Please note that comments at these meetings are directly transcribed
from recordings, and will not be changed by request. However, if your
name has been spelled incorrectly, you are a speaker which has not
been identified, or you would like to complete a sentence where the
recording has been identified as (indistinct), please contact the
Secretariat on 1800 356 425 or by email email@example.com
The Committee has, at its discretion, removed any defamatory
comments or obscene language, and has identified this where
appropriate. While every effort has been made to provide an accurate
record of proceedings, neither the Committee nor the Commonwealth
accepts any liability for the accuracy or content of the attached
WHEAT EXPORT MARKETING CONSULTATION COMMITTEE,
MONDAY, 12 FEBRUARY 2007
MR RALPH: Good afternoon, ladies and gentlemen. I would like to welcome
you to this meeting to discuss the views on wheat export marketing. My name
is John Ralph and I'm chairman of the Consultation Committee. On my far left
is Mike Carroll; Peter Corish next to me on the left, and Roger Corbett. Then
at the far end of the table, Russell Phillips, who heads up the secretariat for the
You will all be aware that the reason for the Consultation Committee is the
Government has announced it will be examining the arrangements for the
marketing of wheat overseas and has set up this committee to go around the
country to the wheat-growing areas of Australia to get the views of growers so
that these can be fed into their deliberations.
We have been asked to consult with people who are involved in the industry,
but our particular focus, in terms of reporting to Government, will be on what
we learn from these meetings and also from written submissions. I would
encourage as many of you as possible to make a written submission.
Those submissions have to be in by 23 February, so that we're in a position to
report by the deadline of 30 March. But I would like to stress that the
submissions don't have to be anything elaborate, a page or a half a page, setting
out your views, which can then be aggregated with others that will enable us to
have the widest possible representation in our reporting.
I want to make one thing very clear, and that is that it's not our job to make
recommendations on what should happen in relation to the marketing and sale
of wheat into overseas markets. We have been specifically charged with not
making any recommendations. Rather, our task is to seek the views of as many
growers as possible and feed those views in as one input into the Government's
deliberations on what arrangements it will put in place. Whether they make
changes or not make changes, that's going to be up to the Government.
The way we have been running these meetings, and which we propose to do
again today, is we have asked people to register if they want to speak. What
I will do, I will ask each of those in turn in the order in which they appear on
the sheet, and we will give each person five minutes, with a signal - very
sophisticated equipment we've got here - with a minute to go so that everybody
has the same opportunity.
The fact that you haven't registered to speak doesn't preclude you from
speaking. What we will be doing is asking each of those who did put their
names down. In turn, the committee will almost certainly be asking questions
of some of the speakers to get clarification or elaboration on what they are
saying. But after we have been through that part of the process, the meeting
will be open for anybody else who would like to get up, having heard the
speakers, and also want to present to the meeting.
I hope that if you've got one of these things, turn it off, please, just so we don't
get interrupted. I would ask - and this has been honoured at the other meetings
we have had - even though you may not agree with the views of a speaker,
please give them the opportunity to make their views known and you'll get a
chance to debate later, if you so wish.
The first person that I have down here is Mark Hoskinson.
MR MARK HOSKINSON: Mr Chairman, Panel, ladies and gentlemen: my
name is Mark Hoskinson, I'm a third generation farmer, with my wife, and I
hope that my children will be able to follow in our footsteps, if they choose. I
grow a thousand hectares of wheat each year, I try to, in adverse conditions.
I would firstly like to ask the committee to only receive submissions from
bona fide A class shareholders. I do believe there have been a lot of people
making verbal and written submissions to this Panel that are not growers and
are in fact representing those with vested interests for full deregulation.
I declare that I'm an A class shareholder and I have a small holding in shares in
both AWB and Grain Corp. I am on the New South Wales Farmers Executive
Council and their Grains Committee, the Regional Committee for Grain
Growers Association as well as the Executive Committee of the Wheat
Growers Association. So I have a sound understanding of what is happening
within the grains industry, in particular in the area of wheat marketing.
I can clearly see that this process of reviewing the wheat marketing has been
ill-conceived, as Government told growers that their actions post-Cole would
not cost growers any money. Ladies and gentlemen, I'm disgusted to say that
this currently is costing the growers a large amount of money, when they can
least afford it, after six years of drought.
There is enormous bureaucratic redtape that adds to the stress loads of our
farmers and the reason for this is that AWB is unable to take any positions in
hedging the 07 crop through hedging price, financing, shipping and the dollar,
while this is being undertaken. We, the growers, have been penalised big time
by missing out on the benefits that AWB achieved for us, as marketing of our
pool is done over a long period, using hedging to maximise our returns.
They are also facing extreme difficulties in being able to maximise returns for
the 06 crop while this is going on. On top of the Cole Inquiry farce, I will
never be able to slightly trust anything the Government tells us again. Who is
going to compensate us for our losses? No-one, we will lose out again.
On that point, I have a document here from an Indonesian news report stating
how pleased they are with the actions of the Australian Government in issuing
permits, as they have been able to buy Australian wheat at bargain basement
prices, and are pushing full deregulation to allow further cheap prices.
Another report I have read is from the Indonesian Government that have been
negotiating with the Australian Government since August 06, to allow payment
of wheat outside AWB. If this is true, then the Australian Government should
be crucified for this. The export of wheat to Iraq through Wheat Australia
allowed Iraq to purchase cheap wheat. Who took the discount? Us, the
Australian wheat grower.
Ladies and gentlemen, there's a lot of confusion over the use of the term "status
quo" in regard to the future of the Australian export system. Not even the
Government can explain what they mean when they say that they will not
accept the status quo. I say forget about the status quo and let's continue with
the structure we have, that includes the functional separation changes that have
been implemented, with the veto returned to the single desk operator, and let
them get on with the urgent requirement to sell the past/future crops that was
we as growers need them to do to maximise our returns.
I'm not against any change, I am willing to look at alternate models that will
maximise my returns, but not as a knee-jerk reaction by Government,
embarrassed by their actions and seeking revenge as they have supplied the
fuel to a small vocal band of deregulators who have spent a huge amount of
time and money stoking the deregulation fire for their own net gain, not ours as
Any change should be only done by wheat growers, after considerable
assessment of the proposals, as the only reason for change should be a net gain
to growers. Every man and his dog has come up with a plan for the future. It's
about time that those claiming to represent growers, like Grains Council, got
off their backsides and take notice of what we, the growers, want, not staff and
consultants. We need leaders who respect the view of the majority, not the
vocal well-financed minority.
In the lead-up to the 2010 review, we should be able to watch the new AWBI
and L in action to see what the implemented changes have done and for us to
continually look for improvement, not total unproven upheaval that may be a
further nail in the coffin for the Australian wheat growers.
Members of the Grain Growers Association had the opportunity this week to
vote on two resolutions about what is required in our wheat marketing. The
outcome of that should give a good indication of what we want as members,
who take time to vote. Even though both the board of the GGA and VFF
Grains oppose the resolution, they both have large shareholdings in
I am in favour of a grower poll over the future of our marketing system, but
only if it's an informed poll, where there is a detailed explanation of what they
are voting for and against. How much time do I have left?
MR RALPH: Keep going.
MR MARK HOSKINSON: One of the reasons the numbers are down here
today is that there's a clearing sale at a farm not from here. I strongly feel that
there's a good future for the Australian family farm post-drought and post-the
marketing review, but only if we the growers get what we want. Otherwise,
the Government may find Parliament Hill surrounded by thousands of angry
farmers and millions of dollars of useless farm machinery. I don't want to see
hundreds of clearance sales forced on us from the Government
mismanagement. Thank you.
MR RALPH: Thank you. I would ask each speaker to stay at the microphone,
in case there are questions.
The point you made, that we should only listen to wheat growers, the terms of
reference require us to listen to those in the industry, but what we will be
focusing on in our report will be on what the wheat growers' views are because
that's what we have been asked to do basically. But we are required to listen to
others in the industry during the inquiry.
You said that you're not against some changes being made. Would you just
like to elaborate, expand on that a bit?
MR MARK HOSKINSON: The company, AWBI and L, particularly L, has
gone through massive changes over the past few years, since it was set up. I'm
not against those changes, because any change - every business, even my own
business of farming, goes through ongoing change. Otherwise, we get left
But to make radical changes that will actually destroy what we have built up,
AWBL was set up by us, the growers, it was our money that set it up and it was
the growers' consultation process over the years that actually developed the
structure that we've got today. But it's not the structure we had two years ago,
it was changed for fundamental separation, last October, as you realise, and
that was all being driven from the grass roots.
When I say that the A class shareholders are the ones to be listened to, it is our
company, the shareholders of AWBL are grain growers, we built the company,
there's been other people, investors, come in and bought up about
20 something per cent of it, but the majority is still owned by growers. So the
company itself is our company and anything that the Government does to
destroy that company, effectively they are only destroying us, the Australian
MR RALPH: So you wouldn't be in favour of the suggested separation that
AWB has suggested?
MR MARK HOSKINSON: The separation that has been put forward so far,
there's no information to us.
MR RALPH: No, I know.
MR MARK HOSKINSON: There's absolutely no information. We can't
make a decision one way or the other whether we support a light demerger, a
heavy demerger. The heavy demerger, in my feeling, would be the only one
possibly of shining light because, as per the policy of New South Wales
Farmers, any structural change has to be proven that it's for the benefit
financially to us, the growers - no-one else, not your traders, not your
Grain Corp , not your CBHs and everything - to us as growers. It's our
industry, they hang on to the edges of it.
MR RALPH: That's why I am just trying to get a feel for it because AWB as
it's now structured, of course, does have two classes of shareholders.
MR MARK HOSKINSON: That's right.
MR RALPH: And it has responsibilities to those two classes of shareholders.
Are you saying you would rather it be under the control of growers, or are you
happy with the way it is?
MR MARK HOSKINSON: The system as it is now is what we have to work
with. There's been a lot of fundamental changes made in the last 12 months or
so. That has to be given a chance to operate, it has to be given a chance to
operate out to, say, the 2010 review, because what would be done now, by
what the Government's actions is now, is actually crucified us as growers
because it has disallowed the AWB to hedge our crops.
So the whole process has been ill-conceived because there was no statements
been put in place, even for the traders, to be able to market hedge the future
crops. So the whole thing has cost the industry dearly and it's going to
continue costing us dearly until we can get something done about this whole
situation at the moment.
MR RALPH: Thank you very much, Mark. The second speaker is Hugh Hart.
MR HUGH HART: My name is Hugh Hart, I'm a wheat grower, grain grower
- actually we're grain specialists, we don't have any livestock. We farm a
thousand acres near Tallimba, which is near West Wyalong. I have a son home
on the farm, who is the hopeless optimist that there's a job. I would like very
much to prove him right.
