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 3 February 2007

 MR RALPH: I hope we're not interfering with people's golf. Let me start by
 introducing the members of the committee. On my right - your left - are Mike
 Carroll, Roger Corbett, and Peter Corish. And Russell Phillips, who is the head
 of the secretariat, he will be here shortly, but he's over at the other location just
 making sure that anybody who turns up there is directed over to here.

 Now, you would all be aware that the Government has announced that it is
 examining whether there should be any changes made to the wheat-marketing
 arrangements and it established this committee to seek out the views of the
 actual growers of wheat about those marketing arrangements. The larger
 players, the peak organisations and others in the industry, have their opportunity
 always to be lobbying and making their views known through media releases
 and direct lobbying, but this is an attempt to go round to 23 different towns in
 the wheat-growing areas of Australia for us to find out what the growers
 themselves think and to feed that back to the Government.

 Our role is not to make any recommendations on how wheat should be marketed
 in the future. We won't be recommending - making any recommendations of
 that nature. We have a simple and yet complex task. The simple task is for us to
 find out what people in the wheat-growing areas think about the issues and for
 us to report that back faithfully to the Government. So I stress we're not going to

 Forbes (3 February 2007)                P-1
be making any recommendations on what should happen, but rather what are
your views. So that's the task.

Now, we have two ways of getting the views of wheat growers; one is through
these public meetings and the other is through written submissions, and I would
urge as many of you as would like to give us written submissions because that
will be a way in which we can get more of the views of the people who are
actually engaged in producing the wheat. Now, the way which we intend to
conduct this meeting is to give those who have registered that they wish to
speak, the opportunity to speak.

We want to give everybody an equal chance of being heard and so today because
of the number we have who have registered, we will be limiting presentations to
four minutes. You will get a ring on the glass at three minutes to let you know
that you have a minute left. The committee will probably ask some questions of
those who are speaking after they speak. So I would ask you to stay at the
microphone after you have finished speaking until I call the next speaker.

The fact that you haven't registered to speak doesn't disqualify you from
speaking. The reason for putting the four-minute limit means that we will be
taking just over the allotted - just over half the allotted time for the meeting for
those presentations. We will have the remainder of the time for others who wish
to speak, who may have heard something during the morning, they agree with or
disagree with, and want to have their view made known. If you have one of
those mobile phones in your pocket can you, please, make sure that it's turned
off. So the first speaker I will call is - and I will be calling in the order of - - -

MR .....: Mr Chairman, this is for growers - a forum for growers and I
understand that you've had Alec Osborne from Drayfus speak at Moree. We've
had various traders at all the meetings. So if they are speaking would they,
please, declare their interests - what the conflict is because after all Mark Vale,
in a letter to the growers, said that this was a growers' forum as well. Could you
just clear that point up, please?

MR RALPH: Under the terms of reference, we are to consult with all the
participants in the industry, but our remit is to report back on the views of the
growers, in particular. So we'll be focusing on the views of the growers. We
know that there are traders, and I think they - the traders that have spoken
previously have identified themselves as being traders, so - the opportunity for
them to speak, but essentially when we report we're going to be interested in the
views of the growers in reporting back to Government. So call Mr Stuart Day.

(Speaker's microphone not working properly)

MR DAY: Gentlemen, I would like to first of all thank you for giving us an
opportunity to voice our views. Secondly, I would like to just bring in a little bit
of history as to why we have the single desk. That history was a protection to

Forbes (3 February 2007)                 P-2
farmers from carpetbaggers in the past. Now, as a young farmer I'm worried that
the future without a body that represents the grower, that has a power of veto
over the export of grain, has the right to stop anyone else from undercutting or
selling grain, whether it be wheat or not. Thank you. I will start again if that is

UNKNONWN SPEAKER: Keep going. We've heard it all before.

MR DAY: Yes. With these mikes, I can tell. The power of veto, I believe, is
an important issue and I believe that without that power of veto the
carpetbaggers that were using the Australian grain growers to undercut them
back in the '50s when the AWB was first started, is an opportunity for them to
come in and undercut us again. So as a young grower, which there are very few
of these days, I would like to see a single desk still there with the power of veto
to at least give us some protection from the large corporations who are usually
using grain trading based on countries that are subsidised. We have no
protection. This is our only protection. Thank you.

MR CORISH: Thank you. Stuart, you have said pretty clearly that you support
the retention of the single desk and you have made comments about the veto.
Do you think that the current arrangements can be improved? Can we, looking
at the future - as you said, you're a young farmer, you've got a long time,
hopefully, in the industry, do you think there are things that can be implemented
now to make the future of wheat marketing - export-wheat marketing in this
country better?

MR STUART DAY: Transparency within the industry, I think, is a very
important issue. So that all parties in the industry can see what's going on. The
powers of the Wheat Export Authority, I think, haven't been good enough and
with that the AWB in itself has been able to play a game that probably hasn't
been received nearly as well as what it should, but yet again through the Cole
Inquiry and the issues which came out of that, Australia - the AWB, I should say,
perhaps would be the only company in the world that hasn't been playing the
game and if you look at problems in the Middle East, I believe that's probably
the only way that you could have played the game.

THE AUDIENCE: Hear, hear.

MR RALPH: There is a proposal being suggested by the AWB, for halving off
of the AWB International in order to deliver what some people see as desirable
of having an organisation then that is owned by the growers, working in the
interests of the growers, and without any interest in other economic activities.
Do you have a view on that?

MR STUART DAY: That's pretty well what we would like, I would say, as
growers because we then have a say. We have a chance to stop the large
corporations, cartels, bulk traders, and so forth, coming in and being able to

Forbes (3 February 2007)               P-3
undercut us as was done back in the '50s when the Labor Government put in the
single desk.

MR CARROLL: Stuart, you mentioned that the Wheat Export Authority hasn't
had enough power. How much more power would you like to see it have and
specifically in what areas?

MR DAY: Well, as a grower, I can't just say what is the power I believe they
need. I believe they need to have all the power available to them so that
transparency can be transparent. We don't seem to be seeing the full result of
what's coming out and what they're doing. There seems to be this corridor there
that, as a grower, I can't look down. So it's a matter of an open - - -

MR CORBETT: As we've gone around, Stuart, we've heard arguments - I
would just like to say that we, the panel, I am sure, and I, personally, have got no
preconceived ideas of what should be happening, we're here to listen, but in
putting propositions to you to tease out your views I don't want anyone to get the
feeling that there's a prejudgment here or a support of a particular point of view
because it would be possible just to have a tape recorder up here and ask
everyone to speak and then later roll it out.

So the purpose of having a dialogue is to ask questions and to push back to get a
greater links of views. But there is a - the argument has been put that the
gatekeeper actually is the guy who benefits by having the veto. So if I've got a
monopoly, I'm unlikely to exercise any - let anyone else into my monopoly when
it may be in the interests of the wheat farmers to have some licence issued in a
particular market and Durham Wheat has been used as a good example of
something that was type of, in many growers' views, mishandled. So would you
see some change - it has been argued that there could be some change like a
growers' body, maybe the WEA, strengthened by grower majorities, they control
the veto and sublet out the right to operate the single desk in a competitive way
in some nature?

MR DAY: Yes, I would be ..... in that because market forces are one thing that
does drive pricing up. One of the things - the AWB not allowing some other
organisation to export grain, I think, has been an issue, but in saying that there's
been an issue I still think that more exporters - well, people should be allowed to
export, but they should be paying a levy or some sort of fee back to a body
which has control over the veto so that that protection is still in there for the

MR CARROLL: Stuart, do you think the veto would be better with the Wheat
Export Authority rather than AWBI, providing it's controlled by growers?

MR DAY: Yes. Yes, it has to be controlled by growers. We are the ones who
have the grain, it is our grain to sell. All we need is a body to make sure that no-
one can undercut our grain from overseas.

Forbes (3 February 2007)                P-4
MR RALPH: Thank you very much, Stuart.

MR DAY: Thank you.

MR RALPH: Can I ask Ernest Kitto - and if that microphone doesn't work, you
might come and share this one.

MR ERNEST KITTO: Thank you for an opportunity to speak today, but I
would like to go back to who has been pushing to abolish the single desk. We
all talk about, we want the single desk and there's talk of abolishing it, and we've
got to look at who wants to abolish it. It's the same people who opposed the
creation of the single desk in the very first place, in the '30s. Stuart was about 20
years out. I think it was in the '30s that we first heard about it and the early '40s.

And these are private marketers. And talking about transparency, there's no
transparency in the profits that they make. They never tell us how much a tonne
they make on the wheat that they sell and yet the Australian Wheat Board is
obliged to tell everybody what they pay, what their costs are, and everything. I
think it is rather unfair, to put it mildly, that they should seek to destroy what is -
it's not - I also object to the term "monopoly".

It's not a monopoly, it's a grower-owned selling system on behalf of the growers
and every time we read in the newspaper it says, "The disgraced AWB
monopoly". Well, to me that is an insult to the growers and it's our money that
set it up in the first place, and the part that went wrong was when private
investors were allowed to put money in and that's where the conflict of interest
came. There's no conflict of interest in AWB holding the right of veto because
they're working on behalf of growers.

There's no single person or whatever that benefits from it. It's only the growers.
And so if they're to have the - it was mentioned about there could be other
benefits to growers. Well, the AWB is doing their job, they're working for the
growers because the growers should be the only ones allowed to elect all the
members of the board and elect the staff that do the job. And there's been this
talk about having an independent WEA. I'm a little bit sceptical as to it's

There's people even on that board that have a conflict of interest and we don't
know who they are, they're just appointed, they're not elected by the growers. So
they could have other pressures put on them to grant - as has happened in this
last while, there was pressures put on the Minister to grant export licences to
people who had no right to have it because this is a year when there's a very -
shortage of wheat. There was no advantage to the growers by another person
coming in and giving a supermarket special just to get the wheat away from the
Wheat Board.

Forbes (3 February 2007)                 P-5
MR RALPH: Thank you. If you wouldn't mind staying there? You mentioned
the need for it to be representative only of growers. So I presume that you would
also be in favour of separation because at the moment of course there is a - the
directors of AWB have two classes of shareholders that they have to satisfy; one
class being the growers in terms of the price that comes back to the pool; the
second is the B class shareholders who get the dividends out of the operations of
AWB. Now, as AWBs enterprises grow of course those profits favour the B
class shareholders not the A class. Do you have a view on that?

MR ERNEST KITTO: Really, I don't know why it was split in the first place.
We put the money in, we should own the whole show and that's why it's getting
back to having these other B class shareholders who are not growers, that's
where the conflict of interest comes in. If the whole thing was owned by the
growers, there would be no conflict of interest whatever.

MR RALPH: Now, unfortunately, that water has flowed under the bridge and
most B class shareholders have the rights that go - the dividend rights that go
with those shares so I don't know to what extent that can be turned back.

MR ERNEST KITTO: Someone raised the question - actually it's the grain
growers who raised the question, that 23 per cent of the B class shareholders are
institutions. That was at December 2005, that's 12 months old. Now, the shares
have dropped dramatically since then and I imagine the institutions would have
been the first ones to bail out. I think there's a lot less percentage of institutions
now than there was then.

MR RALPH: Okay. Thank you very much. Tony Cogswell?

MR TONY COGSWELL: Three times lucky. Ready to go. My name is Tony
Cogswell, I'm a local Forbes resident. I'm an ex-grain grower and marketer of
grain, mainly in pulses and corn and other grains, not so much wheat, but - - -

MR RALPH: Excuse me a minute, Tony, I think your microphone is causing
the problem. So I think if you just take that one away we mightn't have a

MR TONY COGSWELL: I would just like to ask this meeting to consider not
the total wheat-export situation but contain it at trade in particular because these
country towns will add a lot of value to wheat. It will create rail infrastructure
and other things due to the movement of wheat in containers and of course at the
end of the day, we've all watched rail lines being closed round the country.

Just up the road here, on the hill, there's a $6 million investment in grain
handling and rail sidings to move pulses and other grains and I think it's
important that we separate container and bag trade from the bulk-wheat trade
because it's imperative for these towns to be able to capture value and pursue
niche markets. Now, I think at the end of the day if the price is not right for the

Forbes (3 February 2007)                 P-6
growers they're not going to sell the wheat to these box traders or exporters. So I
would just like to ask this meeting to consider a separation of their thinking
between the bulk-wheat trade and the container trade. Thank you.

MR CARROLL: One of the things that we've heard is that it's very difficult to
estimate what the benefits of the single desk are because there's no benchmark to
compare it against. Some people have expressed a view that if there was some
opening up, particularly in the area of niche markets and container trade, it
would allow us in the future to be able to assess how effective the AWB is,
particularly in areas such as managing costs. Do you have a comment or a view
on that?

MR TONY COGSWELL: I think my - my particular view is on those niche
markets. At the moment it's very difficult to get any permit. I'm all for those
traders paying a permit to an authority, but it needs to be - that process needs to
be open and transparent. It can't be a permit refusal on the basis that it's already
an existing market because I think it's been well demonstrated that the
Vietnamese box trade which accounted for quite a few hundred thousand tonnes
of wheat in a year was developed by permit-wheat trade into areas that didn't
have bulk-handling facilities, it was a non-core market of AWB, and I think we
need to have people continue to develop those markets without undue
interference and providing that they obtain a permit. All these sales would be
registered, so the AWB would be aware of - or the Wheat Export Authority
would be aware of what volume that trade represents. I think - I can't see any
problem with that system.

MR CARROLL: If I could just go on from there? Private traders make a
significant investment in developing a market such as the Vietnamese market
and it becomes quite a significant market. Should their investment in that be
protected or - because the risk is that as the market becomes significant, AWBI
exercises its power of veto and then everything that's been done to develop that
market and the incentives to do that in other markets are gone, so - - -

MR TONY COTTERILL: Well, I think that changes - well, I mean a market
development is an expensive exercise and, you know, we've done it on other
grains in Asia.       There are certain development costs, particularly in
infrastructure, for container packing and handling, and I think, you know, we
should allow market forces to determine - you know, whoever bids the best price
to the growers will buy the grain and if they can create efficiencies by linking
those farmers directly with markets, leaving some of the added-value chain in
country towns, building infrastructure.

MR RALPH: Thank you very much, Tony. We've got to keep moving to give
everybody the same opportunity. Mr Phillip Buckland?

