restructuring to separate the single desk wheat export
business has nothing to do with the Cole Inquiry would be gobsmacking. For the
disgraced monopolist though, it’s par for the course.

The central excuse for maintaining the
single desk (and pretty much AWB’s original existence) was that somehow or
other it was a scientific fact that monopolising the right to export Australian
wheat meant Australian farmers received more money. A magic figure of an extra
$13 a tonne (and often more) is routinely thrown around as perceived wisdom.

It’s never quite made sense to me. (Unless
of course the AWB was paying bribes to obtain premium prices for what remains a
freely-traded commodity.) There are some
economies of scale in transport and handling that might be worth a bit but such
efficiencies would continue to be available to those who wanted to make use of
them. There’s another argument that the single desk smooths out some seasonal price fluctuations for farmers – the sort of
thing most business people have to do for themselves using hedging tools – but
it still doesn’t add up.

Today, Melbourne Business School’s Professor Paul Kerin risks the agrarian socialists’ ire by
stating wheat farmers have been hoodwinked into believing the single desk gives them a
premium.

Kerin tells the Smage that several independent
studies have found no credible evidence of net benefit from the single desk. He
cites a heavy combination of the National Competition Council, ACIL-Tasman,
Accenture and Allen Consulting.

As usual in such cases, the AWB commissions
its own studies which manage to find the exact opposite. For example, AWB’s web
site offers Your Single Desk, with details of a study it commissioned from consultants called Econotech.
Their modelling manages to find the single desk produces a premium of between
$13 and $30 a tonne. Truly amazing.

The great thing about economic consultants
is that the bodies commissioning their studies tend to get answers they like.
Perhaps it’s the way the terms of reference are set. Or something.

As far as AWB and its National Party and
farmer supporters are concerned, Econotech’s numbers are facts and the rest are
lies. And some farmers still seem to
think AWB is just like the old Wheat Board.

Regarding the restructuring, AWB chairman Brendan
Stewart says they were working on it before the Cole Inquiry started. That
might well be true, Brendan, but we all know now that AWB realised it was in
serious trouble long before Cole was appointed – that’s why you sent all those
documents off to lawyers for opinions and privilege. Remember?

Get Crikey for $1 a week.

Lockdowns are over and BBQs are back! At last, we get to talk to people in real life. But conversation topics outside COVID are so thin on the ground.

Join Crikey and we’ll give you something to talk about. Get your first 12 weeks for $12 to get stories, analysis and BBQ stoppers you won’t see anywhere else.

Peter Fray
Peter Fray
Editor-in-chief of Crikey
12 weeks for just $12.