I'm unequivocally and unashamedly against the demerger model. I don't
believe it offers us any advantages as growers. We, through our A class
shareholding, control both companies effectively. As far as returns to
shareholders and returns to the pool, both companies are charged with
maximising returns to the pool, in their constitutions. So there is no real
problem there. There may be a problem of perception for people who are not
used to the complex structure that AWB has, and it is a complex structure.
I don't want to see anything change at this stage. I think, as Mark says, to get
through to 2010, have a look then. This whole thing, to my mind, is a complete
and utter farce. 2,000-odd companies dealt with Iraq through the oil for food
program. Only Australia has chosen to try and retrospectively bail the UN's
failed program out by crucifying one of its local companies. No-one else has
been silly enough to try it - with good reason. There's nothing it in it for
anybody, and I'm sure Mr Howard is very sorry he ever started this thing in the
The structure of the company had nothing to do with what happened in any
case, and we just want this thing finished. We want the right of veto put back
with AWB, because a single desk, single to a simple farmer like me, means
one. Single means there is one exporter of wheat. You can't have single and
somebody giving licences over here to all and sundry. That's not a single desk.
The Government knows what growers want. This annoys me, this idea, "Let's
go out and find out what growers want." They know what we want: we want
the single desk retained. That means that the power of veto has to reside with
the operator of the desk. It's plain, it's so bog simple, that I don't understand
what all of this confusion is about.
Why are we out here doing this, wasting money? As Mark said, our company
has been effectively hobbled since this Cole Inquiry started, and it's cost us.
No-one will ever put a figure on it because it's too complicated and too hard to
do. But it has cost us, and it has cost us a lot, and they are still not satisfied.
People have lost their jobs, their reputations, and we have lost heaps of money.
If somebody needed to be punished - and I don't believe they did - but if
somebody did need to be punished, there is enough punishment being handed
out now. Finish it, stop it, let us get back to the job as growers of growing the
stuff and our marketer, let them get back to marketing. They're spending more
time running around lobbying, trying to find a way forward through this haze
of Government-induced fog than they are of selling our crop. This is
Not only have we lost on the marketing side, but we are all shareholders in that
company, we started the company. What's happened to our share price through
all this? In a time of drought, we've lost as an industry millions and millions of
dollars in share value. Look, nobody but a - I don't know, I just don't
understand why they want to hand us some more punishment and more pain.
They're not satisfied yet. They've got their foot on our neck, but they are still
I just want it to end. Finish it. Let's get on with the job. There's going to be no
winners in this, except the anti-desk zealots. They're the ones who are going to
have a very short-lived victory because they will be pretty sorry about it when
they find out how much it actually costs them when the desk goes. That's
about it, thank you.
MR RALPH: Thank you very much. The next speaker is Mark Dwyer.
MR MARK DWYER: Thanks, Mr Chairman. My name is Mark Dwyer, I'm
from Rankins Springs. I went to the trouble of writing quite a bit out this
morning. I probably needn't have, because I think Hugh just about covered
everything, I believe, quite succinctly there. But I wrote it out, so if you don't
mind, I'll give it a shot.
I would just like to refer you to, I think its page 15 of the discussion paper, and
I have pretty much based everything that I would like to say here today on
what I have read in the discussion paper because I'm too angry about this
whole farcical situation to think straight for most of the time. So you'll
probably have to bear with me a bit.
Page 15 of this document lists - I can't even see straight now. It takes a part out
of the AWB Limited's constitution and in reference to the business about the
demerger, I suppose, it says here:
The objectives with respect to the management of AWB
International Limited are, which are maximising the net pool
return for growers who sell wheat into the pool run by the pool
subsidiary by securing, developing and maintaining markets for
wheat and by minimising the costs as far as practicable, and
distributing the net pool returns to growers who have sold wheat
into the relevant pool.
It goes on to say here:
Under its constitution, AWB Limited must ensure that the business
of providing services to a national pool is conducted efficiently and
at competitive prices. In doing so, AWB Limited may have regard
to the need to provide B class shareholders with a reasonable
commercial rate of return and the responsibility that further capital
may need to be raised.
Now to my scribble. In view of that, it seems to me - and I haven't read the
entire constitution, I find it quite complicated - but it seems to me that AWB's
priority is clearly to its pool participants and the B class shareholders are
secondary, as suggested by the constitution.
Personally, I have always thought that there would be a bit of a problem with
this grower corporate model and the consequent dissemination or
disaggregation of the B class shareholding, but that's what we've got, I suppose.
I think a lot of that has occurred in the last - I think it was listed publicly in
2002, and I mean we have pretty much been in drought since then, so if
anybody needed a bit of cash, they probably sold their shares.
These priorities are also relevant in the context of claims about transparency
and responsibility to shareholders, and it should be remembered when
considering the corporate structures of those contenders for export licences, ie,
Grain Corp, coal bulk handling, ABB and probably others.
In relation to the discussion paper, I have just got some points down here.
I have said given that the whole industry is still, and will be for some time,
export orientated, and dealing with a continually corrupt world market please,
it says what are the principal requirements that I require for wheat marketing?
I want the single desk retained by AWB Limited. I want it to have the power
of veto over exports. I want there to be provision for national pools and I want
a buyer of last resort and I want somebody to apply and maintain quality
standards - and I've pretty much got that with the structure I've got, even
though in the last few years we probably haven't delivered much grain.
Can the benefits of pooling be maintained without the single desk? I say no.
The service provider has to be able to gather the crop, for a start, to justify its
activities in marketing rooms, hedging and futures, I suppose. I think the effect
of multiple sellers would undermine all aspects of pooling. Also the multiple
sellers offering pools or just trading grain will have additional marketing costs
of their own, making any sort of efficiency gains questionable.
Do we need more than one exporter? All the present contenders for export
licences have alliances with multinational trading houses who also have
interests here and abroad as end-users, ie, feedlots; and given the export nature
of our grains industry, I see a huge conflict of interest here and a potential
unfair trading advantage over growers, large and small.
In fact, the whole concept, I suppose, of multiple sellers or this export licence
option seems to fly in the face of the concept of globalisation and its effect on
economies of scale and the need for increasing levels of vertical integration.
We have pretty much got that with our single desk. I don't see why we have to
continually tamper with it.
Further to this, the option of multiple sellers, how can any provider be the
buyer of last resort? This facility has an inherent risk for the service provider,
and therefore a cost, and has to be covered by someone. I don't see private
traders/handlers/exporters presently having any obligation, and in fact probably
would profit greatly in an oversupply situation, which is possible given our
continually adverse current climatic conditions.
I think we are going to have to wear the cost of the buyer of last resort, or it's
going to be a train wreck without it. I wonder if I could just quote an article -
I'm taking up a bit of time - but there's an article in the January edition of the
Grains Research and Development Corporation magazine, Ground Cover, and
this is in relation to probably - it's an article that talks about, "The pulse
industry hunts feed grains opening," and they're talking about the pulse
industry seeking a permanent position in feed rations. You can just cross out
whenever you see "pulse," if you ever read this article, and strike in the word
"grains" because it pretty much applies.
It's got Mr Tony Edwards, from Ace Livestock Consulting, talking about the
impediments to a permanent position in feed rations. One of them is export
competition that makes livestock end-users a secondary market, and another
one is the availability, reliability and timing of supply. It just seems to me that
everything comes back to they're trying to bring export parity, everything back
to export parity or less.
Reliability of supply is pretty much we store it, we carry the full risk of the
whole thing, and then supply it when it suits the industry. Then we've got a
comment from - I think he's Mr Kevin Roberts, from the Lot Feeders
Association - and he says:
Collectively, livestock producers are one of the most important
customers for Australian grain farmers, Mr Roberts says. It's a
pity export is still seen as the preferred market. Mr Roberts' blunt
message was forget about what the malsters and the millers want,
start thinking about what the livestock feeders want. I don't want
farmers growing varieties with all these bells and whistles, we need
supply. That comes from yield and -
and get this one -
growers making money.
I'm sorry, but I don't buy that one.
MR RALPH: You've gone well over the time.
MR CORISH: Mark, you made some comments earlier about not being in
favour of the demerger ideas that have been floated around. You're a younger
person, you've hopefully got a long time in the grains industry - - -
MR MARK DWYER: Not much longer, I can assure you of that, at this rate,
because I've got better things to do with my time than continually have to go to
these meetings. Every year, for the last 10 years, this stuff has been going on.
MR CORISH: That may be the case, but certainly, as a number of people
have said, and the reason why we are here, is because there are questions in
regard to what the future of wheat marketing is going to be in this country.
Let me just play devil's advocate for a minute. We've got the Canadian Wheat
Board under pressure at the moment, from their Government, we have got a
National Competition Policy Review due in 2010, and we have got a WTO
decision to remove all so-called export competition in 2013. I would suggest
that all the pressures that you've been referring to are likely to not go away,
they're going to continue, and in some cases some people would say they might
Looking 10 years down the track and looking at all these pressures and other
pressures that are going to come on single desk marketing, you think now is the
time to be looking at putting something in place to ensure that you have got the
very best marketing system for export wheat in this country longer term, long,
MR MARK DWYER: Not unless something drastically changes, and
I certainly don't think the outcome of the Cole Inquiry or this process is any
reason to break up what we have already got. It's only just been put in place.
Those comments by the Lot Feeders Association and others, I mean I sell to the
domestic market and it is what it is, but there's no respect for growers as
producers in that marketplace.
I've dealt with all kinds of end-users with field peas, wheat, barley, and we're
the last one in the line. If we lose the single desk as our buyer of last resort and
our marketer, because we don't want less than export parity, we want more than
that, and we're not going to get that from the domestic market.
The industry is going to shrink. In 10 years' time, the industry won't be what it
is now along this demerger path or multiple export sellers, it's going to shrink.
It doesn't matter what I say, because I certainly won't be here.
MR CORISH: Thank you.
MR RALPH: Thank you very much, Mark. Mr Edwin Cheers.
MR EDWIN CHEERS: Mr Chairman, ladies and gentlemen: as you can see,
I've been around for quite a while now. Although I'm not actively growing
wheat, I'm still involved. I remember clearly the 30s, when we didn't have
single - before the AWB - and one particular year the wheat crop wasn't good
enough or the price wasn't good enough to cover your cost of your bag and
your sowing, and the bigger your crop was, the more you lost. And that's the
result of all the different buyers, before AWB.
We cannot lose the single desk selling. What we need is like in the 50s, Jack
Cass, those men, they were committed growers but they were committed to
make profit for the growers. The growers' interest was their one number, and
that's what we need today. I really endorse the previous speakers, what they
said in regards to the situation at this time.
We have been growing wheat out there. The other year, we got an above
average crop and broke square because the price wasn't there. Then when you
do get the prices there, the drought - fighting the seasons and the weather is
enough for farmers, they shouldn't have to be fighting the Government when it
comes to marketing, because we are the only country that is not subsidised, we
have to face that. That's okay, as long as we haven't got to fight governments
and other elements that come into not giving the farmers a fair go. That's all
we want. Thank you, Mr Chairman.