MR PHILLIP BUCKLAND: Just moving that out of the line of the speaker,
because that's been the problem, I think, feedback. I've only really got a short

Forbes (3 February 2007)                P-7
thing to say and that's could you, please, tell John Howard to listen to what the
Yanks are already saying? They want to get rid of our single desk because it
would be an advantage to them not for us.

And also I would like you to listen to the growers and tell him to listen to the
growers not those that say that they will - that they're doing - they're working for
us, because even the grain growers' association has a lot of big members in there
that are not really working for the grain growers, they've got other - yes, other
things. So yes, that's all I wanted to say really.

MR RALPH: Well, that's the purpose of course of this committee and the
reason for these meetings is to hear what people like yourself want to
communicate back because, as I said, the Government has available to it the
views of the large organisations and there's been an understanding that
sometimes the views of the growers don't come through and so we're coming
round to these - having these meetings to find out what you think. So thank you
very much.

MR PHILLIP BUCKLAND: This year, Manildra was buying out at ..... too.
They pulled out for a day or a week, I forget how long, and the price
immediately dropped around $10 a tonne because Coghill and a few others could
see that they didn't have to pay the higher price. So if there's no Wheat Board
buying for us or a pool, yes, we're just going to have to cop it sweet, that's what I

MR RALPH:        Thank you. Thank you very much. The next speaker is Pam

MS PAM KRIEG: Thank you, Mr Chairman, I'm a grain grower from ..... . Mr
Chairman, both the needs of growers and the requirements of our overseas
customers are paramount in making decisions regarding the wheat-export
arrangements. Australia, through its single desk, does not just sell wheat. It
sells much of its wheat with a quality guarantee of differentiated products which
is tailored to the quality demands of specialised markets.

We're a major wheat exporter participating in a competitive world market and
the playing field is far from level. So it is vital that we maintain the advantage
we have through our single desk. If we have a number of exporters vying for our
export wheat how do we ensure a pool of wheat which is large enough to
successfully provide the tailored product which many of our customers want?
Major overseas customers have expressed concerns as to how large repeat orders
of consistent and guaranteed quality wheat would be supplied in a deregulated

We need to ensure we have a system which satisfies our customers and I believe
that the power of veto is vital to protect the investment made in these established
markets. Presently, our whole wheat-marketing system is based around the

Forbes (3 February 2007)                P-8
national pool operated by AWBI. Whether it is the fact that it provides a base
for other pricing, whether it's the fact that it provides a safety net for other
traders who can freely take wheat into the pool, whether it is the strict quality
standards which govern our returns, whether it is the benefits of the golden
reward payment system, or whether it is the security of having a buyer of last
resort, it needs to be acknowledged that the absence of a single desk and a
national pool would have major repercussions not only on export markets but
also on our domestic market.

The single desk and the national pool add value to growers by providing many
things; collective market power in international markets, maximisation of pool
returns, price stabilisation for all growers, a receiver of last resort, risk
management of price and currency, many other valuable services to growers, and
valuable industry services. I believe also there are benefits which we can't put
dollar terms on; things like security, trust, and reliability, which we have found
to be failing in some operators. We want to keep all of these benefits and all of
these services.

The AWB is not without blemish and appears to have faced more scrutiny and
criticism than any other Australian company in recent years. It has been judged
by many industry participants and yet they, themselves, do not appear to have
been judged. Any reform process needs also to examine things like regional
monopolies and grain handling and storage. The AWB has been an effective
marketer of the Australian wheat crop for many years and should at this time
continue to manage the single desk, operate a national pool and have the right to
exercise the power of veto.

THE AUDIENCE: Hear, hear.

MS PAM KRIEG: Any future changes to single-desk arrangements should be
gradual and they should be linked to global trade reform. I don't think Australia
should be giving away anything, Australia needs to be strong just for the sake of
all other grain trading countries as well. We have told Government, we have
told the media, and we've told our farm leaders all of this before. Most of them
have listened but many have not heard. We don't want knee-jerk reactions and
we don't want to be the pawn in political games. The wheat industry and the
future of Australian growers is too important for that. We're relying on you to
get our message across. Thank you.

MR CORBETT: Thank you for that very clear statement, that I'm sure we've all
heard. The single desk - in listening now to lots of people, the single desk is
obviously a very important issue. There has been a lot that have argued that
some change is required, particularly I think a lot of people see that taking the
buyer - the grower capital that had been created, 650 million or circa that and
transferring it to shares was, in hindsight, a bad arrangement because those
shares have subsequently been traded and have their own rights, so in essence
create a conflict of interest.

Forbes (3 February 2007)               P-9
A lot of growers have talked about that conflict of interest and their concern for
it, a lot of growers have talked about the question of lack of competition in input
costs, and a lot of growers have talked about the fact that the pool price in the
Australian marketplace actually determines, to a large degree, the domestic price
and that most buyers - most producers, particularly on the East Coast are selling
into the domestic market, and if that domestic price is not created - if that pool
price is not created with very competitive inputs then it's going to be lower than
it needs to be in lowering the price for the domestic market. So that we've heard
strong argument for change. Do you see any changes in the present system or do
you - are you arguing for absolute status quo?

MS PAM Krieg: Well, at the moment I think we need to maybe be given a
good alternative. There is no good alternative at the moment. Your argument
about pool prices and domestic prices, I think that is definitely the case at harvest
time if you're looking at a harvest fall. If growers choose to store and sell later, I
don't think the same things apply. It just goes to show that local traders -
domestic traders are not willing to pay more than they have to pay.

My experience is they pay as little as possible. They get away with the lowest
grade that they can possibly. We face the problem in Central New South Wales
of growing hard wheat, that the cash price has usually dropped by the time they
get to about here. If you're growing a high-grade milling wheat usually your
only alternative is the pool. There may be room for some change in the
arrangement. I know there's discussions about structural change to the AWB,
you know, there is forever this conflict of interest thing. I just find it interesting
that it's levelled at AWB, but if we look at other players in the grain ..... ABB,
they also have shareholders.

Are people bothered there by their conflict of interest as well? I think the whole
structural change needs to be looked at very carefully. There's criticism all the
time, but it is a very costly business. I've heard it's going to cost between 10 and
$15 million if AWB went down the track of a merger. We need to be very sure
that that's going to have real benefits for growers.

MR CORBETT: The argument has been put that the WEA lacks teeth and the
argument has been put that if growers were given control of WEA, as a majority
holding on the board, then is that not the place where regulation of AWB could
be instituted and, for example, forcing competitive marketing at different places,
competitive services and so on, that argument has been put. I would be really
interested to hear your view on that.

MS PAM KRIEG: Well, it's a difficult one, isn't it? I'm not sure - I think WEA,
the report that they came out with this year - obviously, they haven't been given
more teeth yet, but the report they came out with this year was much more
comprehensive than previous reports. I know the time that AWB spend, the
resources that they have to put providing information to the WEA and I guess

Forbes (3 February 2007)                P-10
the cost of us, you know, operating the WEA is an issue. So how much more do
we want to spend also, I think, running the WEA.

I think - yes, I think giving more teeth maybe, but, you know, do they have
enough teeth but are they just not reporting comprehensively enough on what
they do? I think they need to - we do need to have a strict look at what we're
doing but also, you know, containers and bags, I'm not sure exactly there.

We need to look at quality issues and so on and I think it's important that as they
did - I'm not sure that was a very comprehensive or adequate comparison this
year between the effects of bags and containers on pool returns and so on too. I
think that is an important issue. I'm not sure whether getting total grower control
of WEA is what we need. I think we just need competent people there. We
need them to be given the power to look at the things that we want them to look

MR CORISH: Pam, just a quick one. A few minutes ago you commented that
by the time people in this area are harvesting the cash prices for high-grade
wheats, high-protein wheats have come off. Does that mean that most of the
high-grade wheat in this area goes into the pool, most years?

MS PAM KRIEG: Oh, I couldn't really say, I mean, for other people what the
choice would be. I mean, people in the past - - -

MS PAM KRIEG: ..... to advance your price as well, but no, I wouldn't really
be aware, but, you know, I think there are a lot of people that - I mean, if you're
selling a house and you want the best price, you're optimistic.

MR RALPH: Thank you very much, Pam. The next speaker is Bruce Noble.

MR BRUCE NOBLE: Mr Chairman, my name is Bruce Noble, I'm a wheat
grower from the Eugowra district as has my father and grandfather before me
and I come here this morning to put to you as strongly as possible that I want to
see AWBs control of the single desk for export wheat continue. It has served us
well and I don't want to see it thrown out. Certainly in my life time, we've seen
some dramatic changes in the methods of production of wheat and the
generations before us, they worked very hard, but their knowledge of the overall
industry wasn't all that extensive.

And certainly the farmers of today, a lot of their time is consumed in the actual
growing of the crop, of selecting the variety that is most suitable, choosing the
fertiliser requirement, the seeding implements to get it sown, weed control and
so on, and we, in recent times, have had a great degree of flexibility in the
marketing of domestic wheat and we've seen some changes there where, in the
last 15 years, much more of the wheat grown in the Eastern part of Australia is
consumed by the domestic market, and particularly so in the last five years when
none of us have grown what we would regard as a decent crop.

Forbes (3 February 2007)               P-11
So there have been some dramatic changes. And while the farmer of today is so
much better informed about the direction and the trends of the value of their
crop, but still we are pretty busy at home on the farm and while we have freedom
of selection on the domestic market, I don't think there are too many individual
farmers that are right up to speed with dealing with the world export trade in
wheat, and that is why it is so important, in my view, that we should have a body
that acts collectively on behalf of individual farmers to look after our interests
on the world export wheat market.

And it is imperative that that should continue. We see, at the moment, energy
prices have gone through the roof and coal companies have got ships lined up off
the ports of Eastern Australia waiting to take on board coal. Now, that wasn't
always the case and they would line up as individual traders, the consumers of
coal around the world, and they would then take the very lowest price, whatever
the company would give, the lowest price, that was it.

And in the past we've seen that with wheat. Now, I don't ever want to see that
again and while I stress that while we are so much better informed as farmers
than we were in the past, it is essential that a body like AWB should oversee the
world marketing of Australian wheat and not be dictated to by somebody like the
United States who seems to be quite okay to subsidise their growers to an
enormous extent and then on the other hand be telling us that we need, in
Australia, to get rid of the single desk for marketing our wheat on the world

I find that totally abhorrent and totally unacceptable and certainly that is the
issue that I see is of paramount importance and we should not be in any way
whittling down the role of the AWB. There have been some very fine gentlemen
that have represented the farmers' interests on that over my life time and there
are still some there today, and I want to see that continue.

MR RALPH: So you are supporting the idea of the AWB continuing on with
no change and, if you like, the AWBI is closer to what the Wheat Board was in
setting - in only being concerned with the selling of wheat and all the returns
coming back to the growers, but with the privatisation of course you have a
different structure now where the profits that come from other activities plus
profits on services provided to the pool go to the benefit of the B class
shareholders because all dividends flow to B class shareholders.

Now, the B shares were originally owned by growers, but of course what's
happened as they come on to the stock market and growers have sold out, there
has - it was pointed out earlier that 24 larger shareholders in the AWB now are
banks and institutions or trustee companies for superannuation funds. So are
you - your support, though, is to continue with that, without splitting the pool off
just for the interests of growers? Am I interpreting you right?

Forbes (3 February 2007)               P-12
MR BRUCE NOBLE: At no time did I use the words "no change". But over
the history of AWB there has been change, an evolutionary change. They have
been responsible for setting quality standards, for promoting the sale of wheat
around the world by taking milling techniques and baking techniques to the
Asian countries to produce noodles, they've just done the same sort of exercise in
the eastern countries to produce flat bread.

So at no time did I use the words "no change". There will always be change and
we would be living in the past if we thought there was going to be no change,
but the point I did make was, quite strongly I thought, that I want to see the
single desk for export wheat controlled by AWB to represent the collective
interests of grain growers across Australia. That was the important part.

It doesn't mean that we pull the shutters down completely on the fine detail of
how that should be implemented, but we don't want to see the whole thing
thrown out the window and take whatever risks might be round the corner for us
in the future when hopefully in my life time we are all able to grow a good crop
and we see these buggers stacked up all around the wheat growing areas - once
again, we've got a massive amount of grain to disperse somewhere around on the
world markets. We want that body of the AWB to be there to oversee that in our
interests and not broken up and at the discretion of a whole lot of other
individuals that may not be in the general interests of wheat growers of

MR RALPH: Thank you very much, Bruce. Next is Mr Neil McDonald.

MR NEIL McDONALD: Thank you, Mr Chairman. I'm a third-generation
wheat grower in the Condobolin district and I have a son and daughter who
operate their own properties now, they're probably in the minority who are doing
that sort of thing, and I have a grandson who I would think probably would
continue on. I go by the old adage that "If it ain't broke don't fix it". I can't see
much wrong with what it is at the moment. That doesn't mean that we'd be
unwilling to change, as many have said before. I think you've got to be careful
who you listen to.

I hear you say that there's a big ground swell of a need for change. I feel that
that's coming from people who are not genuine bona fide wheat growers. Some
of them actually sit there to represent us as our industry spokes-people, groups or
organisations, but unfortunately quite a few of those have vested interests in
shareholdings and other types of things that they have which override their basic
interest in farmers and I think in a lot of cases those organisations do not speak
for farmers - sadly, but that's the way it is.

So I urge you to listen to the individuals on the floor at these meetings. There's a
lot of things that I think are very good about the AWB structure. I don't think
there is any need for a separation of AWB I and L. The guaranteed first
payment, that's always been a wonderful thing. The buyer of last resort is

Forbes (3 February 2007)                P-13
something that we've needed desperately a few times in my life time. The
product, Pam covered it really well. We're selling a very differentiated product
which I'm sure would disappear if we had a deregulated situation, if it was more
like coal - c-o-a-l.

That brings me to the Cole Inquiry which has happened at a very unfortunate
time. I don't know what Mr Cole dug up, I can't see very much. The ATO
doesn't seem to think there was much there either. It's coincided with a year
when grain production has been terribly low so much so that you could probably
sell stale tea leaves for $300 a tonne. All this has combined to make it a really -
a sitting duck for the international traders who would love to get rid of the
structure which I think in itself is the greatest recommendation for it to remain as
it was.