MR RALPH: Thank you. You're in favour of maintaining just the status quo
then? Do you have any views on the separation?
MR EDWIN CHEERS: No.
MR RALPH: No views or not in favour?
MR EDWIN CHEERS: I'm in favour of the situation the way it has been set
up and to retain what has been built up over the years, but be more grower
controlled, to make sure it's fully grower controlled.
MR RALPH: Thank you very much, Mr Cheers. The next speaker is Bruce
MR BRUCE BLACK: Thank you, Mr Chairman. I'm a wheat grower from
Rankins Springs, and I thoroughly endorse the previous speakers. I've just got
a few notes I've made to put my point of view as to why I feel that we need to
maintain the single desk as it is in its present form.
The criteria of the Wheat Board is to maximise returns to growers, and that is
the basic formula that no other trading company will adhere to. They will be
there to maximise the returns to themselves at growers' expense, and that is not
in our interests. The security of payments to growers, you've got private
traders buying wheat and trading, there's no guarantee that they will be paid,
there's private traders going broke all the time and bankrupt and growers left
out of pocket.
With grower ownership and control of the single desk would ensure the trading
is done in the best interests of growers, and the single desk was not to blame
for the Iraqi food for oil deal, it was done by people trading in that company, it
wasn't the single desk that was at fault.
The ability to negotiate lower freight rates through volume, when you've got no
- there's a volume going to be moved, the AWB can negotiate better rates of
freight to help the growers achieve a better return. The main opponents of
single desk are those with vested interests, looking to make money themselves
at the growers' expense; and if the single desk is such a poor marketing
arrangement, why is the US so opposed to its existence?
Power of veto over bulk shipments is absolutely essential to be under the
control of the holder of the single desk, and I believe AWBI is best placed to
hold that position in the growers' favour. Thank you.
MR RALPH: Thank you, Bruce. We are certainly hearing lots of support for
the single desk. We have also heard views on areas where it might be
improved and some concern expressed at some of the meetings about the sort
of inherent conflict - I understand the constitution of AWB - but the fact that
you do have conflicts sort of inbuilt into the structure rather than necessarily
reflecting the people who are involved. Do you have any views in relation to
MR BRUCE BLACK: I just refer back to the constitution, where it says
maximise returns to growers is the number one mandate to the board, and that's
what will come first. Until that is broken, that is the number one factor, I
MR RALPH: Would you like to see more contestability in the services
between the farm gate and the ship so that you're sure that the return to the
grower is maximised rather than some of that economic value drifting through
to the B class shareholder?
MR BRUCE BLACK: That doesn't involve AWB. The single desk is only
exporting the wheat, it's not actually moving it. That is the Grain Corp and
other companies' problem, isn't it?
MR RALPH: It's just that the price at which services are purchased, including
finance and any services that are currently supplied as part of the monopoly
supplier, there are two ways of tackling it. One is transparency, and that has
some difficulties if a company is a commercial company that has competition
with other companies. The other is having contestability so that you ensure
that the services are being provided at the best price for the growers. Just a
question on the issue of that.
MR BRUCE BLACK: I understand that there is competition in the financing.
I do my financing through the National Bank, so there's competition there. The
board does compete in that area, so I don't see where your problem is there.
MR RALPH: My colleagues are all being very quiet this afternoon. It must
have been a bit of a bumpy flight up here, I think. Thank you very much.
MR BRUCE BLACK: Thank you.
MR RALPH: The next speaker I have is Tom Murdoch.
MR TOM MURDOCH: Thank you, Mr Chairman. Look, I can only reinforce
what other speakers have already said. I'm a grain grower from over towards
West Wyalong. I think the majority of the men that are here today, and women
alike, see security with a single desk operation, whether it be called AWB or
whether it be called something totally different.
I firmly agree that by having a single desk and a monopoly of the sale of grain
to export gives growers security with both payment as well as the knowledge
that, with the structure of that organisation, it's hopefully achieving the highest
price available to those growers.
If you have competition, like if there's money to be made in a handling
operation, for argument's sake, and extra profit to be made there, it will gain
competition. But by the same token, if you have competition in the export job,
it will only drive the price down, and that's something that growers don't want
because you've got an excess of grain looking to go to export and you've got
numerous bodies handling that grain, they will all just take a lower price to try
and get market share, and that's affecting the growers' hip pocket.
It's inevitable that the wheat industry is going to change down the track, but
I think with a knee-jerk reaction with the Cole Inquiry and everything else
that's going on, I think the grain industry as a whole needs some strength and
security, just for the short-term anyway, so that farmers feel as though they
have got some direction in where they are going, whereas currently they have
no direction. Thank you.
MR CORISH: Tom, you pretty clearly said you're not supportive of change in
the short term.
MR TOM MURDOCH: Yes.
MR CORISH: Longer term, you also said change is inevitable. What are
some of the changes you foresee or foreshadow into the future?
MR TOM MURDOCH: I think the picture with the fact that AWB and
Grain Corp, for argument's sake, are vastly different companies to what they
were 10 years ago, they have evolved into larger organisations and a majority
of growers have sort of lost a bit of direction as to how those companies
For argument's sake, Grain Corp is no longer just a grain handler, and AWB
through all the varying wings and companies that they exist in, is no longer just
a grain exporter, they are also marketing, handling.
So I think down the track, if the pressure comes from the grain industry to have
a single desk, it will be an entity on its own and not attached to something else.
MR CORISH: So transparency, grower control into the future become even
perhaps more important than what they are now?
MR TOM MURDOCH: Yes.
MR CORISH: Can I, through you, Chairman, ask another question. Most
people in this area, and I'm not asking for specifics, just a broad trend, most
people in this area would deliver their wheat to the AWB pool, in most years?
MR TOM MURDOCH: I think a lot of people would deliver a large
proportion, although in this particular area there's also a lot of end-users, chook
farmers, feedlotters, so there would be a huge amount of grain delivered into
MR CORISH: Do you see that growing or maintaining about where it is?
MR TOM MURDOCH: It will certainly grow, I should imagine, yes. It's
good in itself to have that domestic market, but I think also there wouldn't be a
grower in this room that hasn't been affected by a domestic trader going into
receivership as well; whereas anyone who has ever sold grain through the
export market has always been paid. Any profits to be made, it's better to be
paid a smaller amount than not at all.
MR CORISH: I would agree with that. Thank you.
MR RALPH: Martin Quase.
MR MARTIN QUASE: Good afternoon, Mr Chairman and Panel, ladies and
gentlemen. Just a simple view from me because I'm not up with all the
workings like so many people are. I would just like to give my simple
I would like it left kept as it is, with the AWB having the power of veto,
because the way it is now, the way our operation is anyway, most of the grain
we deliver to the pool and we have the ability to grow the grain and deliver it
to the pool and not have to worry about marketing.
It's been fairly stressful this year, we haven't delivered to the pool this year.
The little bit of grain we have had, we're selling it off privately. You don't
have the security. You know that people have gone broke, grain traders, and
people have been left up in the air.
People like us, most people here, have gone through a few difficult years, very
difficult years, and we have great security in being able to deliver our grain to
the pool and know we are going to get paid, and that's very important for us
because we don't want to spend our life marketing our grain - I don't anyway.
Some people may have the time or the ability.
The other thing with the wheat pools in the last five difficult seasons is that
they have always seemed to have been fairly cautious with their estimations of
how they are going to wind up the pools, and we have had quite a few very
nice unexpected bonuses along the way and they have come at good times.
The Golden Rewards system is an excellent incentive to grow quality wheat.
You can strive to increase your protein, you know you're going to get paid for
it. You can reduce your screenings, you know you'll get paid for it. Reduce
your moisture, you know you'll get paid for it. I'm sure that that would fall to
pieces with the destruction of the single desk.
They're pretty simple points, and I don't want to go too far into it, but I just
want it left as it is basically. If a bit of minor polishing needs to be done, a bit
of slight changes, but the single desk is a single desk as far as I can see and
that's how it should stay. That's about it.
MR RALPH: Thank you very much, Martin. Just to draw out a couple of
things. We haven't heard anything much here today in relation to the selling of
wheat in containers and bags, and we've heard in various other places the fact
that they have no objection to that being freed up somewhat in order to get into
other markets that maybe the AWB or AWBI are not participating in. Do you
have any views about that?
MR MARTIN QUASE: I'm pretty sure if it is a niche market or some small
thing, it's probably not for me to say really, but I can't - just small amounts in
containers. I don't really know. It's not for me to say and I best not comment
on it really, because I don't know.
MR RALPH: Thank you very much, Martin. The next person I have is David
MR DAVID LUMSDEN: Mr Chairman, members of the Panel, ladies and
gentlemen: how long do we have to argue about this single desk thing? It's
been going on for years and people have - we come up with the same opinion
every time: keep the desks, grow wheat, get on with it, sell the stuff overseas,
and do our best. But it keeps coming up. Who doesn't want the answer we
want a single desk?
If you look around the room here, most people will want a single desk; right
across the countryside, it's the same. To me, it's a pretty simple thing.
Through the single desk, we gain unity. Australian farmers need unity. Every
time we hit a stress point, we pull in a million different directions. Unity is our
strength, and we don't have it if we fragment the industry, lose our single desk,
lose our power of veto, we lose our strength on the world scene.
We're only really a blimp on the world grain-growing scene, but we still can
get out there and competitively fight through our united approach through the
single desk, with the power of veto. Why would you want to change it? Why
would you want to take that strength away? Why would you want to have a
fragmented approach and have a dozen organisations coming forward and
bidding for a market and instead of bidding it up, bidding it down, and the
lowest tend to win? And we lose. We, the growers, lose. Why would you do
To me, the other simple question is why would the American farm lobby be
violently opposed to the Australian Wheat Board, or let's leave the Wheat
Board out of it, the single desk, with that power of veto? Why? Because as
they say, it gives a Willy Wagtail the strength to fight an Indian successfully.
We fight Uncle Sam on the world scene and we often win.
But if we take that unity away, if we take that single approach away, we will
just be there fighting amongst ourselves, with each other, neighbour to
neighbour, company to company - joke. We have a quality product to export
because the single desk demands that. Why not keep it? We grow the grain,
we sell it to the cash or pool, no matter the quality or quantity there's a market.
There's a market for a bloke if he grows 300 acres, 40 acres, 40,000 acres, and
they can compete at a local level equally.
That is the Australian way, isn't it? Isn't that the Australian way, that the small
bloke gets a shot as well as the big feller? Because often the industry is carried
by a series of small fellers. If it is exported, it goes across one desk, not a
process of the lowest bid wins the deal. The returns are optimised and they
come back to the grower. It's pretty simple. Why complicate it?