I don't think there's a lot more that I can say, but I really feel that the structure
needs to remain. There's a review in 2010. I can't see anything wrong with
leaving everything as it is until then. I'm sure there will be room for change and
fine-tuning. I think it is unfortunate in a way that we've got this problem with
the B class shareholding, but I think the grass-roots growers identified that at a
very early stage, could see that problem coming, but I don't think it's something
that - I think it's something that we can work through and I've got great
confidence in the people that will come on and continue on to push our
organisations and I think it's really up to us to get in there and do a bit more to
make sure that they are doing the job that we want them to do. I think
complacency has been part of the problem and that's about all that I have to say.
Thank you.

MR RALPH: Thank you, Neil. Questions? Thank you very much for the
statement, Neil. Phil O'Hare?

MR PHIL O'HARE: Mr Chairman, ladies and gentlemen. Dear Sirs, several
inquiries have indicated the single desk export facility, the AWBI, owned by
growers has, over many years, been worth an extra 6 to $8 per tonne as well as
putting a floor in the domestic market. The Labor Party which strongly
supported the original establishment of the AWB in 1989 opposed the removal
of cost of production formula which has cost growers of all grains millions of

Latest research indicates the benefit closer to $15 per tonne. Grower control
through AWB and supported by the democratically elected State grower
associations has, through grower levies and rigid quality specifications, had a
second to none reputation on the world stage. Payment variations and auctions
have enabled many growers to set aside funds for hard times as instanced by
recent droughts. The success of the Rice Marketing Board is another example of
grower control and the profits stay in Australia.

Deregulation which has devastated the dairy industry, dropping regulated cost of

Forbes (3 February 2007)                P-14
production prices by approximately one third would have a worse effect on the
grain industry because of irregular seasonal production. Other examples are
vegetables like potatoes and wine grapes, they have no protection, and over the
last couple of years producers have been offered roundabout 60 per cent of cost
of production and to add insult to injury, the wine grape producers, their local
processors have imported from Mildura and Berry in Western Australia of local
produced product on the vine.

Control by the likes of Coghill, ..... , Drayfus, and Glenforth, all mentioned in the
2250 cases not investigated for kick backs would be inevitable, aided and
abetted by organisations that ignore major shareholder and member views.
Multiple single desk participants would cost more and not improve grower
returns, but there is ample scope for the collusive minority-supported GHAs to
co-operate with the single desk authority to facilitate joint ventures in domestic
and export sales of barley, canola and other grains for the benefit of growers.

Without AWB there would be no advance on the unsold portion of the crop at
harvest time which could be more than half the crop. Without AWB, no floor in
the domestic market which is held back by grain trader cash purchases of
approximately 2.2 million tonnes in average seasons and as prices are
historically low at the farm, a floor in the legislation enables considerable trader
profit through the pool as AWB has to accept all grain presented. This review, I
trust, will support a streamlined and efficient single desk and not pander to
collusive-would be exporters who avoid public meetings of its members and
only present the views of huge shareholding directors.

Multiple single desk participants would only increase costs and minimise
particular grain availability. Competition is provided by the United States,
Canada, EU, Argentina, and subsidies without the splitting and fragmenting of
our once united and successful approach. So I believe because of fluctuating
production and domestic consumption in the Eastern States we could look at a
separate Western Australian pool under one single-desk umbrella.

Western Australia with the most grain exported and regular production is in a
different situation to the Eastern States, without that variation we must look at it
separately. No system is perfect and one trusts this review reflects the majority
wishes of those growers who want the single desk retained or failing which a
ballot of growers ..... at the ..... meeting and strongly supported by Tony ..... be
democratically implemented. Maintaining a single desk is not the only problem
facing growers.

Whilst increasing yields by at least 50 per cent over the last 20 years, despite six
good seasons, '95 to 2000, and record production figures, figures released by the
farmers' association and the Eugowra statistics five years ago indicated rural
incomes at no more than 75 per cent of city incomes and 65 per cent of the ACT.
 This is the case, sooner or later domestic cost of production or import costs will
need to be looked at to maintain viability.

Forbes (3 February 2007)               P-15
Alternatives to the AWB which guarantee a payment would further inflame the
divisiveness that's overtaken our once co-operative industry. Industry shares
would plummet because multiple sellers do not enjoy the majority support of
growers. I speak as a long time UFWA and farmer association member, a
modest AWB and Grain Corp shareholder, a wheat committee member and a
then committed twice member of PWA when the GTA was purchased with the
intention of facilitating economies of scale and handling and receiving, and fully
co-operate with the AWB in both domestic and export marketing. However,

MR RALPH: Phil, I would ask you to conclude in a few seconds, thanks.

MR PHIL O'HARE: All right. However, ..... corporatisation of Grain Corp and
a change of name from the highly respected Fine Wheat Association, the GTA
has seen the ..... and the AWB ..... developed against the wishes of the majority
of GTA members. Let's not get carried away regarding the regrettable kick-back
episode for it pales into insignificance compared with 23 billion handed to the
United States by the United Nations to restore infrastructure in Iraq and is totally
unaccounted for.

MR RALPH: Thank you very much, we have noted your comments, Phillip.
Can I now ask Donald Walker - sorry, Dougall Walker?

MR DOUGALL WALKER: Thank you, Mr Chairman. I am a very small - I
grow a very small quantity of wheat. I do however farm a couple of thousand
hectares every year, I live at Young, but I'm really here as your customer. Each
year I use about 20,000 tonnes of grain and in some ways the single desk export
parts are a little less relevant to me. I might say that they're your problem
because it's my belief that most certainly the AWB is not an efficient company.
It doesn't have to be.

The old original Wheat Stabilisation Act gave some things to growers and it also
implied an enormous social responsibility. Now, I don't see that that's there any
more. I think that's got lost and that might have been quite sad. The single desk
does have some ramifications for domestic people. It allows the Wheat Board to
be - it allows the Wheat Board much greater powers of acquisition and I think
the monopoly position gives them a great advantage to be able to do that.

Now, at most times, that, to domestic customers, is not perhaps so terribly
significant, but when we get a major drought and the Wheat Board has become
merely a monopoly stockholder then that really does become a great problem to
me and other consumers. The Wheat Board hasn't ever been a particularly
customer-orientated company and when the Wheat Board has been given the
opportunity it can be very difficult to deal with, it can be very hard or the supply
situation becomes very fickle to dependent customers.

Forbes (3 February 2007)               P-16
The things that I perhaps would like and I think Australian customers need - and
they are your customers and if you don't look after your customer then you're
really not doing much of a job. The things that I would like are some
transparency so we have some ability to plan where we're going with our
business and the other thing that I believe we need is export parity pricing. If
you think about some of the things that have been talked about, there has been a
chattering class of farmers for some time that have been talking about an ethanol

Now, is anybody still thinking about ethanol, because if you thought of an
ethanol industry having to buy grain at $350 a tonne, they wouldn't be doing it
for very long. If you had to buy their fuel you'd be broke as well. So, look,
Mr Chairman, I think that's really it. My request is that the - that really that we
need a sensible pricing arrangement of grain to domestic customers when there
is a major drought and the Wheat Board's significant stockholder position -
monopoly stockholder position gives them pretty much power of life and death.
 Thank you, Mr Chairman.

MR RALPH: Thank you very much, Dougall. If you wanted export parity
pricing that would mean you would need price control within Australia. In other
words, that would mean that - almost having to have another pool to operate
because if you - if buyers are going to be able to buy at export parity price then it
has got to be shared across the market, you can't just single out certain growers
and say they can only sell at the export parity price and the other growers can
sell, you know, at a higher price.

MR DOUGALL WALKER: Mr Chairman, that might be correct, but the
Wheat Board has been given some great advantage in their single desk export
legislation. Now, we think - or I think that that creates some significant
problems when you're a domestic consumer in times of these major droughts that
perhaps occur every eight to 10 years.

MR CORISH: Dougall, the small-parcel trade, bags and containers, you think
there are opportunities - niche markets there that - perhaps could be further
development if there was less restriction on that trade?

MR DOUGALL WALKER: Look, there's nothing like it, but I am certain that
if there was competition for export markets be they from the small end of the
industry and containers and other things, wheat growers would be better off. I
mightn't be, but you growers would be.

MR RALPH: Okay. Thank you very much, Dougall, for those views. Can I
now ask Michael Kinslah - - -

MR MICHAEL KINSLAH: One of the things I really want to ask the whole
room is why can't we have a vote on this? We're a democratic country and I
thought all decisions should be voted on.

Forbes (3 February 2007)               P-17
MR RALPH: I think the problem with trying to have a vote is that you don't
draw out - you can't draw out the nuances of what the opinions of growers are. I
mean, a vote can only be yes or no on a particular question and already what
we've - and I don't want to indicate that we've come to any conclusions at all, all
I want to do is tell you what's happened so far as we've moved around the other
towns and that is that there's clearly a predominant view for the continuation of a
single desk.

But there's also a majority of - a large majority of those who favour the single
desk have also suggested a number of changes that they believe - there's been
strong feeling - it hasn't been reflected here today yet, but there have been strong
feelings about the need to have an organisation operating the single desk for the
growers with only the growers having an input into the control of the single

Now, that's the reason why I've been just trying to draw out from some of the
speakers their views on separation because that implies a separation because
separation may not be as easy as just saying - well, waving a wand for it to
happen. Because having issued B class shares in AWB, those B class
shareholders now have legal rights and you just can't wipe them away with the
stroke of a pen, but yes, there may be ways of handling that and no doubt AWB
will come forward with a proposal. But if you just ask do you want the single
desk or not and vote on that, that doesn't - that wouldn't be reflecting the views
we've heard from growers so far because the response has been a bit more
sophisticated than that.


MR CORISH: If I could just add to that. We're calling for submissions which
close on the 23rd of February and I would certainly urge everyone in the room
that has an opinion, regardless of what that opinion is, to put in a submission.
Now, a submission can be half a page, it hasn't got to be a 20-page epistle. So if
you have got a strong view, please, put in a submission which will certainly be
registered and will make your views known.

MR RALPH: Thank you very much for that. Could we now ask Richard Nash

MR RICHARD NASH: I'm a wheat grower from Canowindra. My question or
submission would be wheat marketing transparency which might be introduced
into any new wheat marketing arrangement. Even though I'm in favour of the
status quo, I'm not sure that that's going to happen in the future. Industry should
be able to get together to set up, improve convention standards for quoting
grower cash prices and world price estimates. The bulk handlers should be
made available data on grain stocks held in warehouses at some aggregated
level. This would improve certainty, enhance liquidity and ensure an even-field

Forbes (3 February 2007)               P-18
play amongst market participants. Thank you.

MR RALPH: Thank you. I guess I can start off by saying whatever happens or
whatever system you have, you'll never have perfection of course and one of the
issues for growers to consider in the arrangements is on one hand transparency
but on the other hand market intelligence. In other words, there - so there are
two ways of getting efficiency; one is transparency so that people can see what's
happening and maybe putting on some pressure but that could also be giving out
information to competitors. The other way of satisfying growers I think that they
need to think about is more contestability which I think was an issue which was
raised a little earlier.

In other words, if there's more contestability between the farm gate and the ship
then you know you're getting the best prices in the marketplace without the
single desk having to give up any of its proprietary information. In other words,
there are two issues; obviously a single desk has to focus on - and which
obviously will be to the greater interest of growers; one is that through the
single desk getting the best outcome in the marketplace - in the international
marketplace for growers, but the grower then of course is interested in what is
the price at the farm gate and so there is the opportunity to improve the returns to
growers if you can get those - the cost of those services, handling, finance,
etcetera down to the lowest level and you can do that by transparency or you can
do that by contestability. I think that's something you might like to think about.
Thank you. Graham McDonald?

MR GRAHAM McDONALD: Graham McDonald, I'm a wheat grower from
west of Condobolin, have been there for a fair few years, looking at my hair. I
would like to welcome the committee here to get the opinions of wheat growers
because I think it's very vital that you do connect directly to the wheat growers
because there's a lot of organisations out there saying they're representing wheat
growers but they've got too many conflicts of interest.

What I would like to highlight is the grain growers' association which is a very
good organisation representing 17,000 members, but on this issue they've got a
huge conflict of interest. And I think they will probably put in a submission to
your committee on their behalf, but in reality there is a motion coming up at the
AGM in support of the single desk by a group of members.

The board has said they cannot support that motion and the main reason they
cannot support that motion is the fear of legal action from grain growers - grain
shareholders. And that just shows the depth of the problem we've got with the
conflict of interest and what's happening. I would like to put that as a very
strong warning and a recommendation what they're doing here, talking directly
to growers throughout all the entire ..... going round.

I am a very strong supporter of single desk. There's been a lot of talk about
competition - more competition with opening it up, but in reality competition is

Forbes (3 February 2007)               P-19
only of benefit to the seller when there's a shortage. When there's a surplus it's
always the benefit to the buyer. And to demonstrate that, last year I was trying to
sell barley early in the year and I couldn't give that away for six months. That sat
in my silo for six months. I couldn't find a market.

That's simply because there was a lack of competition there, there wasn't the -
yes, and that's what going to happen to our wheat market, I fear. I'm going to
have to store my grain for that period of time. Eventually I did sell it, they did
me a favour, I got more for it, but I think that's my fear about the single desk. I
think we're going to have that surplus we always do after harvest, we'll probably
have 10 million tonnes wafting around this country looking for a home, and I
think it's going to make it very difficult for my business.

Talking in particular about the single desk and the arrangement there, the veto
power I think has to be held by the holder of the marketing structure. If you put
it in the Wheat Export Authority's structure, it's liable to political interference
and it also doesn't give guarantees to the marketer to get more market. If he has
uncertainty about getting that grain he's very much restricted in how he .....
markets and all the other services he's providing.

So I'm very firmly of the opinion that it should be held in the marketing
organisation and I think AWBI with the alteration that's been done to it - maybe
it needs a bit more, but I think it should stay there. The Wheat Export Authority
certainly has had failings in the past, it hasn't had the resources to do the job and
it certainly needs adequate resources to do a proper job. I think the basic
structure is not too bad, it just needs a lot more funds to do the job it was given.

I think it's very important we don't do a knee-jerk reaction to what we're looking
at, to try and come up with a complete new system in a few months with
political pressure and pressure from the Yanks and all that I think is fraught with
danger and we'll probably end up with a system that has got bigger faults in it

So we need to be - that's what we've got till the 2010 review, bearing in mind
there has been changes to the AWB I and L structure and I think that's probably
gone far enough and probably - some probably would suggest might be too far
and as far as getting rid of all conflicts of interest, it's a dream. Whatever you do
there's a conflict of interest. It's a matter of managing that conflict of interest and
I think we're down that track to a large extent. And I think that's basically my
feelings on it.

MR RALPH: Just before Roger asks you a question. Going to the first point
you made. I expect probably the large organisations like Grain Corp and their
representative organisations will make submissions, but those submissions will
effectively also be made to Government because our report will focus on the
individual growers rather than the organisations and our report at the end of
March of course is then to have input for the Government to consider what

Forbes (3 February 2007)                P-20
action it will be taking and, as I said, the larger organisations and representative
organisations will be making their submissions there. We won't be focusing on
them, we're focusing on what the individual growers are saying, but - - -

MR CORBETT: Thank you, Mr Chairman. ..... . I would just like to say that
as far as I'm concerned as a member of this panel, I consider the Cole Inquiry
irrelevant and I consider what the Americans state irrelevant. It's purely the
opportunity that's afforded itself by the Government, for whatever reasons, to
review the situation and I think it's very interesting that a Government has asked
us - and I'm certainly - and I'm sure my fellow committee members are not going
to spend 23 meetings going around Australia with a view that we're going
through some senseless exercise, there's a decision already been made.

I think the Government genuinely wants to hear the views of wheat growers
independently of any of those conflicts that you're referring to. I've got complete
objectivity because I've never been involved directly in this market before, but I
think one of the things that's really struck me is the conflict between objective
control in the best interests of the growers and commercial interest, and you have
referred to your own association and the fact that they face themselves, as you
said, a conflict of interest. That conflict of interest of course, as the chairman
has pointed out, already exists in the AWB.

So do you see the opportunity for growers here to take direct control of this
operation - take control back into their own hands by having an authority that is
purely grower controlled in the interests of growers with no commercial
operations, the type that will always bring about a conflict of interests? We
heard that argument and I would be really interested to hear your view on that

MR McDONALD: I would really like to see an organisation there that's grower
controlled and all that sort of stuff, but where we stand today that's a bit of a
pipedream, that should've been how it was done to start with, but we mucked
that up. Where we stand today, we've got a structure there that is doing the job.

It has got some conflict in there, but I think the conflicts are managed, and I don't
think we make major changes now. I think maybe in five years - you know,
down the track after the 2010 review maybe we should be aiming that way, but
at this stage we've got a system there, it's the only one going, no-one has put a
better alternative up there, I think we should make that one work at least until

MR CORBETT: If the current situation continues and the B shares continue to
trade in the marketplace, as they will, then that business will be increasingly
fragmented. AWB as they should as directors of that company - because they've
got obligations as directors of that company, continue to develop the other
activities of that company and they're already in a number of - a variety of other

Forbes (3 February 2007)                P-21
businesses, then the ability to focus clearly on the interest of growers in
operating that single desk progressively diminishes. The argument has been put
that teeth should be given to the WEA and they should have grower control with
no commercial interests other than to administer AWB and any other interests
that they might have, but it should be administered by growers, free of any
commercial activity. What is your view of that suggestion?

MR McDONALD: I tend to agree to a certain extent, but it's really just what
names you're going to give each organisation. I believe that AWB - - -

MR CORBETT: Names are not important. Names are not important. What's
important is the constitution that says this is a body that will only have directors
who are growers, maybe some expert additions to that, and they will only
administer this area of responsibility. They won't go into commercial
arrangements, they won't go into grain handling, they won't go into insurance,
they won't go into shipping, they will simply administer it and select the AWB or
other people as the growers may choose are in their interests - purely, in the
growers' interests, with no commercial advantage. That argument has been put.
It's a pretty clear one. I'd really like to know your view on it.

MR McDONALD: I actually support that to a large extent, you know, I'd really
like to see AWBI, sort of, more into that over time, but it's going to take time to
do it. But yes, with the conflict with the - more shareholders getting out of
growers' control, I think as long as they're just a service industry providing a
service to our organisation, it is running our pool, I don't think it matters.

Now, by 2010 - I'm not suggesting that it will happen, but maybe there might be
someone else who can offer that service better. But I would like to see AWBI,
sort of, more into it, more grower control. It's going that way to a certain extent
but it can't happen overnight. There's been a proposal for a complete split, but it
hasn't got any assets, you know, no-one has put to me how that would work. I
think that would be ideal, but right now I don't think it can happen overnight
because they haven't got assets. It needs to be done in a carefully considered
way that it will ..... to make it work.

MR RALPH: You have raised an item that nobody else has to date, but I - if we
get time later I would like to take it up with you, but we've got to move on or we
won't be hearing from the other speakers. Thank you, Graham. John Stone?

MR STONE: Mr Chairman and fellow farmers, I've been giving quite a bit of
thought to the situation that we're in. Now, the situation that we're in or the
situation that used to be - and I'm talking about coming from England 38 years
ago. It was a delight to arrive here, leaving the total shemozzle of merchants,
agents, and never did we know where we stood. We were in quite a mess. It
was a fantastic change to come here. My father took a place up at Quirindi .
When he came home he said, "Boy, that's what we want."

Forbes (3 February 2007)               P-22
That lasted only a little while because he, himself, said, "I can't carry on with the
circumstances of waiting for my money for five years." Which was the case
with the AWB, I believe. Yes, I support the pools. Yes, I basically - I can
understand all the farmers' point of view and after all it starts with the farmer.
Just as an example I'll go back to 1968 and we were farming at Canowindra and
my father came later on, after myself, and we had an extraordinary thing happen,
but still I supported the AWB.

What happened was - and I really was in a mess - that I produced in the first year
a tonne of wheat on a property of 1100-odd acres - on 960 acres. Fantastic.
Couldn't have been better. The second year we had quotas and with those quotas
my quota was absolutely in - my program was in shreds. What happened was
that suddenly we could sell our wheat anywhere. There was wheat all over
because I had another rattling good year. There was wheat all over.

Monkey bins, something I'd never heard of, but I tell you what I soon knew
what they were when it came to shovelling. So on that strength we've waited a
while, kept it all in the monkey bins and then the Wheat Board said we will take
it, but many others had taken a lesser objective view and they took half the price.
 So I can't help but support the Wheat Board, but all of us - and I say all of us -
are looking after our own interests.

Hence, you've got silos everywhere. They're still building silos. I've been
through that years ago in England when I've had grain stood on the farm for a
year before I could sell it. It's a tricky situation we're all in, but for heaven sake
let us not be too emotional about it. I think that's the first and foremost thing.
Don't forget you're - I'm sorry. You're in the box seat all of you, you are literally
number 1 on the list as far as production is concerned. Thank you.

MR RALPH: Thank you, John. Next is Mike Almond.

MR ALMOND: Thank you, Mr Chairman. For those of you who don't know
me I represent Mountain Industries and we're obviously a grain handler, elevator,
packer and supporter to both the Wheat Board and the traders. And I certainly -
it's pleasing to note the grower interest and the fact that - I think, obviously as
growers you do control the agenda, as the last speaker said.

However, there certainly is a division between bulk, the pools, and the smaller
packing export market. And possibly a number of you aren't aware of the
developments that can occur in that market and certainly the small end of town
puts a lot more effort into that and I think will end up offering a better price for a
smaller percentage of product that should be able to be purchased either with a
permit or under some form of control, but driven by natural market forces.

Obviously, the large collection of the pool for exporting hundreds of thousands
of tonnes at a time needs to be managed and handled. I certainly would support
a grower control of that. I'm not keen on monopolies as a business because they

Forbes (3 February 2007)                P-23
tend to beat up on small people. However, if you are exercising your control
over your product, that's a different matter, but I suggest my experience with and
looking at the Wheat Board they haven't necessarily totally behaved in your best
interests and that's the people inside, that's your management, your control of
them, when you have that, hopefully, independent established export authority.

I guess to the committee I really want to make sure that people are aware that
there is an emerging small market out there. As Tony mentioned, we've invested
approximately $6 million in this town, we've employed up to 12 and 15 people
at a time in that depot, and we hurt, obviously, just like you do, when there's a
drought. I think three years ago we took 19 tonnes of wheat in into 22,000
tonnes of storage. So it was getting pretty rough.

I mean, we're part of your industry, we want to support it, and obviously we've
got to put competition in there that's going to drive prices up. You've got to get a
fair return for your effort and a fair reward for your effort and you've obviously
got to cover your costs and you've got to make a profit otherwise you're not in it.
 But that market is there, we have an opportunity to grow it, and it needs to be
examined, either independently or alongside the larger bulk market because it
will be significant and particularly into Asia and in particular with the way world
trade is travelling. We've actually got - shipping costs at the moment are cheaper
for us to export full boxes out of Australia, which is giving the market that
people aren't aware of, than it is for bulk. That's probably the end of my

MR RALPH: Thank you, Mike. Any questions? Thank you very much. Barry

MR HAWTHORN: Thank you, Mr Chairman. Most of what I want to say has
already been said, but I would have a comment to make to the feeding industry -
to the domestic feeders. They do a fair bit of squealing at times like now when
the price is high but when there is a great surplus of wheat around I've never
heard them say oh, we'll pay you a bit more, it's too cheap.

THE AUDIENCE: Hear, hear.

MR HAWTHORN: And I guess what that says is that, you know, it's about -
we're talking here today about selling the wheat that wheat growers grow and as
far as I'm concerned, you know, there's two things that make up the best return
for me and one is getting the best price and the other side is, as people have
already mentioned, that there needs to be - that we're not getting slugged

And as far as I'm concerned, the current structure with the AWB is that we've
been screwed in terms of the management costs for the pool and that's why
things like what Roger has been saying a while ago, or asking people, we need
an independent authority who can control what these characters are up to. Now,

Forbes (3 February 2007)               P-24
the only problem I see with that a bit is that I'm not 100 per cent convinced - and
maybe people will think I'm going down on my own people, but I'm not
convinced that having growers run that is the best idea because we're about
growing wheat, we're not marketers, we're not directors - professional directors
of great big organisations and companies and to be frank, a lot of the people who
we voted on - who have got on to all these grower-controlled things haven't done
the job for us.

So where that takes us, I'm not sure. What I think is that we need something like
the WEA to have enough authority and enough money and the right people to
know what's going on because from my understanding of the Cole Inquiry, it
became quite obvious that they didn't have a clue what the Wheat Board was
doing and if they're supposed to be looking after our interests and they've got
these characters pulling the wool over their eyes, how are they doing that?

As I said, most of what I wanted to say has been said, but I think the pool is an
important thing because it's about maximising our returns, it's setting a price
bench and everybody - other people have said it, if you don't have that there then
all these traders, they're not in there for us, they're in there for them, and they'll
try and get our wheat at the lowest possible price and sell it at the highest
possible price and they get fat in the middle.

A couple of other things that were on your list of points on your website is that I
need to be confident of the people that I sell my wheat to. I can't spend all year
growing wheat and spending a fortune to grow it and then sell it to some
character who is not going to be able to pay me and I think that is a critical thing.
 And if we open it up to every person who wants to stick his hand up and say I'll
buy your wheat, we need some way of knowing that we're going to get paid for it
and, you know, every year there's at least one that falls over somewhere.

Who carries the can? The cockie. He doesn't get paid for his work. And we've
even had the ridiculous situation where some character has had the wheat, didn't
pay for it, they were supposed to be just holding it for them, and they wouldn't
give it back to them. I think that's basically it. What I would like to say about
deregulation is that I - someone else mentioned earlier about the milk characters
- milk farmers. I haven't seen the deregulation of primary industry that has
actually benefited the grower.

THE AUDIENCE: Hear, hear.

MR HAWTHORN: It's always the grower gets pushed out, his price gets
pushed down if things get deregulated, but not long down the track the handlers,
the sellers, the supermarkets, whoever it is, get a bigger price. What happens to
the grower's price, down the gurgler, and you can - you know, you name it,
there's plenty of examples of that. And of course, you know, if the current
wheat-marketing arrangement, the single desk, the pooling arrangement, isn't
working why the devil does everybody want to get rid of it whose our

Forbes (3 February 2007)                P-25
competitors. Thank you.

MR CORISH: Barry, you have mentioned the concept of strengthening the
Wheat Export Authority, make it more independent, giving it more teeth. If that
happens do you see it having a broader role in the area of market intelligence,
monitoring the competitiveness of services that are provided through the supply

MR HAWTHORN: Well, what I'm referring to is perhaps a little bit more like
a Meat and Livestock, Australia type of structure. I don't know if that's a good
example, but that's the problematic part of it and, you know, maybe what - I
think it was Roger saying earlier, you know, maybe AWI needs to be - it really
comes down to what we need is somebody whose sole focus is about getting us
the best farm-gate return for our wheat. That's what it comes down to.

Now, whether it's a separate AWI, that that's its sole focus, which means best
price, least cost, or whether it's WEA that makes somebody else do it. I mean,
I'm not qualified to make that call, but as far as I'm concerned I want somebody
who is in there and their sole purpose is best farm-gate price for the wheat that
we grow.

MR RALPH:        Thank you very much, Barry. We've got to move on. John

MR COBB: Thank you very much, Mr Ralph, and to the four of you, on behalf
of all of us. Thank you very much for the large amount of your very valuable
time that the four of you are giving to the wheat industry. We do appreciate it. I
don't want to say very much. I just want to highlight a couple of issues which I
believe get thrown about in a way that is not realistic and one is that, as you
correctly said sir, the vast overwhelming wish is to retain the single desk.

But a single desk - and the questions then come; so how about a single desk
which various companies can sell through? And that is a total furphy. You
cannot have a single desk that is sold through by more than one company
because that is just not a single desk because a single desk, without doubt, is a
sale monopoly. You can't have it any other way on behalf of all growers. So to
actually ask the question are you happy for various different companies to sell on
the single desk, it can't happen because it is not a single desk.

I think that needs to be understood very early and it totally destroys the whole
principle to go down that track. Another thing which I think - and knowing how
many of us, the vast majority, want it retained, is, I think, the very commonsense
reason which actually no-one has mentioned so far, is in a year when we're only
selling - we're only growing 8 million tonnes or whatever and the prices are
good, anyone can sell it. Not everyone would get the last dollar out of it, but
anyone could sell ..... to anyone else. But that's not the main reason we have it.
It's when there's a glut of wheat, when prices are damn bad you can only

Forbes (3 February 2007)              P-26
maximise the benefit through a pool, through something that operates over 12 or
18 months to get the best benefit for every wheat grower that's here because they
won't get it when they've got a meaner market unless they can hold all their own
wheat - and not many can, they will not get that at harvest time.