If there's a problem - we have recently had a problem with the Cole Inquiry,
but it was within a company, it wasn't with the industry, it wasn't with our
product, it wasn't with the quality of our product, it wasn't how we grow it. It
was within a company, it was an internal matter, and it should remain that way.
Let's leave the system as it is. Stop hanging it on our own industry. That's the
other thing we're really good at, we just hang X on our own industry - excuse
the expression. Build our industry up, not pull it down. We need to unite
thoroughly, become more united. Look at the French, look at the strength they
have because they all pull together, they don't go every different way they can.
Let's just meet the world market and meet it with our tails up and our chins up
and do our best. Thank you very much.
MR RALPH: Do you see any opportunity for making improvements that
would improve the return to growers?
MR DAVID LUMSDEN: Once again, I hold, as many growers here do, we
hold a simple view on this and that is try and keep those eggs in one basket and
gain our strength on the international scene by marketing as a big concern and
not as a little one, and I believe that in the past we have seen returns maximised
that way, or optimised at least, and I believe we can do it again in the future.
MR CORBETT: I want to first add this comment, before I put this proposition
to you that we are here to listen to wheat farmers and not have our own views
and not promote our own views. So in asking a question, it's only a matter of
challenge and push back to get your viewpoint and understand it better.
Indeed, we are here to listen to that viewpoint. So I don't want you to think
that when I ask this question, it's prejudged or I happen to believe in the
proposition I'm putting to you.
There are many that feel that the single desk is terribly important to the
industry, and I think that is generally felt, but not universally felt. There's quite
a variety, as we have listened to people, that would have some concern how the
single desk has been managed under present structure, and a view is that if the
single desk is so important, then it should be managed really well.
Some would see that the structure of AWB, as it's currently structured, because
when it was corporatised, of course those shares were put on the market. When
anything is corporatised, it's up for sale. Any public company is for sale, and
anyone can buy a share of that company and anyone can sell the share.
As we know, a substantial body of that shareholding has now been sold by the
wheat farmers and it's owned by a variety of people that have an expectation
for that company that is probably different to the expectations that are in the
pure interests of wheat farmers. For example, some have argued that some of
the purchases of businesses that have been made have been made at quite
inflated prices and those prices have been subsidised from wheat farmers. Is
that in the interests of wheat farmers?
So the argument goes, if you believe very much in a single desk and that single
desk is not well managed in the interests of wheat farmers, and, I might say, in
the interest of community generally, then in the fullness of time, it will go.
So it seems that this is a real opportunity and the Government have genuinely
asked me and my colleagues to come and listen. They hear, of course, from a
variety of your representatives, but they have asked us specifically to come, as
it were, at the grower level and ask you, without any intermediaries, for your
view directly. So it's an opportunity for you to put those views directly to
I challenge you a little bit on the question of the single desk and whether it is
under the best possible management at the present time.
MR DAVID LUMSDEN: I think the thing about the operation of the single
desk is that if you don't like the way it's being run, there's always a chance of
sacking the people involved and employing somebody better, or someone you
would believe to be better, to be accountable for the Australian wheat growers.
MR CORBETT: Under the present structure, that is difficult and clearly hasn't
occurred. An argument has been put that to have the - and I don't wish to cast
any aspersions, it's just a metaphor - to have the guy in the jail with the keys is
not a good arrangement, and to have the person that owns the benefit - and it's
not now the wheat growers, remember that - to have the person that owns the
benefit to be in charge of the veto is not maybe the best arrangement and
maybe the Wheat Export Authority should be empowered to have more teeth to
be able to monitor the management of the single desk in a more independent
way and that the Wheat Export Authority should only have active growers as
That has been an argument that has been put. What is your view on that?
MR DAVIDLUMSDEN: I don't want to go into the Wheat Export Authority,
it's not an area that I have done a great deal of homework on, and I think I said
that at the outset, that I have this from a grower approach.
But once again, all I can say is that if we have an accountability to farmers, if
farmers are the people who are the most important here, if farmers' returns - but
not just returns, there has to be a fairness and equity about it in an industry. If
all those things are addressed and we have the right people operating the desk,
that way we can stay on the world scene and only go upward from there. But if
we are to be seen all over the world as squabbling amongst ourselves, we won't
MR RALPH: A question that has occurred to me, and maybe somebody else
in the room can answer it because I think we may have somebody from AWB
here. You mentioned about security of payment. Of course, since AWB has
been corporatised, growers are unsecured creditors of AWB, of AWBI. Is
there any cross-guarantee from AWB to AWBI? Can anybody tell me that? It
just occurred to me, I just wondered whether there was any guarantee.
MR JOHN SIMPSON: John Simpson, I'm a director. The loan actually
comes from Limited, not from International.
MR RALPH: So Limited is essentially guaranteeing the payments to the
extent of its total asset base? Am I right?
MR JOHN SIMPSON: It's secured against the value of the grain.
MR RALPH: So growers would have a claim not only against the pool, but
also against AWB. Is that right?
MR JOHN SIMPSON: We guarantee 80 per cent of the upfront payment,
which is secured against the grain.
MR RALPH: No, different question. The issue was raised about security of
payment. Growers are, as I understand it, unsecured creditors, right?
MR JOHN SIMPSON: Who deliver to the pool.
MR RALPH: Yes.
MR JOHN SIMPSON: I'm not sure of the thrust of your question, but you get
80 per cent of the value of the grain paid up front, if you take the loan, and that
is secured against the value of the grain and we guarantee that. If the value of
the pool happens to fall and an underwriting has been taken by the grower,
which they are with our products, then that's guaranteed, and that's by Limited.
MR RALPH: Okay. The question then is probably not all that material, but
from the point of view of AWB has possible exposures under litigation that
people are talking about, the grain would be an asset that would be at risk in
that regard presumably.
MR JOHN SIMPSON: If the value of the pool were to fall below the
80 per cent payment that was paid up front, it's a non-recourse loan, so then the
shortfall is picked up by the shareholders of Limited.
MR RALPH: Thank you very much, John. Next is Mr Pat Drum.
MR PAT DRUM: Thank you, Mr Chairman. I'm a stranger a bit today, I
come from Corowa, and I grow about a thousand tonne of wheat. My message
to you gentlemen is go back to the Government and tell Mr Howard to put the
power of veto back into the hands of AWB by 5 o'clock tonight. If he can't
hear you, you'd better tell Mr Vaile, too. When you've done that, you'd better
tell Mr Rudd, because hopefully he will be the Prime Minister end of this year.
The power of veto will go back to AWB unconditionally until 2010, when the
review is to take place.
I say 5 o'clock tonight because I don't think any of these young blokes here
should hang by the neck for one more day while you four gentlemen come out
here - and I don't know what your name is, sir, the man second from the left,
the man with the red tie - - -
MR CORBETT: That's me, Roger Corbett.
MR DRUM: To me, I'm not going to argue with you, I was coming here to
make a statement, but you seem to have a preconceived agenda, from what
you've said here, and there's plenty around me that could probably pull you to
pieces, but I can't, and I won't try.
MR RALPH: I think Roger Corbett prefaced his remarks by saying that our
task is to draw out the views and report, and we can't go back at 5 o'clock
because we have been given the task of going to another 17 or so towns to get
views, and we're not getting a total consistency of views. You may have read
in the newspaper this morning, because it's now on the public record, and it
will be on the public record as part of our report, but we met with the Grains
Council and the five states represented there have five different views.
So there's not a consistency. There is still very much a strong support, very
strong support, across the board for a single desk. But as you will have also
read, even at the Grains Council there are now some saying deregulation.
There are certainly views across the spectrum in favour of a single desk and
generally with the veto maintained by AWBI. But there are quite a number of
views of changes that should be made in the current arrangements within that
MR CORBETT: I would like to just respond by saying, with fear of repeating
myself, that I made it quite clear, in answering the question, I didn't have any
particular point of view, I was simply reporting various views that have been
expressed to us in various places throughout our consultation.
MR PAT DRUM: Would you mind telling us who has told you those views?
MR CORBETT: Look, I don't think this will lead us anywhere. The answer is
MR RALPH: We have now had about 170 speakers, so you can imagine we
have had a number of different views.
MR PAT DRUM: You had two against us in Wagga and you had two against
you in Moree, I think, sir.
MR RALPH: I think what you're referring to is the small number who are in
favour of deregulation.
MR PAT DRUM: Yes.
MR RALPH: But there's also in most other towns, obviously less so here and
less so this morning, people who want to have a single desk but they have
various views on how that might be put in place with the interests of growers
only under the control of growers only working on the marketing and selling of
wheat only. As I said, there's a great majority in favour of a single desk, but
there have been to date more people who have advocated some changes than
there are of doing nothing.
Thank you, Mr Drum. The next I have is Ian Braithwaite.
MR IAN BRAITHWAITE: Thank you, Mr Chairman. I would just like to
make the observation in the free market economy that we live in and survive in
that a free market exists where you have many buyers and many sellers on any
one day. When you have a grains industry that revolves around three major
buyers and something like 100,000 sellers on any one day, I don't believe is a
So as such, I'm a great supporter of the single desk and pool system and, as
you've alluded to, how you take the integrity of the single desk forward and the
pool system. What has been in question has been the integrity of how it's been
managed and how that goes forward and how that is modelled.
Yes, I do believe there is some (indistinct) to make sure that integrity is in
place. I think Bruce Black hit the nail on the head: the future and where you
go forward has got to be with the provision of maximising the returns to
growers. Thank you very much.
MR RALPH: Thank you very much, Ian. Next is Mr David Robertson.
MR DAVID ROBERTSON: Mr Chairman, Panel, ladies and gentlemen: I've
got a counter-point of view to what has been expressed here nearly all day, and
I suppose it had to happen, there's got to be a little bit of entertainment, but I'm
going to supply a little bit anyhow.
The first thing I would like to say is AWB Limited is not the Australian Wheat
Board. The fact that they have got a tremendous amount of accumulated
goodwill is probably testament to how well the Australian Wheat Board was
thought of. As soon as they had shareholders, everything has changed, and
from my point of view it causes a conflict of interest which is unresolvable
with a monopoly.
The first thing I would like to say is the company itself, AWB, and they have
been in the headlines and this is the result of it. The antics of AWB, from my
point of view, the fact that they've got a few rogue elements and the Cole
Inquiry set up for that was one side of it that I can say nothing about, but the
fact the managing directors of that company tried to withhold and deceive the
Cole Inquiry was the part that damns them in my eye.
I really can't trust them unreservedly. They were out there in public trying to
deceive the highest inquiry the Government could put up. From that, it flows
on. How easy is it then to deceive the Wheat Export Authority? How easy is it
to deceive us growers? They can say whatever they like, we've got no hope. If
the Cole Commission had to struggle as hard as they did, we've got no hope.