And I think that is the real reason everybody gets so much comfort out of the fact
that they own a body which sells their wheat over a time, and there is absolutely
no doubt, I believe, that the pool and the single desk do return at the end of time
the best total ..... to growers and after all that's what it's all about. There is one
other thing I would like very quickly to say and I actually, personally, agreed
with one of the earlier speakers who said, "Why don't we simply let the
containers and bags go?"

It will never be more than 5 per cent of the market really and it does do - it does
give that freedom in the same way that the freeing up of the domestic market
gave everybody choice. I believe the containers and the bags sold overseas as
long as the oversight committee still looks after quality assurance, still makes
sure that that wheat has not been selling on a down price to generally hurt
Australian wheat overseas, that it is the best way to go. But I do thank you on
behalf of all us for the time you're putting into it and I know that you will present
the Government at the end of the day the views of what the people here think.
Thank you.

MR RALPH:          Thank you, John. Just before you go. As you said, the
predominant view that we're receiving is for the continuation of the single desk.
Some people are saying maybe it's got to be another single desk, but largely it's a
continuation of the single desk. But the issue that, you know, has been very
much to the fore in the meetings we've had so far - and I stress so far because it -
you know, we can detect changes as we move from town to town, but they're not
all exactly the same, as you would well know.

But the issue of the separation which AWB is, sort of, proposing and it's clearly
a recognition, I think, of the fact that the way in which the company was
structured upon privatisation has the seeds of a problem in it because - I mean,
anybody that's sitting on the board of AWB has a responsibility to seek to
maximise the profit of AWB. Part of that profit comes from servicing the pool,
but it also comes from other activities, and they have the responsibility to grow
that business, but any growth in that business of course is only for the benefit of
the B class shareholders not for the growers. Would you just like to comment on
that because we've been trying to draw that out because it's clearly become a
significant issue as we've moved around the country so far?

MR COBB: Well, I believe - AWB are actually obviously trying to achieve that
right now. Now, if they can I guess that's an example of what we can do or in
their case what they are actually doing. It obviously - as you alluded to earlier, it
has the enormous issue of the rights of the B class shareholders who have been
an open market for ..... . I would be interested to see how AWB deals with that

Forbes (3 February 2007)                P-27
and how soon they do. I'm not just sure when they're actually bringing down
their legal things to be put before a shareholders' meeting, but I believe it's some
time in March, is it? Not until after the AGM. I would very much like to see
what their legal advice is and how they do it. It obviously - it has always been an
issue and the AWB is not the only organisation who has had that issue.

MR RALPH: I will be as interested as you to see how - the mechanics of how
they propose it. Thank you very much. Grant Holland?

MR GRANT HOLLAND: Grant Holland. I'm a small wheat grower from
Greenethorpe. I have a small shareholding in the AWB and Grain Corp. I am a
third-generation farmer, I have two sons, and unless things change dramatically I
will be the last. I will just start - I will just read you something I've got here. I
believe the future wheat-marketing arrangements should be similar to other
agricultural commodities produced and exported from Australia.

Export wheat trade should be open to any person or organisation that can meet
the requirements of a legal trading enterprise that pays its creditors and the
various taxes imposed in Australia. No trading organisation should be
advantaged by having excessive market power through the monopoly control of
any part of the grain-supply chain and you can include the bulk handlers in there
as well.

I would like to move you across the Nullarbor where they actually grow the bulk
of our export wheat. The last few years here, in the Eastern States, we've
actually had to import wheat. We've been a net importer. And with the massive
rise in domestic consumption that is going to be the trend. In WA, where they
export the bulk of our wheat, a company, CBH, is a co-operative that is owned
by the wheat growers.

In the last few years, they've invested $100 million in six overseas flour mills,
they have roughly a 50 per cent share in those flour mills. They've done that to
become vertically integrated and because they believe they can offer growers
more money. I believe CBH is the type of company that Australia needs more
of. It's a company who has a lot of foresight. It is owned by growers. We talk
about we want things that are owned by growers, well, that's what CBH is, all
the profits go back to the growers.

They have, for years, been able to - have noticed that wheat growers aren't
getting the price they should be getting for their wheat and the fact that they are
able to offer between 25 - and I believe it could be as high as $40 a tonne more
than the AWB national pool tells us what's going on with the high cost of the
AWB and how they market our wheat. I would like to also - there's been some
comments about having a vote. Last harvest was the vote. In Western Australia
- no, no, listen - okay. Go on have your fun. In WA, where they had a massive
export surplus, less than 20 per cent of that wheat was directed straight to the
AWB. Less than 20 per cent. Do you know why, because they got a sniff that

Forbes (3 February 2007)               P-28
there might be some competition and these other companies were offering them
more money.

And it wasn't until the Government - Mr McGauran held a gun at growers' heads
that they then had to offer more of their wheat to the AWB. There's still over a
million tonne the growers are holding, hoping that some more permits will be
issued. That is your poll. That is the poll the politicians will be looking at. Less
than 20 per cent supported the national pool in Western Australia when they
were offered choice.

Most of us here sell our wheat on the domestic market where we have choice.
You never hear of growers wanting to go back to the old system and a grower
here mentioned that years ago he couldn't sell his wheat. Well, I can tell you that
there are a number of companies in Australia and overseas who want to buy our
wheat and they want to pay you a fair price. And if they don't offer you a fair
price - they don't offer you a fair price don't sell to them.

In a deregulated market you are allowed to sell 100 per cent of your grain to the
AWB. Don't forget that. 100 per cent. The AWB will still be there. Now,
quickly I would like to read a couple of things. This is an exhibit from the Cole
Inquiry and I want growers to listen. This was a letter that was sent to the Iraqi
Grains Board by Brendan Stewart. It was because the Iraqis heard that the AWB
was spruiking to growers that they were able to get them a premium in the Iraqi
market. This is the letter that Brendan Stewart wrote to the Iraqis:

        In the spirit of full disclosure, I will also provide evidence which
        demonstrates AWBs contract prices have, in most cases, been equal or
        lower than the prices offered by the US.

Lower than prices offered by the US:

        Therefore the contracts have been secured on their merits rather than on
        the basis of any impropriety.

Now, some of the figures here - this is an exhibit that AWB never, ever wanted
wheat growers to see. Now, the figures have been blocked out of this - in
confidence, but:

        In September 2004, IGB finalised a 1 million tonne contract with AWB
        at a price -

blanked out -

        per tonne. This contract included a significant package of additional
        services and training at a price which has returned in US dollars -

It's been blanked out -

Forbes (3 February 2007)               P-29
       tonnes to the IGB. In the same month a tender which was restricted to
       US wheat alone reportedly generated offers which were more than
       $US20 a tonne higher than the price negotiated a few weeks before by
       the AWB. Your Excellency, this clearly demonstrates that the AWB has
       not been charging excessive prices. In fact, our prices are regularly
       more competitive than those of our reputable suppliers.

And he finishes by saying:

       When all the facts are analysed, it is clear that AWB provides the best
       quality wheat, -

and we won't disagree with that -

       delivers it reliably, provides a valuable package of extra services and
       importantly does this at a price that reputable suppliers find difficult to

MR RALPH: Thank you very much, Grant.

MR CORISH: Grant, briefly could you just comment on the things that most
people that we've been hearing around the meetings and certainly here in this
room find very important and that is the security of payments offered by the
AWB and the fact that AWB is effectively a buyer of last resort - I know with
some minor exceptions?

MR GRANT HOLLAND: In regard to buyer of last resort, that is a furphy.
The Government has just knocked back 44 permits to companies who wanted to
be the buyer of last resort, if that's what you like to call it. But it is just a
nonsense, a buyer of last resort, it really is. We've got a huge domestic market,
there's a huge world market and we don't have access to that market. A lot of
those people who were applying for permits were going to supply markets that
the AWB has never heard of.

MR CORISH: I asked this question to a lady earlier. In this area how much of
the production in a normal year goes to the pool, not perhaps this last season but
in a normal year, what percentage goes to the pool?

MR GRANT HOLLAND: That's a figure I don't have access to, but personally
on my own business, nothing. Has been for a number of years, and there's good
reason for that. It's interesting the amount of people who you talk to who
support the single desk that say I will never give those X my wheat though, but
they still support it.

MR RALPH: Okay. Thank you very much for that, Grant. Kerry Hazeltons?

Forbes (3 February 2007)              P-30
MR KERRY HAZELTONS: Mr Chairman, I would start off this way. The
single desk eventuated from the Wheat Board. Now, the Wheat Board, it's my
understanding, eventuated from the Wheat Stabilisation Act. Now, the Wheat
Stabilisation Act came about, I believe, in the early years of the war. Probably
'40 or '41. Now, there was a meeting in Adelaide from the growers' associations
of New South Wales which - grain association, I think, farmers' and settlers'
association and the wheat growers' union.

Now, Ministers of Agriculture from each State must have been there as well as
the Federal Government and that was, I believe, how the Wheat Stabilisation Act
came about by their agreement. Now, the agreement then was a guaranteed price
for the first time ever for wheat in Australia, which I think was four and
threepence a bushel - two shillings a bushel for anything above 3000 bushels.

Now, that agreement was between the States - all States had to agree
undoubtedly like they would do today and if that is lost - if the single desk is lost
would we ever get it back? Would we ever get the States to agree again to a
single desk or a single marketing - and the growers' organisations? I don't think
so. You've only got to listen to the radio yesterday in regards to water. They
can't agree - one doesn't agree with their findings.

So I think we've got to have the single desk and John started - was talking about
the English situation when it was open going. I can remember when - about the
beginning of the war, the agents, you sold your wheat to an agent, whether it was
Farmers and Graziers or Elders, I'm not old enough to remember, but that's how
your wheat was sold. And if we have to return to that, the weakest buyer - the
weakest seller becomes the base price. Thank you.

MR RALPH: Thank you, Kerry. Next is Jack Francis.

MR JACK FRANCIS: Mr Chairman and gentlemen, I go back in history. I'm
an old man and I'm able to do that. As a boy in farming, a kid from the age of
six years old, you start to do an apprenticeship with your father and I can always
remember before the war it was ....., it was a flour mill and you used to get
virtually nothing for your wheat and on top of that there was a social thing, if
your wife got into any sort of an altercation with a miller's wife you didn't get a
sale for your wheat.

And if you didn't pull your forelock at the right time, you didn't. And I
remember later on in the mid '40s when I was delivering wheat and we had a
type of wheat which was Gaybow, which was high protein and anyway they kept
- the mill kept asking to have us - that delivered to us and they had a premium on
a certain protein in the wheat.

And it was always a little bit under the premium, but at the same time I was
taking samples and I had them done and it was protein and I went to the mill and
I just said you mentioned that I wasn't entitled to protein. And the mill owner

Forbes (3 February 2007)               P-31
was there at that stage and he got a bit annoyed and he said to me, your father
had the X out of his trousers. His terminology not mine. And I was able to say
to him yes. And we still didn't have the Wheat Board. The X was out of my
trousers too.

And I tell you what, that's exactly what will happen if we get taken our single
desk from us. Mr Chairman, there are certain things that I just can't understand.
Why is it that the Americans are putting public pressure on to us to try and get
rid of our single desk? For heaven's sake we're their allies, aren’t we, over in the
Middle East? Why are they for us in that way when at the same time 50 per cent
of their returns or better for their wheat comes out of subsidies paid to the
American farmers?

We don't get subsidies. We're going out there on the basis where we're paying
all the costs and we're competing with the Americans with a 50 per cent subsidy
and with the EEC even more. Why is this happening, please? I just can't
understand it. And, Mr Chairman, to come back to what you were talking about.
 I believe you've seen it here, and as you go round the country that you'll get the
same sort of response to people wanting the single desk. Slightly different.

I think the only problem that we have is just how we're going to organise it. Are
we going to somehow or other buy back the commercial one so as we, the
growers, owned it without a golden share? And I think that's probably the way
to go, but may I ask you gentlemen to - in your submissions to talk about how
the best way - business structure, any sort of company - single desk company in
the interests of the growers. Thank you, sir.

MR RALPH: Thank you very much, Jack. Fortunately, - - -

MR RALPH: reflect what we hear here in terms of the support for the
single desk and the support for other measures that may be imprudent such as
you have suggested, more or less going back to what it was where the AWB
before privatisation, the Wheat Board, was working only - it's only task was to
market and sell wheat and work for the interests of the growers.

We've got a different situation now and that conflict has been drawn to our
attention at every meeting we've had and then so if there's a way of solving it, so
much the better because that seems, to me, in line with what would be generally
supported. How it might be done is a somewhat difficult task which fortunately
we don't have to express an opinion. In fact we're precluded from making any
recommendations. Thank you for those comments. Mr Peter Wright?

MR PETER WRIGHT: Thank you, Mr Chairman, Peter Wright from Cowra,
which is about an hour south east of here, and to the committee members. A lot
has been said that makes us think that this committee has been set up largely as a
result of the Cole Inquiry and I think Mr Corbett said it was irrelevant. We wish
it was but I don't think it is, and the Americans keep pushing their argument to

Forbes (3 February 2007)               P-32
get rid of this and that's putting a lot of pressure on the Government. And I think
you've got to take it, what's been - what's happened in the last 12 months in your
deliberations to put a good argument forward that we - well, we have to retain
this single desk.

I would like to see a single desk retained and with grower control and my
understanding of the Wheat Board, the A class shareholder was that the A class
shareholders elected directors of AWBI, but I'm probably wrong. But that was
my interpretation that our B class shares was where our dividends come to and if
you wanted to sell them well and good, it was a commercial decision to make

And I feel frustrated that you've gone off on a tangent with the Wheat Board
saying that it's got other interests now, it makes money and it pays dividends to
its B class shareholders and it's got a conflict. I suppose it's a conflict if you
want to get rid of the Wheat Board or - no, it's more of a conflict if you want to
keep the Wheat Board of a single desk, but I don't see any problem with a
company making profits. And if you've got a problem with that you can go and
buy B class shares on the stock exchange and receive the dividend.

I'm also a lamb producer. Woolworths buy a lot of my lambs at the Cowra sale.
They make approximately a billion dollars a year. I don't get a cheque at the end
of the year for selling my lambs to Woolworths and helping them make a profit.
 And it's also interesting competition has been mentioned here this morning, to
open it up, to get more competition makes more money. It seems to work two
ways. If I want to sell my wheat, I'll ring around to see who has got the most
money and I'll take the highest price. If when I want to buy a tractor I'll ring
around and I take the lowest price.

And this is what the Wheat Board has to do when it goes overseas to sell the
wheat. They all want our wheat but it's at the cheapest price they can buy it for.
So you've got to be in a position to sell that wheat at the cheapest - at sometimes
the lowest price, but you've got to have things in place to get that lowest price
higher. You've got to - and this is what the Wheat Board has done and it's got
history there - marketing control there to obtain a market and maintain it.

And that's one of the farmers' biggest problems is maintaining a market because
there's always someone looking to take your market share. And I see if we get
rid of this, it's going to be a bun fight between the wheat traders and our wheat
price will become cheaper. If we could reform the AWB single desk, as we've
been asked this morning, it would be very good, but to take away some of its
commercial operations I have problems with. If that restricts them with
developing joint ventures, to get bread making happening in countries that aren't
using it or introducing them to techniques and that can sell our wheat to them
and you've stopped that well, that's going to reduce our return. And also the
Wheat Board has gone into the landmark situation which is further - it's helping
their bottom line, but it is producing a full package to its clients.

Forbes (3 February 2007)               P-33
I think Mr Carroll could refer to that. The national banks, it might be a bigger
circle of things to their clients as in offering finance on the wheat pool. So to
take competition away from the Wheat Board, I think you will starve it and
you'll end up like a lot of these other boards. This board has remained. You've
seen the Grain Corp go broke, you've seen all these co-operatives set up in the
deregulated market of growers getting together to market their wheat and we've
been left with multi-million-dollar collapses. And I see that the retention of a
single desk is imperative to a stable Australian wheat market. Thank you.

MR RALPH: I just rise to the defence of my colleague. I think Roger Corbett
was saying that the Iraqi situation is irrelevant but rather it's irrelevant to our
deliberations which are to report back on what growers say. I think that's what
he was referring to when he admits that's irrelevant, you know, to this particular
consideration of what do growers want in terms of the future marketing of their
wheat overseas.

MR PETER WRIGHT:            I feel ..... that situation and that - it wasn't the
marketing system that caused it, it was people operating the system. It wasn't the
way the wheat was - - -

THE COMMITTEE: I wonder if I could just make a couple of comments. An
interesting thing about when you sold your lambs to Woolworths. I bet there's
no-one in this room that's never been paid by Woolworths. But let me point out
to you that if Coles offered you a better price you would have sold them there.
I'm going to stray, Chairman, close to the line here. I've been saying to myself if
I was a wheat farmer what would I be saying this morning. And I hear loud and
clear here that the single desk is in lots of people's mind the most valuable asset
they have.

THE AUDIENCE: Hear, hear.

THE COMMITTEE: And that's an asset that is owned by the wheat farmers.
You're the trustees of it and I think you need to be very thoughtful about
whoever operates that desk for you operates it really well because if they don't in
the long term it could be lost. And so the submissions that you growers make
need to be, I think, really mindful of protecting that desk and, as I've said, for it
to be protected it needs to be operated really well.

MR CORBETT: Peter, you made some comments about my involvement with
the harvest finance market and the banks involvement. When the banks
introduced those harvest finance products the cost of underwriting and interest
fell quite significantly and yes, that was a benefit of competition and there are
lots of examples of that. When AWB, for example, entered the fertiliser market,
the cost of fertiliser came down as well. Are you happy that a lot of the services
that AWBI procures from AWB Limited are contested enough to ensure that that
full range of services are as competitively priced as possible?

Forbes (3 February 2007)                P-34
MR PETER WRIGHT: Reading the reports, it's quite obvious I wouldn't be
happy with them because they weren't contested. As you said, when some things
have been opened up they've become cheaper and the Wheat Board has been
able to match them and so forth. But if we went into any business - and
businesses - you look at a business and it's got one big mark there, but there's all
these subsidiaries under it and I think if we went in a bit - into any business and
interrogated it the way the Wheat Board has been interrogated we'd find similar

So therefore we aren't against change, we'd like to see this competitive thing be
created. We're involved in the local abattoirs at Cowra, producers put money in.
 We got one dividend 29 years ago and never got a dividend then, but there was
all these management fees going out to a major shareholder who has since shut
the abattoirs and as one fellow told me, we always get our dividend on a Friday
or a Monday at the local sales and we felt that then when they shut.

So just because these management pools mightn't have been in the best interests
of good corporate governance, that we were still able to sell our wheat at best
world prices and the people competing against the Wheat Board, we only had to
beat them by $1 to get the business. So yes, I'd like to see more competition in
those things and I think it is good business. But I think if you looked at any
other company, you could see a lot of management fees there which would have
the same results as what we've seen there and I don't support that either.

MR RALPH: I think there is a difference here. I take the point you're making
that other companies may have inefficiencies, etcetera, but the thing that
distinguishes the AWB is the two classes of shareholders, because the point that
Mike was just making, for example, when the banks offered a lower rate of
interest in financing, the AWB then matched it and the difference - that
difference was - you know, then flowed effectively from the B class to the A
class shareholders because it went into the pool, that went back in the price.

So there is a difference between, you know, the usual company where all the
shareholders are in the same boat and if they get - the company is run well they
all do equally well or the company does badly they do equally badly, but here
you've got transfers of value between two classes of shareholders and that's, to
me, a very difficult situation to administer in the interests of both classes of

So one of the advantages of contestability is that it's one way of ensuring the
services are brought at the best price and it automatically looks after that
question of transfer of value because the B class shareholders are getting paid,
getting the profit out of the services that they provide competitively and that's
what they - you know, that's quite reasonable, but it means the grower is also
getting the best value into the pool. So that's a - you know, that's a difficulty that
has been created by the creation of the two classes of shares. You might just like

Forbes (3 February 2007)                P-35
to comment quickly because we have to call on the other speakers.

MR PETER WRIGHT: Mr Chairman, I can't really - I can understand your
point because if they reduce their profit on their services they won't make much
profit up top so the dividend to the B class shareholders would be less, but - I
beg your pardon?

(Inaudible speaker)

MR PETER WRIGHT: When more goes to the pool and they retain their
business, they're still making a profit to the B class shareholders. If they didn't
become more competitive and let the other people take that business, their whole
profit would drop so the B class shareholders could've lost more.

MR RALPH: That's right the B class shareholders would lose in that situation,
but the A class shareholders, the growers, would gain by the same amount.

MR PETER WRIGHT: I understand what you're saying, but if they didn't do
anything they would've lost all that services' business so their bottom line
would've been smaller anyway. So the dividend for the B class shareholders
would've been smaller. I think it's a bit of a red herring, that one. The company
directors and the board have to make decisions to retain their business, make as
much profit as they can. If they didn't match this competition when it was
opened up, they would've lost a whole lot more.

MR RALPH: Brian Delaney?

MR BRIAN DELANEY: Thank you, Mr Chairman, thank you for your time.
I'll be brief because I think most of the points have been covered. I'm a very
strong supporter of a single desk. I've never known any other system in my
wheat-growing career. My father used to liken the profitability or lack of, of
wheat growing before the Wheat Board to the poverty of North Coast dairy

We've since had a deregulation in the milk industry and I think it's pretty plain to
see what's happened to the dairy farmers in that industry. The price to the farmer
went down 20 cents a couple of days after it was deregulated and the shops went
up by 20 cents a litre. So you know where the profits started to flow to. Much
the same thing will happen if we lose the single desk.

I'm a bit interested in the - I think it's a pity that the AWB, as it is presently
called, is a private company because it disparages the reputation of the old AWB
and I liked Milton Taylor's comment when he was on the delegation and - in the
old AWB, "There were always two or three members went on every delegation."
 And the then chairman, Les Price, said to him, "You haven't got sixpence in
your back pocket for a bribe," and that was the integrity that that board had.

Forbes (3 February 2007)               P-36
I have sat on a very small publicly unlisted company and it is true that if the staff
want to snow you, I think it would be possible to do it and if it's - you can blame
the directors, but if they're snowed it can be done and I think it's very hard for a -
the directors would have to be very aware to uncover it. Just on the AWB itself,
I would be very happy to see full grower control of the marketing of wheat. If I
had my way I'd buy all - have the growers buy all the B class shares back again
and that could be done. I can't see any real reason why, with the financial
engineering that can be done today, that that could not be done. Thank you,
Mr Chairman.

MR RALPH: Thank you very much, Brian. I won't allow the microphone - to
throw it to my right or we'll be having a debate about milk. Mr Peter Mooney?

MR PETER MOONEY:                Thank you, Mr Chairman, and I welcome the
opportunity to talk to the committee here today. It is also very reassuring to hear
from you that the effects of Cole and that Kangaroo Court won't be affecting
anything in your deliberations regarding what wheat - grain growers have to say.
 On the matter of corruption, anyone who did miss Tuesday night's SBS show
certainly should've seen that to see what graft, corruption, and ripping off by the
Yanks in Iraq is all about. Where they slipped $20 billion of Iraqi money around
and played games with it.

And, Mr Chairman, we should also remember that in Iraq the AWB did actually
get our grain into Iraq and did feed the starving people and averted probably one
of the worst humanitarian disasters that could've happened and no other
company could've done that. On the more relevant issues before you today and
what other people have raised, I would just try to sort through a couple of little

The de-merger which has been proposed by AWBI - and remembering they've
already had a half de-merger, a separation of operations - certainly has cleared up
a lot of the issues in my mind as to any conflicts that could happen within those
companies. But from what I'm gathering from other people here today and
certainly in my mind is that maybe we do need to go back to the future and what
members of the panel have been continuously raising is the issue of the A and B
class shareholding.

And it would seem to me, Mr Chairman, that the listing of AWB and the
returning of both AWB L and I to the total control of us growers is the positive
way to go forward. Certainly, the institutional shareholders will have to be paid
out. I think Johnny Howard caused this debacle, Johnny Howard can get his
chequebook out and buy them out.

THE AUDIENCE: Hear, hear.

MR PETER MOONEY: Otherwise, Mr Chairman, if we have a heavy de-
merger, as some people have called it, AWBL will be shipping down the road

Forbes (3 February 2007)                P-37
very nicely with some $510 million of our money, the growers, that we put in
there over a long period and at great cost to us at the time to fund our company,
to give us a capital base to finance our pools, and in the blink of a biro, our 510
million will be gone. That's more than what the whole Iraqi lot was on about.
So we're talking about being ripped off. I think this possible floating off of L is
worse than anything else.

On the issue of power of veto, Mr Chairman, it is impossible for the company
holding a single desk not to have full veto power. How can any company be
expected to go out and hedge and forward sale and market at a profit if they've
no idea what they're going to get. It might be all right for Grain Corp to sell
three or 4000 tonne of canola or 5000 tonne of barley. Small tonnage is small

And when you're talking 23 million tonne, the figures are so astronomical and
the marketing logistics and forward hedging is such that you need to have - what
you've got and know you've got all that there is. And in conclusion, Mr
Chairman, if you think there's no power in the private-grain trade, I think you
only need to look. You're sitting up there today, we're down here defending our
industry again, that isn't something that's been brought out by us, the growers,
and that's the whole of the single desk. This is an issue which has been forced
by the private traders, Mr Chairman, and I just comment on the WEA.

Certainly, it is good to have a good, strong regulatory company looking after the
whole of the single desk. However, there are issues of propriety of information
and the disclosure of that information because once digging too deep and
exposing too much comes in that company is ruined. And they tell me the most
awaited publication in America is the AWB annual report so that they can find
out what and who and how AWB traded so that the private traders can be in on
their market each year. Thank you, Mr Chairman.

MR RALPH: Thank you very much, Peter. Ian Menzies?

MR IAN MENZIES: Thank you, Mr Chairman, Ian Menzies from Condobolin.
 I'm a wheat farmer there. I've got very little to say. Most of it has been covered,
what I was going to say. Just a couple of points. I'm a very strong advocate for
the single desk. I've had experience with a grain trader at harvest this year. I
was in a very fortunate position to have a commodity that is really sought after. I
was actually a price setter rather than a price taker. It was oats.

And I've farmed for 30 years and I probably won't experience it ever again. I set
the price. He wanted $50 a tonne under it. I said, "Forget about it, it doesn't
worry me." It really didn't. I knew I could sell it at some stage. He came back
two weeks later with $30 more. I still said, "That's my price," and within two
seconds he was up to my price. Very rarely does it happen and it's a very great
feeling. Unfortunately, we don't get that all the time. With the Wheat Board, I
have been - I have had a few problems with the Wheat Board and I think there

Forbes (3 February 2007)               P-38
are certainly problems within them.

I think they're evolving as they go. So they're, sort of, addressing the problems,
hopefully, as they go along. I've found at harvest this year, wheat was wheat, so
we were told. That's fine, okay, right, protein and screens. But what about
moisture? Moisture is still there. I deliberated and sent moisture and I bet a lot
of others in this room did too. Compared to 12-and-a-half per cent moisture,
where you're being paid the same thing. I've lost out 4 per cent. Over 100
tonnes, I've lost four tonnes. Where does that go? Why?

The Wheat Board wasn't very strong this year. They didn't put moisture on it
and no-one else did either. So if you haven't got a strong Wheat Board no-one
else is there to help cut it out. They just want maximum dollar. As I say, I'm a
very strong advocate for the single-desk seller. I feel that the Wheat Board - I
would be very careful not to throw the baby out with the bath water. That's all I
want to say.

THE COMMITTEE: Thanks, Ian. Have you sold that oats yet? Look, I
probably should declare an interest because there's been a bit of talk about
conflict of interest earlier in the meeting. I am an AWB shareholder. I'm a third-
generation wheat grower and my family is still involved in wheat growing at
Goondiwindi and a few other places in northern New South Wales contrary to
some comments that have been made recently in the press. Ian, my question to
you is that you said that you saw some problems with AWB and the current
situation even though you are a strong supporter of AWB. How do you think the
future marketing system could, in fact, be improved?

MR IAN MENZIES: It's a very hard question to - if I had the answers then I
would be out there advocating them, I suppose. I feel that - yes, I've had
problems with the Wheat Board but they have come back to me and straightened
those problems out and I feel yes, they've certainly looked after me at the end of
the day. Yes, it's a hard question, I haven't got the answer. But I think there are
others out there that could yes, re-jig it.


MR RALPH: Thank you very much, Ian. Jock Munro?