When I'm saying what they are deceiving us about is how good they are
performing. I can't say, I don't know. Who knows?
The next thing that it leads to is the AWB knows what the single desk is worth
to them. They struggle and try very hard to hang on to every monopoly they've
got. Whenever there's a deregulation, in finance or whatever it might be,
competition added to it, we see benefits as growers, straight to us, every time.
With this spinoff of AWB International, all I've got to ask is who is going to
underwrite that, because at the time of the AWB being set up, all the assets of
our wheat fund went into AWB, who underwrite the pools. If they spin off
AWB International, where does the underwriting come from? To go into it
further, are they double dipping because we already pay an underwriting fee
They're my opinions on AWB. So to get into the marketing side of it,
monopolies are never good. Eventually, sooner or later, it's an abuse of power.
They end up fat and lazy and there's no pressure on them to reduce costs.
Under the system we've got now, we've got service agreements and they have
to be checked out by the Wheat Export Authority, which probably, in my
opinion, haven't got the powers to do the job anyhow.
I don't think a monopoly is the way to go. Competition is the way to go, in my
opinion. The question was asked if the US grain growers want this scrapped, it
must be bad for us. No-one has really explained why the US grain growers
want it scrapped. I would suggest it is the fact that they have got power. They
can go into the market, with unpurchased grain, and sell it at any price. They
pick a market, they will win it every time. After that happens, they are
guaranteed of a profit and they give us what's left.
People say competition, you know, is driving the Australian market down.
They've only got 14 per cent of the world market anyhow. There's certainly
plenty of competition out there to drive the market down. But on the flipside,
if there was competition for returns to us and we knew that another pool
provider was talking a percentage and $15 more than AWB because they're
more efficient, what do they do? That would make the AWB look at
themselves very seriously and what they are doing. But at the moment, that
I'll just say a couple of things. Buyer of last resort - the reality of that is all
quality grain can be sold at a price, it just keeps coming down the line. So a
buyer of last resort is one thing and feed grain is the bottom line, and you
would have to have rocks in your head to sell feed grain to the Wheat Board
anyhow. (Indistinct) piles over there is full of prime hard wheat at the moment,
or hard wheat, I should say.
I would just like to say finally the pooling 2005-2006 was the last pool I was
involved in, 61 per cent paid up in the grade that I'm in. Big drought, been
known about for quite a while, and the prices haven't improved markedly and I
would say they're shaping up to make two more pool payments, get another
one in April and another one in July; 20 per cent in April, another 15 per cent
in July. They've done it before and that's the way it's looking to me and I don't
think that's good enough either.
MR RALPH: Thank you very much, David.
MR CORBETT: I would be really interested to know your thoughts on the
type of form of change that you think may be helpful in bringing about this
competition you refer to.
MR DAVID ROBERTSON: I would like to see Australian - if there's got to
be change, I would do it pretty smartly. Australian growers have got control of
a number of companies and they're the ones I would target. If you're an
Australian grower owned and controlled company - I suppose not owned any
more, but controlled - I would let them have a crack. Give the Wheat Export
Authority the powers to do the job and oversee it, and that's the way I would
MR CORISH: Could I challenge you in one way. I don't think you're
suggesting total deregulation.
MR DAVID ROBERTSON: No.
MR CORISH: I think you're talking about changes where we would see more
transparency - basic transparency in a single desk arrangement - and you're
suggesting that another operator or operators, rather than AWB, should be in
MR DAVIDROBERTSON: Yes, I would like to see competition.
MR CORISH: Am I close to the mark in that assumption?
MR DAVID ROBERTSON: Of what?
MR CORISH: When you say competition, do you mean that the single desk
arrangement should remain with the veto power being with, say, the Wheat
Export Authority or another operator?
MR DAVID ROBERTSON: Are we playing with words here? A single desk
with multiple sellers, is that a single desk, or a single desk with the Wheat
Export Authority and multiple sellers, is that a single desk? Is that what you're
saying? I don't know. I'm not too sure about a single desk as such. I can live
with any system, but I want multiple sellers or buyers.
MR CORISH: So regardless of whether there's some sort of orderly marketing
system or not, you want competition?
MR DAVID ROBERTSON: Yes, that's the way I would go. I would
probably put the powers with the Wheat Export Authority because they were
the old Australian Wheat Board.
MR RALPH: Thank you very much. We have had all the speakers who put
their names down, so the meeting is now open to anybody else who would like
to - sorry, Nigel Martin.
MR NIGEL MARTIN: Thanks very much, Panel. I believe you're to go back
and report to - your job is to go back and report to the politicians in respect to
what growers want. I think it's pretty obvious: 80 per cent of growers right
across Australia are looking to retain a single desk. I differ slightly from some
of the other speakers here. I think there's a marked improvement that could be
made in our existing AWB. I personally would like to see the single desk start
at the port, instead of upcountry, because that would bring some transparency
into the huge cost structure to get things there. We already have a deregulated
domestic market, and we are talking about export single desk, so why shouldn't
it start at the export point?
Some of the speakers here have said they wanted more chose in buyers. We
have already got a lot of choice in buyers because we've got a burgeoning
domestic market with feed grain stocks and various other things, so this gives
them the ability to have a broader range of buyers in a domestic market. But
the guts of the matter is everything goes back to export parity, the benchmark
has been export parity price. The stability has been the single desk.
The big problem is the politicians haven't got enough guts to do what the
growers want, it's as simple as that. They're trying to muddy the waters, talk
about different stakeholders, all this rubbish. There's only one lot of
stakeholders. We pay to grow the grain, we pay the handling charges, we pay
the freight, we pay the FOB charges and we get what's left. So therefore we
are the stakeholders, that's as far as we see it.
The guts of the matter is the Yanks want to get rid of the single desk. That
really makes me wonder why. If their system is so good, why do they have
export enhancement programs, why do they have these mass subsidies to
growers? It worries hell out of them, single desk. We have good quality
wheat, we have a system that can do with some improvement, but there's really
no point in throwing it out just because we have had this Cole Inquiry, and that
seems to be about the guts.
As Hugh Hart said, the waters have been very muddied and most people are
pretty clear they want to keep the single desk, it's served Australia very well
over the past decades, and I think the country has done very well out of wheat
growers. That's all I want to say.
MR CARROLL: Nigel, I would just like to you expand a little bit more on
how you practically see it working, if the single desk started operating at port
rather than country, and what degree of benefits, what sort of cost savings do
MR NIGEL MARTIN: Look at the handling charges and various things. I
mean, if we've got other players that can turn around and get something to port
cheaper, why shouldn't growers have the ability to be able to capitalise on that?
I mean, I can't explain all the nuts and bolts of it here now, but at the moment
we've got AWB negotiating the freight rate full stop because they have the
majority of grain upcountry, so therefore other players can't get in to negotiate
a cheaper freight rate. So that's one issue.
I also think the same thing could happen with handling charges. They're the
two greatest costs to growers, freight and handling. As for the way it has
operated, look at the ridiculous charges that are charged for the pool, to operate
the pool. That's just a rort. You don't have to be blind Freddy to work that out.
I think that the AWB could do a much better job.
It was held in very high esteem right across Australia by growers and everyone
concerned. It has been muddied and confused with the fact that we've got a
commercial company now. By the same token, they should be more
transparent in where your pool charges and cost structures are going.
MR RALPH: Nigel, if you had greater contestability in those charges, so that
AWB could still be a supplier to AWBI and to the growers, but others could
compete for those services, wouldn't that give you what you're seeking? In
other words, take AWB out of the equation, it could still stay there and provide
the services, but on a contestable basis. Then you would have some assurance
that you were getting the services at the best cost, wouldn't you?
MR NIGEL MARTIN: I would have thought they should stay in there and
compete, but I still see the main core of it is we need to retain a single desk on
export. Otherwise, if we've got good quality wheat, you get three or four
different people going overseas with the same stuff, what are they going to do -
just going to sell on price. You know who's going to get the rest, us.
MR RALPH: Thank you. Is there anybody else who would like to speak?
MR BILL PARSONS: Mr Chairman, Panel, I'm Bill Parsons from Rankins
Springs, a farmer out there, grain grower. It seems to me we have just been
through one of the worst acts that's ever been in the grain industry, with the
Australian Wheat Board, with their kickbacks to Saddam Hussein to the tune of
290 million. I cannot understand the farmers behind me who are supporting
the Wheat Board at the present time and the single desk, that the Wheat Board
keep the single desk.
I would like to know exactly what is the single desk. We have all read during
the Cole Inquiry where the Australian Wheat Board has agents in America,
England, Singapore, and those agents have been paid to the tune of
$26 million, according to The Australian and other papers, to stitch up deals
with Pakistan and other countries. This has been reported. That money is
coming out of the pools to go to these so-called agents.
So if we've got a single desk, who is supposed to sell the wheat, these agents or
the Wheat Board itself? Fifteen years ago I asked a chairman of the Australian
Wheat Board, "Who is your international marketing manager?" He said, "Bill,
we haven't got one." I said, "Who the hell sells the grain?" He said, "Cargills
and ConAgra sell the grain. They've got their finger on the pulse, they sell
90 per cent of the Australian exported grain."
These blokes have so much single desk minded, so much Australian Wheat
Board minded, you ask them this year, when the board come out with the price
of $240 with their maximum, getting the better price, hedging the better price,
and the traders come out with 317, these blokes have been screaming for the
board all the time, but where did they sell their wheat this year?
The only blokes that sold their wheat to the board this year was the poor
bugger that had to go and get a sowing loan off the Wheat Board to put their
crop in, and they sold it - not for 240. They gave them a loan of $180, which
I am told, and that's what they got in return, $180. Other blokes out here got
317 bucks. That's what they got.
Who is the single desk? They all want a single desk, but what is it? I don't
know. When you've got a chairman of a board saying Cargills, ConAgra - - -
MR RALPH: Can you use the microphone.
MR BILL PARSONS: No, I wasn't going to throw it at you, mate. We've got
a situation, I think here, that we didn't want. We had Flugge in Iraq with a rifle
laying on his guts. That's what youse want, you can have it, I don't want it.
I don't want corruption. That's the way you have to trade with the Middle East,
they say. All these blokes that believe in the single desk, believe in the Wheat
Board, that's the way they trade.
If you read Roger Fletcher, one of the biggest exporters in Australia, one of the
biggest exporters into the Middle East, said, "I have never paid a bribe, I have
never paid a kickback in my business." "But," he said, "the day you do, you
will be paying it for the rest of your life." That, to me, sir, is the way I see the
Australian Wheat Board at the present time. I think we would be a hell of a lot
better off with a broker, a brokering firm, to sell on behalf of the growers
overseas, for the more money he gets for the growers, the more money he gets
for himself on commission. It's as simple as that. Thank you, sir.