MR JOCK MUNRO: Thank you, Mr Chairman. I've got no doubt that this is a
snow job on the AWB, this whole process. There's no other group with innocent
Australians that's been subjected to the humiliation that the Australian Wheat
Board, its staff, and the Australian wheat grower has this past 12 months. Now,
three out of the four of you up there have got form. Mr Ralph, you were on the
board of BHP when Pybus Petroleum recovered a gift. Mr Carroll was on the
NAB when their rogue traders went berserk, and Mr Corbett failed to - the
Government couldn't drag him into having a code of conduct for horticultural
producers. Now, I won't say any more about that. I've got no doubt I'll prove to

Forbes (3 February 2007)               P-39
the growers that this is a snow job.

Now, the history of the Wheat Board, as one of the old gentlemen said - and it
was very good to hear and I really appreciate the fact that people like that take
their time to turn up - it goes back to stabilisation. And from my studies I learnt
that a lot of that stabilisation was about giving growers, like myself, with a farm
at Rankin Springs that some people tend to put a fair bit of you know what on as
a wheat-growing area, it gives me the confidence to plant a crop.

Now, we've lost all those stabilisation things but we still have the single desk.
So I still have confidence. And what you've got to remember in Australia, that
half the time when we sell a crop we're out of sync with the rest of the world.
We've got no idea what the world price will be at harvest time, but the Wheat
Board makes a pretty good attempt with its pool - estimated-pool returns, of
telling us what it might be. And as far as social responsibility, there has to be
social responsibility in the Wheat Board - in the single desk because it's brought
about by an Act of Parliament.

Now, we had a restructure of the Australian Wheat Board in 1989, I think it was,
yes, and we ended up - I would say the Wheat Board - and it was definitely the
top 100 companies in Australia, that's how it was treated on the stock exchange,
and I reckon Andrew Lindberg was as good a CEO as Australia had. And he
was one of the men that had to fall on his sword with this horrible - what you
call - hanging the Wheat Board out to dry.

And when we set up the Wheat Board, we set it up as a dual-class structure. We
had A class growers, which was us, obviously, and we had the B class which are
the shares. And our WIF - the money that we contributed to the WIF was
converted to B class shares and then eventually other people were allowed to buy
shares in the wheat industry. Now, what you've got to remember with the A
class growers, we elect our directors on a regional basis.

So we've got Xavier Martin at ..... at the moment. We've got John Simpson at
Oatlands and we've got ..... who is on - at Eugowra. Now, when you ring those
blokes up, half the time when I ring them, they're on a tractor. They're doing
what I do. If you ring Ian ..... , he's out sowing something. These blokes are
farmers. Now, those guys, they're the majority on that board on both I and L.
Don't forget that. Don't forget how important that regional election is too
because nobody can stack that board from any one State in Australia and that
was all done purposely.

There was years spent on setting this industry up. And John Anderson who was
at Gunnedah yesterday had a huge input into setting this industry up. Now, the
Wheat Board is my representative. Those growers represent me selling my
wheat overseas. Now, we should not forget that as growers. Now, let's get on to
the capital. Now, this is the beautiful thing about the Wheat Board. We control
that capital. It doesn't matter who owns the shares, but there's a majority of

Forbes (3 February 2007)               P-40
growers on both boards, we control the capital. Now, I'll read you the
constitution - and I'm very annoyed with you, Mr Ralph, you're manipulating.
You and your people up there are manipulating this meeting. This is what page
15 in your paper that was put out with this initiative:

       AWB Limited is a diversified agri-business company listed on the
       Australian Stock Exchange. AWB Limited's constitution sets out the
       objectives with respect to the management of AWB, which are -

Now, this is Limited mind you -

       maximising the net pool return to growers who sell wheat into the pool
       run by the pool subsidiary by securing, developing, and maintaining
       markets for wheat and by minimising costs as far as practicable and
       distributing the net pool returns to growers who have sold wheat into the
       relative pool.

Now, I will read you another paragraph, and this is the key to the whole thing:

       Under its constitution, AWB Limited must ensure that the business of
       providing services to the 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 -

B class remember -

       with a reasonable -

Reasonable. Now, that's the key word -

       a reasonable commercial rate of return and the possibility that further
       capital may need to be raised.

So I hope we've cleared that up. And that's why I'm telling you that this is a
snow job. John Howard has got himself in a terrible predicament with this Cole
Inquiry and he's, Howard - to knock the Wheat Board out of it. We might end
up with a single desk still, I don't know, but one thing Howard wants to do is to
knock the Wheat Board out and if you're not careful, growers, you're going to
lose your capital.

Now, I've talked about the obligations of I and L, I've read this piece of paper.
Now, when it comes to cost - this is a beauty. Now, we've got base - we've got a
base fee - I've got a chart here, base fee and we've got our performance index.
Now, what happens with the Wheat Board, we have a benchmark price that they
determine and it's made up of all the world prices of wheat, and then there's an
output, there's a hurdle, and then we have this our performance index. And what
happens, the staff on the Wheat Board who are selling your wheat on your behalf

Forbes (3 February 2007)              P-41
receive an our performance bonus if they lift the price above a certain level.

Now, how many people knew that in this room? I'll tell you what it costs to sell
our wheat. The 2001 pool, something like $4.53; 2002 pool, small tonnage, that
was something like $14.60; 2003 pool, big pool, $4.98; 2004 pool, which I
thought was a small one but it was reasonably big, it just goes to prove we can't
grow wheat in Rankin Springs, it was $7.46.

So what sort of costs are they? That's for an average - $200 a tonne wheat and
it's costing you between four and five, six, $7 to sell it. Now, you can't tell me
that's expensive. Now, as a wheat grower, as I said before, I have the confidence
to plant wheat and just to illustrate the point; Peter Corrish here, who I have a
lot of respect for, so don't worry about that, Peter. But Peter took the plunge, he
got out of a risky area, he went into irrigation farming up in the north of New
South Wales and good luck to him.

Now, when I sow wheat I know that the Wheat Board is going to market all my
crop, every last bit of it. You just imagine if Howard dumps the Wheat Board
what are you going to do at sowing time if you get two or three inches of rain?
What are you going to do? How much crop are you going to put in? Now, the
board also, as I said before, provides me with true market signals that carries out
functions. Now, when it comes to branding - well, Mr Corbett is a good one on

THE COMMITTEE: Jock, could I interrupt. You've had double the allotted
time now. We've still got - just let me finish. We've still got four speakers to go
and the meeting has to finish by 11.30 because we've got to get to Dubbo. So
can I just ask you to hurry up, please.

MR JOCK MUNRO: Right. Okay. Well, I'll be quicker, but this is a big issue.
 This is why this is such a cruel process. You're talking to people here that may
not understand how the Wheat Board is structured and you've got to remember
Grain Corp, ..... , Cargill, the whole lot of them, they've been out there for seven
years - eight years, banging away at its structure. Oh, they're ripping you off,
they're ripping you off, and people - it tends to get in their brain after a while.

Now, as I said, we've got branding. Now, Mr Corbett he knows all about brands
because he's removed everybody else's brands, he's got the Woolies brand and
when it comes to Vietnam and containers well, that container trade wrecked our
Vietnamese market. They did a brand too, they made out their wheat in those
boxes came from the Wheat Board and it didn't. Now, preferred supplier, that's
what we are. The markets, they love buying off us. ..... , they carry on a bit,
every trick in the book to lower prices, but they still buy off us. The other point I
should make, we've got Oxley - Alan Oxley and his report on the wheat industry.
 By the way, he said if we lost a single desk, 12 to 15,000 growers would go.
Oh, only the people from the marginal country, you know, the true wheat
country, don't worry about them, 12 to 15,000 of them.

Forbes (3 February 2007)               P-42
Now, Alan Oxley said if we did deregulate, something would have to be done
with these monopolies. Well, I tell you what, Cargill have done something with
their handling monopoly, they've got into bed with them or it's the other way
round. Now, the other thing of course when I grow my wheat I know I'm going
to get a quick payment. Now, I'll tell you what will happen when we lose the
Wheat Board, you'll end up with a duopoly and they will screw you for
everything you're worth.

They will be in the business of giving you a price - your grain for the lowest
price. And as for this nonsense of competition, how X stupid is that?
Competition lowers prices. The whole Australian economy, we've had a
competition policy going for years. It's all about lowering prices, competition.
When you're selling something you want all the power in the world. So we've
spoken about the duopoly - - -

THE AUDIENCE: Your time is up - - -


MR RALPH: Well, I did say at the start that we would try and give everybody
an equal amount of time and I've been pretty generous with you because you've
started off by being gratuitously insulting so I decided I would let you go. But I
think you've got to - we do have to go to Dubbo and I think you've had a fair go.

THE COMMITTEE: Jock, thank you for your spirited defence of AWB and
your strong statement of support for AWB, but I've got to say that your
comments about my colleagues on the panel are totally unjustified. I have not
had a close association with any of these gentlemen on this committee before we
started this trip around and I can assure you their credibility and their objectivity
should not be questioned. We're not doing this job for fun, we're not doing it for
the remuneration, let me assure you, we're doing it because we've been asked to
try and ensure that the views of Australian wheat growers in particular are
represented to the Government and negative comments about their credibility is
not going to help that process one little bit.

MR RALPH: John Ridley?

MR JOHN RIDLEY:            Mr Chairman, I'll try and make up for lost time.
Certainly what most of us here want to say today, Jock Munro just said it in a
very short time. There are a couple of issues I would like to touch on. Firstly,
Mr Corbett said that the Government genuinely want to hear what growers have
to say. Well, all I can say is, Mr Corbett, the Government must be deaf. Just a
month ago there were three meetings like this in Western Australia, about 300
people at each one, with one in Victoria of 300 people, and one down at ..... of
400. At that Maroubra meeting there was no less than five National Party
politicians who I would imagine Mr Howard would be pretty keen to listen to in

Forbes (3 February 2007)               P-43
an election year and get on with, and I'm sure they all went back and told the
Government exactly what growers want.

And what they told those politicians that day is exactly what we're telling you
here today. Nothing has changed. Nothing has changed in the last 20 years,
with all these reviews and monitoring of our marketing system and the company
doing that. A lot of the - some of the speakers here today, dare I say that I think
you've enticed them into some of the statements they've made about needing
change. While I do realise that you do need to draw out information and that,
some of your questions might be aimed at doing that, but one of the big things
has been the two classes of shareholders.

Well, I know a couple of you up there have got a bit of a banking history. Now,
I'm a customer of a bank, I'm a little bit like the A class shareholders, and in a
couple of weeks time I'm going to be going into the bank and I'm going to be
wanting some money to put in next year's crop because all my share money was
used up putting last year's crop in and I never got anything back. Nothing. So
I'm going to go hand in cap.

And "Oh, yes, Mr Ridley, we'll loan you some money to put your crop in." And
for that they'll probably charge me about a 10 per cent interest rate or something
like that. "I didn't think the base rate was that high." "Oh, no, we've got to put a
margin on it, got to put a margin on it to look after our investors," who happen to
have been the B class in AWB. We don't want a lame-duck company going
around marketing our crop, especially a big crop if we're ever lucky enough to
get another one. We want someone that is strong and vibrant and can go and do
all these things.

Okay, it's in-house, but that's just another perception. I've got three sons at home
and we all farm together and I've got seventh-generation grandchildren and
they're farming there now with us too. A little five-year-old grandson starts
school next week and he says "I don't want to go to school." I said, "Well,
you've got to go to school, mate." And he said, "Well, who is going to help you
if I go to school?" I said, "Well, I can rely on your dad."

Anyhow, but it's just a perception there's a conflict there. I'm a B class
shareholder too, but I don't get any more greater return than if I put my money
somewhere else. It's just a perception we're getting ripped off because they're
making a little profit out of the pool to run the pool. It's just all perception.
Now, and another point I would like to make quickly is for you to tell Mr
Howard not only what growers want but you tell him that we want him to act
quickly because our national marketer, our pool manager, is doing X nothing at
the moment because they don't know what's ahead of them. They don't know
whether they've got 1 million tonnes of crops to market or 20 million tonnes of
crop to market and we're getting around on the bones of our bum at the moment.
 We've got no money. You hear at all these drought meetings that they're
pleading for a planting grant to plant them up, plant the crop. We've got no

Forbes (3 February 2007)               P-44
money. He's got to act quickly so our marketer can get back into the job that
they're meant to do of marketing our crop. And they do that over an 18-month
period not a month around harvest.

THE AUDIENCE: Hear, hear.

MR RALPH: Thank you, John. Gavin Tom?

MR GAVIN TOM: Thank you, Mr Chairman, Gavin Tom, wheat grower. A
good example that has been mentioned was the vacuum - finance sorry, and it
was only a couple of years using the banks before AWB matched that and I think
that sort of pressure can keep the efficiency of AWB - - -

MR GAVIN TOM: ..... only having enough for seed and didn't elect to do so,
but I did notice that for a lot of the grades, particularly the better quality grades,
the best prices, cash and pool, were AWB. So it's a furphy to say that the
alternative purchasers - the names have been mentioned - are going to offer us
more money. I've been along to plenty of Grain Corp and ABB and Elders and
other company's, you know, marketing luncheons and so on, and I've tried my
best to return those favours by looking for them to sell wheat and other grains to
and so often it's AWB that's had the better deal.

As far as, like, drought years, yes, as I said, even drought years like this, it's only
the lower grades, ..... grades, where it's no contest, you sell them to the local feed
buyer. Getting on to the other questioning and international marketing. It's been
claimed that we'll still survive without the international desk - the single desk,
but it's just - I'm repeating things that have already been said, you know, why do
the competitors want to get rid of it - it's just so obvious that it makes a

And as far as that business about a letter to a prospective buyer, of course you
would lead him to believe that you're selling to him cheaper than your
competitor. You want to make a deal. The trick is to not undercut the market
too much. It's just business. I think the Western Australian business, I could be
corrected for being wrong here, but I seem to remember they howled like hell
when they had to pay a $4 levy to the pool in lieu of that wheat going to the pool.

Well, if they were making a 40, $50 premium that shouldn't have been a
problem. I read between the lines and think that there probably wasn't as much
in it as they make out. And just in closing, I think under the current system
where we have got so much choice, sure we don't have to sell to AWBI, but they
do a marvellous job of setting prices in the various grades. All those grades
disappear. It's a major choice in how we sell, who we can sell to, and the
choices we have, and I won't delay the meeting any longer.

MR RALPH: Thank you very much, Gavin. The next speaker is Bill Burke.

Forbes (3 February 2007)                P-45
MR BILL BURKE: Mr Chairman, I'm a very small grower from Parkes,
probably at the end of my use-by date ..... as being also still a Wheat Board
shareholder not having sold - don't put much weight on what I say. Other than to
address Mr Corbett on the question of capital with the differentiation being
suggested by the Wheat Board and AWBI. The problem with that change, it's
going to be how will the pool be funded.

The pool is absolutely essential in wheat growing because basically it's taking on
supply at a time when supply is maximum, but the whole problem with the
wheat industry has been that the Wheat Board has had to go out - and it is the
largest short-term money market borrower and consequently what was put in
place in 1989 to develop the WIF fund as a capital base for a grower-owned-
grower-controlled body now no longer exists for any new entity that the wheat -
AWBI to turn itself into. So it's going to be relying, I would suggest, on AWB
Limited guarantees.

And that then raises the question at what cost, because the cost of finance has
always been covered by previously Government guarantee therefore a lower
funding cost. Now there isn't that security and AWB Limited - it would be a
question whether it would allow other service providers such as banks to tender
for the funding of that pool operation. And there isn't that detail.

There are problems with the single desk in the West which doesn't have the
domestic market that we fortunately do have and I think there has to be a latitude
to Western Australian growers if we're to maintain some overall framework
which we all need with those basic, necessary concepts like buyer of last resort,
duty to maximise returns to growers, there has to be some latitude and the
Western Australians, I think, need that ability to have choice, that if they don't
have the domestic market that they can develop a separate market albeit
somewhat off shore.

So that I see the step taken in the Minister now having the power to override the
AWB veto as being a good short-term step - short term only, because ultimately
we cannot let the single desk go except in trade negotiations where our
competitors also give up their subsidisations and their protections which we've
only had the single desk to cover us on. So that when you look at what structure
in future, I think the structure that we put in place is a good structure, but I tend
to start thinking that instead of single desk it should be single operator of the

So that the Wheat Export Authority may be the body to look forward to,
provided that it has the legislative conditions that if it is going to give a licence
then the licence should have, say, a threshold to it above the threshold. A buyer
applying for licence should have available for growers the alternatives of the
cash and the pool and the pool then has those benefits of buyer of last resort,
maximised returns to growers, and the high harvest payment which growers
have needed all those years, in effect, for funding.

Forbes (3 February 2007)                P-46
Lastly, there should be one further requirement. In order to have transparency
you need audited financial statements of any pool operator separating from his
trading arm to his pooling arm to his supply of services to the pool. For
example, the financing. There's been a push - unsuccessful - to get AWB to give
in its annual reports to growers of audited annual financial statements of AWBI,
AWBA, AWBF, it's failed. Perhaps, gentlemen, if you're looking - and you put
it in your paper as the alternative, if you're looking for solutions perhaps that is
something that absolutely must come on board for an authority - the single
operator of the desk to have. It must be legislated.

MR RALPH: Well, thank you for those comments. As I said earlier, of course
we will not be making recommendations on how wheat marketing should be
carried out in future. We're looking very narrowly at just capturing what do
growers think and what are the things that they are concerned about so that it is
an input to the Government because, as I understand it, the period April to June
is when the Government will be deciding whether any changes will be made or
not. What we're doing is providing one input into that. Is there anybody else
who would like to speak? Yes, sir. You'll have to keep these - any comments
short, to about three minutes, in case there are a number of others.

UNKNOWN SPEAKER.: Thank you for being here and I would defend Roger
Corbett, my Woolies shares are doing much better than my AWB shares and I
had about 30 years' experience as a prime lamb producer for Woolies and we
never had a fight. I never got to know him because we didn't have a fight. So
thank you very much. And of course we had a ..... in Forbes, who was very
famous in the education field. I think he was some connection of yours. ..... So
thank you.

My experience is 48 years growing wheat here. I started off as a contractor in
1950 something as a sharefarmer beside my father's farm and went on from there
to get my own farm and whatever. And the wheat thing has been very good to
me and I'm grateful to it. I just want to comment that I'm disappointed that
whilst we have wheat export marketing consultants - committees nobody has so
far today has used the word expert. We're talking about a monopoly and

And that's very important because in my time at grains council before Peter
Corish, in '87 when John Kerin, with the help of Ian McLaughlin threw the
whole thing out and we had to get it back in again. One of the things I lost on
was the debate about privatising the Wheat Board and that's what happened.
The thing I won on was the freeing up of the domestic market and I think Tony
Cogswell has probably influenced me about that.

Tony is one of the guys I respect greatly because he's one of the guys in private
trade who hasn't gone belly up and he hasn't cost us any money that way, but that
does happen. So thank you for that. But there is, as I see it, a cry from the

Forbes (3 February 2007)               P-47
wheat-growing industry to get control back somewhere towards the farmers.
And this comment about giving teeth to the Wheat Export Authority is just one
way that that's being said, that the farmers feel pretty useless.

And I would have to say that the WEA has had a pretty poor record of public
relations. I think that's - it's not really - well, we don't know really what they've
done, but they've never told us to any great extent. The other thing was this
thing about buyer of last resort. Well, the Wheat Board has been a buyer of last
resort in as much as they have always been required to receive all the wheat that
was produced in whatever quality, they'd have to harvest and pay an advance on
it whether it was sold or not. And I would think that this has been worth a lot to
the industry. I would suggest that if they do not have the amount of control that
comes through an export monopoly then you can't reasonably expect them to be
a receiver, a buyer of last resort.

You're paying money for that. The two things have to go together or they can't
operate. I'm just trying to run across my notes here. What is the single desk -
single export desk, I'd better get it right too - worth? Well, my experience in the
'80s, I developed a fairly good working relationship with James Harper, he was
the Ag Attache from America. He used to fly his light plane up to my place to
get his hours up because he was getting his licence. So we'd have a cup of tea
and chew the fat. And he finally came out and said well, it's worth about $30 a
tonne to us. So, you know, that's history, it's 20 years ago but that was the
principle then.

And I think this is what we've got to do, get back to the first principles of being a
grower body, selling growers' grain, returning to the growers because the
growers are losing their equity. I know that I'm a director of the rural council .....
and the first thing a grower is told when he goes to council is if you have got any
Wheat Board shares well, look, sell them because that was - well, you had some
capital, some money to put into your pocket. So those things again because
growers are actually getting less and less of their equity.

And of course, you know, when a fellow is a consumer of grain he will want the
lowest price, whether it's the export price, ALFA, they’ve been a marvellous
campaigner for many years and still do about where they can get the best thing.
At this time of aberration in the industry, it is an aberration, you know, we've got
to meet that. So thank you very much.

MR RALPH: Thank you very much. I can only take at the most two more
speakers because we're already over time and we've got a plane to catch, but the
gentleman in the aisle?

MR TOOL: Thank you, Peter Tool, farming just south of here. I'm going to be
very short and just say that I haven't got a strong personal view one way or the
other on the single desk, but I do have a strong view on how the charges have
been levied against the growers since privatisation. For example, it is our

Forbes (3 February 2007)                P-48
understanding - or my understanding that it was costing about $53 million to run
the pools under the old Australian Wheat Board - the statutory marketing body.

By the close of the pool, '04, '05, that had blown out to $109 million. Now, I, as
a grower, didn't get double the wheat price and I didn't see that there was double
the amount of wheat go into the wheat pool. So I can only assume from that,
that, you know, it's costing us twice as much now as it used to. And the other
pet thing that I've had - brought up at every public meeting that I've ever been to
is the hide of anybody in our industry to suggest that they can have a base fee
that you could link to the CPI. I, as a grower, can't link my wheat price to the
CPI. I do a bit of contract harvesting and I find that I can't just go to my
customers and say I want - you know, the header price has gone up, your price
has gone up, I want the CPI increase on the rate last year and people would just
look at you and say well, sorry, the competitive market is this.

The transport people, the ..... handlers, everybody else. If we had a situation
where everybody said it's pretty easy, I'll just jack my price up by the CPI every
year, well, look, you know, if they knew about the pool they just wouldn't
approve. Unfortunately the AWB seems to think with their arrogance they can
do that. Thank you.

MR RALPH: Thank you very much, Peter. The gentleman down the back?

MR CRISP: Good morning, gentlemen, thanks for the opportunity to speak to
you this morning. My name is Roger Crisp, I'm a grain grower from Parkes. A
fifth-generation farmer there and a little tribe down the back, they'll be another
generation to come. I want to state categorically from the outset that I'm not a
supporter of the single desk as it currently stands.

I don't see any benefits from it for my future farming business going forward.
People standing up here saying they need a single desk for certainty in price. I
can price my wheat for the next two years, the price is better than $200 a tonne
through the Chicago Board of Trade. That is available to everybody and
anybody and it's not that hard to link into those prices. So if people are saying
they've got uncertainty in price, it's just a furphy.

AWB does not set the price. World price is set over the American market and
that's where it is, the liquidity and all that, it's over there. So you don't need the
AWB to set a price. What I need in the wheat industry is market information. I
need market information for my end users and what products they want and I'm
not getting that market information through the current structure.

They pool all their products over there and they maintain that market
information themselves for their own market - for their own advantages and not
the advantages of me, the grower. So I need this information to know what
varieties to grow to maximise my return. And I have had experience through a
study tour that I did overseas to a market where our grain was marketed and - it

Forbes (3 February 2007)                P-49
was to Korea, and at that stage there they'd just learnt that ASW wasn't a variety
of wheat.

Now, you can laugh but that's pretty serious. This is a major exporter that we
export to and they have learnt this bit of information from the Japanese. The
relationships between Japan and Korea are not the best and then to discover from
the Japanese that ASW is not a variety - they're wondering why they're not
getting market feed back on their complaints about the grain they're receiving,
when they're saying it's not improving, so they just keep getting ASW. Now,
that's just a shocking situation to occur and AWB was the cause of it. And when
I was over there, there were marketers from America over - marketing at that
market - that premium market that we had, we were losing to the American
market because they were over there, talking to those end users about what they
wanted and what they could do to produce it and all we were just selling was

I mean, how could you define a product and better improve your supply chain if
that's what they're going to get. So yes, what I want is good sound knowledge
from importing countries of what they want. I think one of - MR RALPH made
the comment there before - and it was something that I've been thinking about
for some time, would a structure similar to that of the AMLC where we have
actual qualities set up in our importing countries whose sole responsibility is to
develop markets and marketing contacts within those countries and give
feedback then to us, the producer back in Australia about what they're after.

That then provides a ready contact for anyone who wants to import into that
country whether it be individuals or companies. They've got a company over
there - an organisation there that they know is unbiased and is working to sell
Australian grain all around the world, market it as Australian grain. And we've
got that contact, they're going to give us direct feedback on what information we
need and what product we need. So that's what I really want from a new
structure in AWB - in the wheat market actually with AWB.

And people going on about, you know, AWB, you won't have the pool and stuff
available, there's no certainty and stuff, market as the last resort. There will
never not be a pool in Australia because with a pool all the risk is borne by the
producer. Like, they say I'm going to give you $200 a tonne, it doesn't really -
they don't really care what the end price is because you deliver it to them and
whatever they can achieve they'll pay you. If it's only 150 that's all you get. If
it's 220, well, they'll probably give you 210, I suppose. But I mean, pools will
always be - there's no risk borne by the seller in a pool. So pools will always
exist in Australia regardless of the single desk.

MR RALPH: Thank you very much, Roger. I'm sorry I think we've got to -
we've got a problem, we have to be in Dubbo at the right time. The first thing is
that I would like to thank you very much for taking a Saturday morning to come
and give us the benefit of your views and to come in here in such numbers.

Forbes (3 February 2007)              P-50
Secondly, I would like to thank you for giving each of the speakers the
opportunity to make their points. Whether or not you agreed with them they
were given the courtesy of being able to make their statements which I think
reflects well on all of you and it's something that I appreciate because, as I said,
our role is to find out what the growers think and we will report back faithfully
to the Government.

We've got transparency in that these meetings are all on the public record,
everything that has been said has been recorded. If you want to be able to listen
in to what's happened at meetings, they'll be on the internet. The submissions
generally will be on the public record. There might be an occasion where
somebody, for some reason, wants to remain anonymous. We'll decide when we
get such a submission whether we return it or if there's a good reason why it
should be anonymous to at least put the subject matter on the record in a way
that doesn't disclose the author of that submission.

It's pretty difficult to sum up a meeting immediately it's finished and before
we've had the chance to consider, but I mean, clearly today here we've heard very
strong support for the continuation of the single desk. There's a couple of people
who would see a better outcome through deregulation. Quite a number of
people, I think, though, in favour of the single desk would like to see some
improvement if that is possible and the reason I've been drawing out - seeking to
draw out the views on the question of separation is because that is on the table
by AWB and we'd like to find out what growers think about essentially
continuing on with the AWB as it is or whether they would like to see that
separation and then to draw out from that what are the kinds of changes that they
would like to see considered.

So we'll be collating the information from this meeting as from the other
meetings and when we've finished the 23 meetings - we're working around
clockwise round the country, finishing up over in Western Australia - we will
then - we've only got until the 30th of March to make our report. So essentially
the meetings will be all through February. In March we'll be pulling together
what we've learnt and reporting to the Government and I expect that what we
report will be one of the inputs into the Government's considerations of what
they're going to do post June.

Our report will be given to the Government. What the Government does with it
is up to it, whether it's made public, we don't have control of that. What we are
doing of course is making public everything that we're receiving. So it will be
up to the Government to decide whether they publish it and then also to what
extent they take it into their deliberations. We don't have any control of that.

But we're very clear on what we have to do and that is not to - we're not required
to make recommendations on what should happen in the future but we are given
the task of trying to determine what growers think, because it's been suggested
that - and we heard it here today, in fact, that what growers individually think

Forbes (3 February 2007)               P-51
may be different from what their representative bodies represent to Government
and that's what our task is, to try and find out and feed that back.

And that will be put against obviously what representative bodies and what other
participants in the industry put to Government for its deliberations. So I would
like to thank you all very much for coming here and I'm sorry that I've got to cut
it off here but we are trying to cram in as much - even by working on Saturdays,
to get through the towns in the various wheat-growing areas. So thank you very
much for your attendance.

MR .....: Where have we got to send these submissions?

MR RALPH: Over here, at the table, they will hand you a little slip which gives
you the postal address, the internet address, and the telephone numbers.


Forbes (3 February 2007)              P-52