UNIDENTIFIED SPEAKER: Single broker or (indistinct)?
MR BILL PARSONS: I would expect that from you. I can't see anything
wrong with two brokers or a firm of brokers. I can't see nothing wrong with it.
I believe what the bloke said just a minute ago, competition, competition, is the
only way to go. What we have had over the years, there's been no competition
at all. The only competition we have ever had is the local trader. The local
trader is the only competition, and 90 per cent of them - if I may say so, a bloke
rang me yesterday morning and he said, "Is there any sense in these pools?"
I said, "I think so." He said, "90 per cent of the growers today take a cash out
show when they deliver." He said, "Why do we have to have the pool?" I said,
"If you've got the Wheat Board, mate, they to have money to pay the bribes to
get them to buy our wheat." It's as simple as that, sir.
MR RALPH: Thank you very much. Anybody else wish to speak?
MR MARK DWYER: Mark Dwyer here from Rankins Springs again. Gee,
there's so many issues. This business of the demerger, or the way I see it, what
is being suggested here is we have an alternative and have multiple sellers, I
suppose, and I'm assuming that what we are going to end up with is coal bulk
handling, ABB, Grain Corp, and I don't know, they all have alliances with
Cargill and ConAgra, the other big players. So I just wonder - you talk about
evolution of the wheat industry. Where are those companies going to be in a
few years' time?
There doesn't seem to be any contestability or transparency being applied to -
I can only look at what I see with Grain Corp, there's no transparency there.
They've got transparency issues between their shareholder meeting club, which
is the Grain Growers Association, and then they purport to be a marketer and a
trader on the other hand, and at present they're a handler and a supplier to
I agree with what Nigel was saying about most of these issues, but I just have a
question for him as to how do you apply the export - what is it - at port? How
do you make a pool work? If I deliver my wheat to Wheat Board, whoever that
entity happens to be, and we've got single desk at port, isn't there another big
cost structure going to be built in there as to the direction that grain goes when
it gets to port? If I deliver it upcountry and I deliver it to the Wheat Board into
their export pool, the Wheat Board determines where that wheat goes, to
Grain Corp threw this idea up a few years ago. If I'm going to see change in
the present structure of the wheat industry, I want to see some of these
contenders with some real models. I am not going to be - it seems to me there
is a preconceived notion here today and it's that you're going to go away and
make recommendations based on the fact that we don't really know what
options we want. It's pretty hard, because every time we come up with options
as growers, we get it knocked on the head by these idiots in Canberra.
Before the grower corporate model was thrown up, I was involved to a small
degree, I made my input in the New South Wales Farmers Association, the
grains committee - I hate to say it, but the Grains Council, all these
organisations, are so fragmented they're all off in different areas. How can we
as growers come up with anything? We were really pushed into that grower
corporate model. Nobody is real happy. I've never been happy about that B
class share thing, but that's what we have got and we have to make it work, and
we're not giving it a chance.
The Wheat Board - as Mark Hoskinson said first up, there were
2,500 companies in Iraq operating under the oil for food program. Coffey
Annan's son was in it up to his neck. Tony Blair, the Prime Minister of
England, they had an arms deal going with Iraq, and he knocked any inquiry on
the head straightaway. What are we doing to ourselves? I can't believe it. I
can't believe it, it's just absolute X, the whole thing. This Wheat Exporting
Consultative Committee Review, what a joke! Who do you think we are,
MR RALPH: What we are trying to do is to get the views of growers so they
can be part of the input. As I have said at previous meetings, the large
organisations, the representative organisations, the traders and so on, all the big
players in the industry, get the chance to put their views, they lobby. They will
get certainly their chance to make their views known and the structure that will
be developed or left alone or whatever will be action taken by the people in
Government who are going to make this decision.
The task that we have been given is to come out and speak to growers so that
the views that we get from growers can be an input into that deliberation, rather
than just via representative organisations.
MR MARK DWYER: Well here's the message from me: the whole thing is a
farce and I'm saying look at these people here around you and take that
message, take our message back, we're not happy with the process.
MR RALPH: Yes, down the back.
UNIDENTIFIED SPEAKER: This feller here is going well, but anyway. Just
to answer a couple of your questions. You mentioned about the financing here
a while ago and you questioned AWB about it. AWB actively manages risk in
the foreign margin, who they actually sell their grain to. They don't just go out
there and sell to anyone out there. Otherwise, we finish up in the same
situation we've got here with the private traders. You have people going to the
wall, owing us money, and we are the ones that suffer once again.
The managing director of a company which I won't mention, because I will
probably be sued for it, but he was at a meeting, he addressed us, and he was
talking about the countries which AWB doesn't sell into, into the markets. He
was very concerned that we were missing out on opportunities to sell into these
markets. I asked him about risk and the risk assessment they took on these
companies they wanted to sell grain to, I said, "At what risk?" He said, "At
any risk. We want to sell grain to everyone."
So that is the manager director of a major grain company that wants to have
export permits to sell grain outside Australia. Sorry, I'm not going to put my
grain with a company that won't manage risk, whereas AWB does for us on our
behalf. I've got better things to do running around the farm, with agri politics
and everything else I'm involved in, without having an opportunity to market
my own grain. It's too risky for people like us to market your own grain.
You have to go out and get educated. I've seen educated people, who have
become very fluent in marketing their own grain, get burned big time by doing
this sort of stuff. The small man will always suffer.
You mentioned about containers and bags. I haven't got the figures with me
exactly, but containers and bags in the past have been very small, have been a
very small niche market, okay. There's been a lot of applications made; I don't
think there's been too many granted. AWB and WEA are probably in a better
position to answer that.
But I do understand that one mistake AWB did make in the past was they
grabbed hold of the veto on all the grains and they said, "This is ours." What
they should have done, and they got in trouble with some durum growers, was
actually help facilitate some of these niche markets. A lot of people thought
they had a market. When they did get the grain out there, it wasn't suitable for
what they wanted, so they fell over.
AWB should be in the future encouraged to help facilitate these niche markets,
get behind these people who want to develop these markets, and actively
encourage them to do it - with the view of developing those markets on behalf
of us as growers.
It was mentioned here about the Grains Council, there is some talk in Grains
Council about full deregulation. I understand from the contacts I have, as I
travel, that it came from South Australia. South Australia, the chairman of the
committee, I understand, is actually a trader and a large warehouser of grain.
So we have to look at who is actually behind these calls and the attempts to
bring about deregulation or GLAs, grain licensing agreements, by having the
veto held with WEA or somewhere else.
I think there's also a huge conflict with the WTO, the World Trade
Organisation, when you start saying that an organisation like WEA should hold
the veto. To do that, I believe it would be breaching the WTO breaches. So
people keep on coming up with these - it's a dog's breakfast, all these different
scenarios, how we should structure the new marketing system and everything
else that goes along with it. None of them have been researched, none of them
Even the AWB demerger proposal is a dog's breakfast as well because we don't
know anything, and you ask us questions of what we think about a full
demerger. It doesn't work that way.
The industry took three years to develop this current system we've got here
today. We're not going to overnight develop the world-beating new marketing
system for the Australian wheat grower. It will take time to develop. When
people start calling for knee-jerk reactions, that's when we will suffer. So we
need to take it slowly as we go, make the current system work - which
everyone is going to be penalised if it doesn't - and take time to develop it.
There was an interesting case on SBS TV a couple of weeks ago: the
Americans had $20 billion to spend on restructuring Iraq. Apparently we came
to the end of when it had to be all spent and they just threw billions of dollars
away, unaccountable. And we get pulled up for $290 million of a company
that no-one has been charged for, there's been recommendations of
investigations to lay charges, and for $290 million.
We sold that wheat into Iraq and fed starving people. They were starving
because of what the United Nations put against these sanctions. So we got paid
the right amount for our grain.
As far as that port model goes, I, in my travels, have done a lot of work on
committees looking at that port model. It doesn't work. AWB negotiates a
freight rate to get our grain there now, but that's negotiated through volume.
No other company that's going to be selling grain outside Australia can
negotiate volume, like AWB can.
The current port system on the eastern coast of Australia is controlled by a
monopoly, Grain Corp. They have some of the dearest port charges in the
world. But all the reviews that have been done into like Accenture and other
reviews have been done into the handling system, from farm gate to port, have
never zeroed in on the cost of other companies other than AWB.
So we've got huge costs been incurred on us in storage and handling and
people are crying for port models. There is not the research being done to
prove that it will ever work. I won't bore you. The bell's gone, so I'll sit down.
MR CARROLL: It's been mentioned that there's the competition review
coming up in 2010 and a lot of the points you have made is that it's very
difficult to thoroughly - some of the models being put forward haven't been
thoroughly researched and costed out, and that's very difficult because there is
nothing to compare it to. I have heard one grower suggest that a fixed
percentage of the pool be opened up and made contestable; I think the figure
was a million tonnes or a fixed proportion.
Do you think that that would help when we get to 2010, to just have a
comparison and a benchmark?
UNIDENTIFIED SPEAKER: You can't take grain away from the pool. We
have seen what happened with Western Australia when they got the permit
from the Government a few months ago. They took grain out of the pool and
CBH has come out and said that they were going to give an estimated pool
return, people took that as what they were going to receive, it's not, it has been
dropping ever since.
MR CARROLL: Wouldn't it be different if it was a set amount that was
known in advance?
UNIDENTIFIED SPEAKER: You can't operate a pool - no matter who is
operating a pool, cannot manage a pool unless they have guaranteed access to
that wheat. The crop up north, when it starts harvesting up north, it's a very
attractive cash price, always has been, always will be, because they have got a
strong domestic market up north. By the time it gets to us, we have seen all
cash prices fall through the floor. The only safety net we have is the pool. The
pool itself actually puts a floor in the price, it actually puts a floor in the
domestic price as well.
So if those who are in favour of open slather and markets all over the place,
you watch, the price will drop, it won't matter whether it's the domestic price or
overseas price, it will drop.
MR CARROLL: Even if it's a set amount? Moving on then, what sort of
things need to be done ahead of that competition review in 2010 to ensure that
it's a thoroughly researched and fully costed process, rather than something
that's lacking the substance it needs?
UNIDENTIFIED SPEAKER: First of all, we need the farmers groups to get
together and unite and start doing things positively for growers, not the dog's
breakfast we've got at the moment. We've got too many influences coming in
to our farmer’s organisations from deregulators. We need the growers to elect
people to those committees who want to do the right thing by the majority of
growers, not a minority. We need them to speak up at the grass roots.
Anyone here, if you're going to vote at an election, whether it be AWB,
Grain Corp or anything else, Grain Growers Association, you vote for the
people who are going to stand up for you, the grass root growers, and not these
people who dictate to you saying, "The boards of these groups will decide
what's good for you and set policy for you." That doesn't work, that's a
So we as growers have to elect the right people, get them in there and start the
process of - a rolling process, not a knee-jerk reaction to anything that comes
up in the meantime - a process where we can actually have input. We have all
got access to input through our farmers organisations and others, where we can
go down, move motions through our local branches, take them to annual
New South Wales Farmers has got a policy that we've stuck by right until now,
regardless of the fact that one of our grains committee members stood up at
Wagga this morning, just breaching everything that we stand for, I understand
at the meeting. I wasn't there, but I have heard reports. That's not the sort of
person we want there. We want people who will respect the grass root
growers, not their own personal little agenda.
MR CARROLL: Thank you. It will be quite a challenge, because the views
from the states and regions are obviously - - -
UNIDENTIFIED SPEAKER: You've seen the passion that's here today.
MR CARROLL: Yes. This is one region and it's very uniform in its views,
but we have certainly heard a lot of different views from different
representatives of farmers.
MR RALPH: Thank you.
MR HUGH HART: My apologies, Mr Chairman, for boring everyone again.
MR RALPH: Can you just state your name for the record, thanks.
MR HUGH HART: Yes, Hugh Hart again. I have been around grain growing
for 40 years and I've been actively involved in grain grower organisations and
farming organisations for a lot of that time. The idea that there's a huge variety
of views amongst farmers in New South Wales is quite wrong.
There's confusion, yes, there is confusion, and no wonder, because we have got
people alleging to have nothing, with their hand on their heart, no agenda
whatever, but our good - deliberately going out there and muddying the waters.
So it's not surprising you're getting some mixed messages.
The fundamental facts are, and they are absolutely irrefutable, growers want
the single desk, there is no basic dissatisfaction with the current structure that
can be actually quantified or measured. There is emotional responses to some
of this mud-slinging that goes on, that causes growers to say, "Maybe we could
do it better." That's not good enough.
The structure we've got hasn't had a chance to just settle down and do the job, it
just hasn't. Some of the confusion with the business in Iraq, that growers
believe that somehow the AWB spent $290 million of growers' money, well it
didn't. It was a matter of Saddam working out a scheme how to get some
benefit out of his oil exports. Every company who dealt in Iraq, it's
indisputable, every company that dealt in Iraq when Saddam was in power
dealt on his terms in the end. And why we are trying to retrospectively
exonerate the UN failed scheme, I don't know. The UN fails at everything it
MR RALPH: I realise the strength of the views about Iraq, et cetera, but our
task is sort of beyond that, in the sense that the Government has said that it is
examining what it intends to do about marketing and it's got to make some
change before 30 June or just continue on as it is with the Minister's veto.
Our task, as I said, is to get around and try to have as an input into that process
the views that growers express (a) at meetings and (b) via submissions, and
that's why not everybody at meetings gets up to speak. But you all have the
opportunity of getting your views registered by putting in a submission, written
submission, which we would like to see.
MR HUGH HART: Mr Chairman, I fully understand that. But with respect,
the whole excuse for this exercise came out of the Cole Inquiry as a result of
what happened in Iraq. You can't divorce the two.
MR RALPH: I'm saying it's not related to the task that we are doing; it might
be related to what's going on post-us.
Yes, Jock. You must follow us - I have met you in every town in
New South Wales and Queensland.
MR JOCK MUNRO: I'm nearly home now, sir, almost home. I would like to
back up what some of the speakers have said. How can you debate this thing?
This is supposed to be - you're going around asking for growers' views and
then you're turning it into a debate.
This structure, it took the best brains in the country to put it together, some of
the best men in the country: John Anderson, Xavier Martin, Glen Dalton.
Some of you mightn't know who Glen Dalton was. He worked for the
New South Wales Farmers - some of the best brains in the country. Then
you're standing people up and they don't quite understand what's going on.
I have been a representative on the New South Wales Farmers Association for
six years. I learn something about this structure every day of the week. It's
just so difficult, and to put pressure on people - with respect, it's difficult for
growers to quite understand what it's all about.
The other thing, with all due respect again, the intentions of this Government
are definitely not honourable. This is all about the Cole Inquiry and the perfect
opportunity to destroy our wheat marketing system, mainly through the Liberal
The other thing that really stinks about this, it's probably Costello trying to get
a kick at Howard and the Liberals, especially the regional Liberal Members of
Parliament, trying to get a kick at the National Party, and it's great, isn't it,
ruining our marketing system.
Just another one thing on our structure. No one person can hold any more than
10 per cent of the company. So if there's a rush on the shares, the Wheat Board
shares, when they get to 9 or 10 per cent, there's a stop to that company or that
individual buying any more shares.
The other thing, and I have made this point at every other meeting I've been to:
we control that capital. We mightn't necessarily own the shares, but as
growers, we control the capital, and we have a beautiful system when it's all
said and done. People put their capital in, they let us control that capital for the
The other thing we mustn't forget is that this thing is run by growers, growers
that we elect. We've got John Simpson here from Oaklands, Xavier Martin
from Mullaley, Ian Donges from Cowra, Warwick McClelland from down near
Horsham, the two Western Australian blokes, Fitzgerald from South Australia.
They're cockies. You ring them up, sometimes they're on tractors, sometimes
they are in the shearing shed. They are the same sort of people as we all are,
and it's something that people shouldn't forget.
Those committees between L and I, they're compliance committees that are
dominated by growers, by pool deliverers, and those points should be kept in
mind, because if you lose this thing, you'll never get anything like it again.
The other thing about the WEA, can you imagine what would happen to a
WEA with more power? Can you imagine how long it would take somebody
to politicise it? Actually I would like to make the point I think it's been
politicised already. I didn't like that last wheat export pool report at all;
I thought the language in there was particularly unsavoury. They are obviously
bowing to pressure from their political masters.
As for the Grains Council, I just wouldn't get too relaxed about the Grains
Council because I can tell you in New South Wales we'll carry this thing and
you might warn Mr Howard, when you get to see him again, we'll carry this
thing through, I can guarantee it.
Just on cotton, Peter, you've mentioned cotton growing. You have to
remember cotton, from what I understand, there's more cotton traded on the
futures market in a night than would be traded in the wheat market in a year.
The other thing you must remember is cotton growers have surety of
production through irrigation, which we don't have. The bulk of the
wheat-growing areas is marginal country. Thank you.
MR RALPH: The comment - I was going to interrupt, I've been at pains not to
interrupt people when they are speaking - but I think it's a little arrogant to
suggest that the growers don't know what they're talking about, because we
have actually heard some very well-reasoned arguments and statements. The
whole purpose is to get out and listen to growers, and I don't think they should
be denigrated to suggest they don't understand what is going on with grain
MR DARYL KITTO: Mr Chairman, thank you for the opportunity to speak
here. I was denied the opportunity at Forbes. As a wheat grower - - -
MR RALPH: Sorry, name?
MR DARYL KITTO: Daryl Kitto.
MR RALPH: Thank you.
MR DARYL KITTO: I'm bitterly concerned and disappointed in this single
desk lobby and their efforts to dismantle the single desk. Multinational
companies have much to gain, I might emphasise, in the dismantling of the
AWB and the single desk, and profits from these and every one of these other
companies that are trying to get their hands on the pool will end up outside
Australia, in the long term.
Even if they are Australian companies at this stage, they will be very open to
takeover by other multinational companies, grain coding companies, and they
have only one objective and that is profits for themselves, not us as growers.
I would just like to go over a few points, negative points, that have been
brought up both here and at Forbes regarding the single desk. It was
mentioned the container trade, well it's obviously it's always going to be a
niche market and the AWB has always been open to giving the necessary
permits where it is fit. It was mentioned at Forbes by a very negative grower
of the AWB that other companies have been prepared to go in and invest
capital elsewhere, who put in silos and so on. Well, the AWB has done that in
the past, and the very Iraq market was built by the investment of capital,
growers' capital, in there to open that market up to Australian growers.
The other thing that I would just like to also mention is that it's been mentioned
a bit, US Wheat Associates are very keen to get rid of the single desk. It's that
very own Associates that obtain the subsidies in the US, not the growers. It's
an export enhancement subsidy. The growers don't see that money.
It was also mentioned at Forbes by a similar very negative grower that thought
he could market his own wheat, he mentioned a letter that Trevor Flugge had
written to buyers in Iraq saying that they were selling wheat at the best possible
price, and he was inferring that Australian growers were being diddled as a
Well, I think we all know that in the sell side, you have to be competitive, and
it was like a car dealer telling - I mean, if he wasn't competitive, he missed out
on the deal, and that was basically why AWB went into Iraq and sold wheat
I'm not sure what other growers here have also mentioned, but the Canadian
Wheat Board has got the same pressures on it that we have here by the same
people, the US Wheat Associates, because between the Canadian Wheat Board
and the Australian Wheat Board, it stabilised the whole world market, and that
is not in the interests of Cargill and fellow multinational companies because,
with the removal of these two grower-controlled identities, they could
manipulate the world wheat trade far greater than they do at present and by
doing that, make far greater profits.
That is why the Australian Wheat Board is such a thorn in their side, because it
steadies the whole market, and they haven't got control over it and they haven't
got control over the hedging that it does on Chicago. That's the other issue
that I wanted to bring up, was that the few growers that have been against the
AWB have been those who want to do forward marketing on their own self.
That carries a far greater risk than at a national level, and at a national level we
have got far greater security because we can have a drought here, that
obligation can be met in WA and vice versa. Thank you.
MR RALPH: Thank you very much, Daryl.
MR DARYL KITTO: There is one other matter that I wanted to mention and
that was: you have quizzed a lot of your growers extensively and it has been
mentioned here that a lot of them didn't understand about giving more power to
the Wheat Export Authority. It is something that is a very, very dangerous
move because it is not elected by the growers and even at this present moment
it can be so easily stacked, and at present there is the wife of a very pro
deregulator on that very body. For that reason, I don't think there's any wisdom
in the whole industry giving absolutely any more power, taking the power of
veto away from AWB and giving it to the Wheat Export Authority.
MR RALPH: There have been different suggestions about strengthening the
Wheat Export Authority, but one of the suggestions that was canvassed and
reactions sought was essentially one way possibly of overcoming the problem
that exists once AWB has been privatised with listed ordinary shares, and that
is if you turned the Wheat Export Authority into an organisation that was under
the control of growers and elected members, or members elected by growers,
whether that would be one way of achieving the same sort of separation that's
in the demerger proposal, without the problem of trying to find a way of
overcoming the difficulties that are inherent in a demerger because you have
two classes of shareholders with different rights.
Not WEA as it is currently, whether that could be a body that could play the
role of looking after the interests of growers under the control of growers and
provide that sort of strengthening via that mechanism. There have been some
suggestions just of giving the WA more teeth, but there's also been the
suggestion whether WA could become a body that was there for growers,
acting in their interests as an alternative way of giving you some separation.
MR DARYL KITTO: I think, Mr Chairman, the answer to that question was
mentioned at Forbes, it's been mentioned here, I'll mention it again, just in case
the message hasn't got through. The AWB's primary objective in the
constitution is to maximise grower returns, and B class shareholders a
MR RALPH: Sorry, I understand that and I don't want to get into debates,
because we are here to listen. But if you think about the structure, despite that,
any service that is provided by AWB to AWBI that isn't at the most
competitive rates is automatically - this is just axiomatic - transfers value from
the growers to the B class shareholders. That just happens.
MR DARYL KITTO: I have no problem with the words "transparency" and
"contestability" on the supply side, but it is foolish and any businessman - and
there's a couple up there - would know that if you show your opposition your
cards on the other side of your business, you're absolutely foolish, you're
shooting yourself in the foot.
MR RALPH: Yes, and I have made that point, that transparency is okay in
certain areas, but when you're in a competitive position with other players, then
transparency is giving the other players an unfair advantage.
MR DARYL KITTO: Where we need to see some more transparency and
contestability is in the issue of the grain handlers and the grain export
terminals, because that is where AWB has for a number of years banged their
heads against a brick wall. It wasn't until they came into that market and
started setting up their own grain flow centres that we started to see some
MR RALPH: No problem with that. Is there anybody else who would like to
MR MARK CAMERON: Mark Cameron, local wheat grower. I've just got a
quick question on - you mentioned earlier your terms of reference and I would
just like some clarification. Is this a Panel set up specifically to hear growers'
points of view, is that your terms of reference?
MR RALPH: Sorry, what did you say then?
MR MARK CAMERON: You mentioned earlier about your terms of
reference and was the Panel set up primarily to go back with growers' views?
MR RALPH: Yes.
MR MARK CAMERON: So my question then is why are you listening to
MR RALPH: No, our terms of reference require us to listen to other views,
but to report back basically on the views of growers.
MR MARK CAMERON: Then I would probably suggest that you might be
clouding your ability to report back by actually listening to other views.
MR RALPH: I think why we have been selected is to try and segregate those
out, to listen to the industry, but to report back particularly on the views of
MR MARK CAMERON: I understand, but human nature is that once you
have heard something, you can't actually segregate it out. So you won't be able
to make the segregation unless you haven't actually received it in the first
place. So in effect, it's just a process fault, I would see.
MR RALPH: Most of the people who have spoken to us in fact have indicated
on that form that they are growers. There have been some who aren't, and they
have declared that.
MR MARK CAMERON: They might have been able to declare that then, but
where it would fall down is your ability to pass on that declaration because you
won't have known where they have all come from.
MR RALPH: We have to do the best with what information we can gather
that way, because we are asking people to indicate whether they are growers
and essentially the size of their interests, in terms of the tonnage they produce.
MR MARK CAMERON: A suggestion earlier on in the day was that only A
class shareholders' opinions get forwarded. Obviously they're growers. Why
would that not be an applicable thing?
MR RALPH: All I can tell you is the terms of reference that have been given
to us, and we have to work within those terms. The terms of reference are that
we seek the views of those in the industry, and particularly of growers, and
report back particularly in the interests of growers. That's our terms of
reference. I didn't write them.
MR MARK CAMERON: Thank you.
MR MATT SHADY: Mr Chairman, members of the Panel, fellow grain
growers. It's a bit of a luxury for me to be here today - - -
MR RALPH: Could we have your name, please.
MR SHADY: Sorry, my name is Matt Shady. I farm with my father over the
other side of the (indistinct). I would just like to thank the committee for
coming to hear our views. From what I have heard to date, the main issue
seems to be that (indistinct) variety of different views and it's very hard to
weight each of those views. The only way I can see that we can get a fair
weighting or fair representation for growers (indistinct) and the only way that
the ballot will be held is if grain growers or Australian Wheat Board
(indistinct) farmers' representatives put out some sort of postal ballot or secret
ballot where people can vote for a range of issues, so that you can actually get
a quantitative measurement of what the view is out there.
These are all very well and good, these meetings, they allow people that don't
normally get out to find out what other people in the industry are hearing and
feeling. But the actual value of it, I think is limited by the number of people
that can get up and address certain issues on it.
For the record, I'm a supporter of the single desk. I think it has to have a veto
power. Without it isn’t a single desk. I don't think the WEA is the appropriate
authority to be responsible for it because it can be politicised. My main
statement today is that I would like you to go back to Mr Howard with the
message (indistinct) you're actually dealing with growers' livelihoods.
MR RALPH: As I said earlier today, you can't ask the Government to get out
of it because then there wouldn't be any single desk, because it is only through
Government legislation that the veto power exists.
As I have said already today, we have been asked to do a certain job and that's
what we are seeking to do, is to reflect back to the Government what the views
of growers are, and that's also why I would encourage you to send in written
submissions. They can go by mail, they can go by fax, they can go by email,
and they don't have to be lengthy.
It can become in some senses a poll because we will be getting the views of
those who are sufficiently interested to have their views recorded and taken
into account in the report that we make back to Government.
MR BRADLEY RICHENS: Bradley Richens, from Comara, a wheat grower.
My understanding of the AWB, my personal point of view is, it gives me
stability, it gives me somewhere to go, it gives me a baseline in our market.
I was involved in another small marketing group. That company went belly
up, which hurt, which hurt us substantially, monetary wise. But with the
AWB, if I don't deliver to the pool every year and I might put some in there, I
might not, but it gives that basis to just sell, it gives a basis to the domestic
So if the AWB has got a pool bottom of, say, $160, $200, whatever it may be,
the domestic growers, the domestic buyers around our area have to fall into line
with that. Otherwise, they will get no grain. If we haven't got that in our area,
they can play willy-nilly with us, like they've done this year. They know they
can import grain. I mean, we're selling top quality grain at the moment, in the
middle of a drought, wheat for $300 on farm. Last year we had oats worth
$75 a tonne, this year $400 a tonne. That's how much upside/downside is in
AWB, with their pool arrangement, with their veto power, with their export
power with a single desk, could give us direction, give us stability, where we
know there's a base. If I was getting 30 per cent more every time I get out of a
bed, like an American farmer, or 50 per cent like the EU, or 80 per cent like
the Japanese farmers, I mightn't be here today squabbling because I would
probably have a little bit more in my back pocket. But I don't.
We need the single desk to help us. We're not big players in the world market.
I've been to America, I spent five months there, went right through the wheat
system, harvesting. You see what happens there. They are very, very big
players. For us to lose what we've got now is stupid.
I mean, there's been things done wrong, don't get me wrong. I've got a very
close friend that was in Iraq with AWB on the marketing side who's out, who's
gone - doing her own thing now importing stuff into Australia, 3 or 4 million a
week, not a small player. But she's out, gone.
She didn't tell me the whole story, don't want to know the whole story, but
we're dealing in a world market that is corrupt. It will always be corrupt. But
AWB give us a base to work with, and without that I can't see how we can
remain as a grain grower. If you want to look at all our bank accounts around
here at the moment - I can speak for myself - they aren't looking real good.
If it doesn't rain this year, John Howard won't have a great deal of many
farmers left. I'm a young farmer, probably one of the youngest in our area. If
we don't get a good year, why stay here? I can make more money sweeping
floors in Woolworths, honestly, and that's the way it is.
I can't tell you how to fix this, I can't tell you what to do with the board of
directors and so forth, because it doesn't matter whether it's the Macquarie
Bank, whether it's AWB, whether it's head of Commonwealth Bank, whoever.
The top executives are always getting paid too much. They put the hours in,
but ask these guys around here how many hours they put in, and you just asked
before could you take the time to write a letter. We do a fair bit. We're
agronomists, you're an accountant, you're this, you're that, you're very busy.
I'm not a person that likes to write letters, I don't enjoy it at all. I do write them
when I really, really have to. But I think if we lose the single desk to front the
world scene, it will hurt us and we'll never get it back. We need stability, we
need that bottom line, we need to know we're going to get paid.
If we miss a payment, people in the cities don't understand it, we don't get paid.
If it doesn't rain, we don't get paid. We can't just say, "The money is going to
come in." It does not come in. With that, we have stability. We don't get, as I
said, the 30 per cent in the back pocket like the Americans do.
If John Howard wants to do something about this, throw us the 30 per cent. If
he would have thrown us 30 per cent 20 years ago, would we need the drought
support now? Ask him that. Thank you.
MR RALPH: Thank you very much for those views. Though you don't like
writing letters, I hope you will write this one.
MR BRADLEY RICHENS: It's not my forte, I'm afraid. If I could spell cap,
I would probably be a lot better off. It's one of those things I can't do. But
thank you anyway.
MR RALPH: Good, thank you.
UNIDENTIFIED SPEAKER: Excuse me, sir, why has that man got to write
another letter after just what he said there?
MR RALPH: What he said will be recorded. I'm just encouraging him to
make sure that we get people like him writing in and give us their views,
because that will be very helpful to us.
MR BRADLEY RICHENS: (Indistinct) my situation this year, that the AWB
pool has been less than the cash price, but we have to remember that it's an
export pool and in years of drought, when there's domestic shortage, we would
never envisage that we could export wheat and get the value overseas what it's
going to be worth here locally, because of supply.
MR RALPH: I understand that.
MR BRADLEY RICHENS: What I'm saying is the critics of the Wheat
Board, especially from a very vocal few in WA, has been that the Wheat Board
hasn't been competitive. But they are there to export the tonnages - it's in the
good years where we need them.
MR RALPH: Thank you. Would anybody else like to speak? If not, I would
like to thank you for coming today, because we need people like you to come
here and express these views. I know that you've got a lot of other things on
your plate, particularly when things aren't going as well out there with the
season in the way it's been this last year or so, but we will be doing our best to
reflect the views that we will be hearing around the country.
We have done about a third, a little bit over a third, of the visits now, and we
will be doing two a day now until next Friday week, when we finish in Western
Australia. So we might hear some different views.
I do appreciate, and my colleagues appreciate, the fact that you've come along
here today to give us your time, and I would also like to thank you for the way
that you have allowed people to make their statements, even though you may
not have agreed with them, to make sure that they have their chance to have
As I said, our task is a simple one, but also a complex one. It's simple in the
fact that we have a simple aim of seeking to reflect accurately the views of the
people who actually grow the wheat; complex because, as you hear, there are
some differing views.
There is clearly, from what we have heard to date at every meeting, a strong
preference for the maintenance of a single desk. Some people have views on
what might be done to make some changes, to make some improvements, to
overcome some difficulties that they see, but there also are a few people who
speak in favour of deregulation.
But the overwhelming majority favour a single desk, as I said, with many of
them with suggestions for what might be done somewhat differently, and it's
very clear also that the views are different in different parts of the country. So
thank you very much, and thank you for being at this meeting.
MEETING ADJOURNED ACCORDINGLY