Sorting the Wheat from the Chaff- UPDATED

The saga over the bribes paid by the monopoly wheat exporter, AWB, has a fair way to run yet. Beyond saying that there is a lot that looks very smelly about the affair, I’ll wait until more evidence comes out before making more comment. However, it has made me give more thought to how desirable it is for one private company to have monopoly rights over all wheat exported from Australia.

John Quiggin posted an item on the AWB saga a few days ago, and I put a comment on that. The gist of it was that, while I’m generally not keen on monopoly arrangments, I’ve supported the AWB monopoly for wheat exports (usually called the single desk) , as I assumed (partly based on comments from farmers) this gave the best price for producers. However, the ‘bribes to Saddam’ incident has made me wonder about whether the ‘best price’ argument is true, as well as whether this apparently unhealthy company culture is one of the other costs that can come from a monopoly arrangement.

Wilson Tuckey has recently called for an end to the single desk arrangement – as mentioned in this post on Yobbo’s blog. I don’t normally take my views on economics (or anything else) from Wilson Tuckey, but his seat does cover the heart of the wheat belt in WA, so I presume he is reflecting the views of some of his constituents.

The item on Quiggin’s blog has produced a lot of comments which traverse the issues well. I won’t try to summarise them here, but for anyone interested in the issue, I recommended having a read through them over on that site (although the comments do tend to deteriorate towards the end into a slanging match about the UN.)

UPDATE:

I received media release from the Australian Grain Exporters Association. I thought I would just paste it here for the benefit of anyone interested in wheat export policy.

The revelations that we have all seen in the past week from the Cole Inquiry, have shown for once and for all time that the current wheat marketing arrangements are fundamentally flawed. This is clearly due to the power that the Act gives to one company, AWB Ltd, and the apparent lack of controls over the activities of that company.

The AWB Export Monopoly has now caused considerable damage to Australia’s reputation in international grain markets. Overseas buyers may well have reservations about dealing with AWB in light of the allegations that have been made to the Cole Inquiry. Unfortunately, for Australian grain growers, the affairs of the AWB Export Monopoly that are being aired in the Inquiry, are coming to light only a few years after the unmitigated disaster of the NSW Grains Board export monopoly collapse in the late 90’s.

The AGEA which has been proposing changes to Australia’s Export Monopoly wheat marketing arrangements for over 20 years, has now developed the following “Proposed Wheat Industry Model” as the best possible way for industry to move forward.

PROPOSED WHEAT INDUSTRY MODEL

• The Wheat Marketing Act be amended to remove AWB’s export monopoly powers.

• A Regulatory Body be established, with authority to register bulk wheat exporters from Australia.

• The Regulatory Body establish criteria (financial capacity / international commodity trading experience / reputation and credibility) that exporters must meet, in order to qualify as a registered bulk wheat exporter.

• The Regulatory Body to regularly review registered bulk wheat exporters in order to ensure compliance with their status as a registered bulk wheat exporter.

• The Regulatory Body to maintain and report Australian wheat shipments and statistics.

• Registered bulk wheat exporters to have no restrictions on tonnage, or destination, of Australian wheat exports.

• The complete deregulation forthwith of the wheat export trade in containers

• The changes be in place by July 1 2006, for the commencement of the 2006/07 season

It is important for growers that these changes are accompanied by a smooth transition.

The AGEA believes that it’s proposed changes will deliver that outcome, and revitalize this crucial industry.

Under this model it is envisaged that some of Australia’s largest existing grain businesses including CBH, Graincorp, Elders and ABB would be registered wheat exporters, as well as major international grain trading companies.

The major Australian companies, and the Australian based international companies are already buying millions of tonnes of wheat in Australia for the domestic market and for delivery to AWB’s export pools so growers already have good relationships and experience in dealing with companies, other than AWB.

AWB would need to apply to be a registered bulk wheat exporter, no different to any other company.

A W B would be expected to maintain a very large market share under this arrangement.

The companies mentioned above already run large wheat pools in Australia, and it would be expected that AWB would continue to run national pools. Competition in running pools will provide growers with more choice and ensure that pools are run efficiently.

From a growers’ perspective under this system, sales will still be to the same companies that they have been delivering to for many years. Growers will be delivering to the same silos, and wheat will be transported on the same trains, and shipped from the same ports, as at present.

A national quality testing organization would be introduced to test all wheat shipments, and report back to the Regulatory Body.

Under the proposed system, Australian wheat trade would continue to be marketed through a number of other companies, in the unfortunate event that an Australian company became involved in a trade dispute. The risk and cost of any dispute would rest with the particular registered exporter involved and not with the growers as is the case under the current system.

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26 Comments

  1. AS a regional and rural Australian resident, you would expect that I would have commented on it by now but the truth is I don’t know that much about it.

    I’m not sure what the deal is with the bribe scam, isn’t it just they were selling wheat to them at inflated prices. Apart from the prices being inflated, what’s wrong with that? We can’t because of UN sanctions? why not? We invaded without UN sanction.

    I also recall that Iraq owed the AWB money prior to the invasion and feared they would not recoup costs. That said I do believe the single desk arrangement is the best for oz, we have by and large good quality wheat compared to the rest of the world and it makes dealing with Australia simpler and good price can be achieved this way.

    That said though, I see no reason to deny CBH the opportunity to sell without going through the AWB. Competition is an aspect of the free market, the free market usually only fails when it is applied to essential infrastructure.

    Until I discover more about this so-called bribe scam, I don’t particularly see anything wrong with the arrangement. A contract between the AWB and Iraq was fulfilled. It should not be anyone elses business. Both sides made their choice and are satisfied with the arrangement.

    Unless of course you are telling me Iraq don’t want our wheat to feed their hungry.

  2. I remember a few years ago when a cargo ship of wheat was blocked because of “contamination”, which according to the paper the other day was part of the kickback process. I find it hard to believe that the oz gov didn’t know the full truth of the matter at that time.

  3. The Iraqi government were only allowed to spend the amount of $180 per person per year for food during the many years of sanctions. Each time someone like the AWB inflated their prices the amount of food able to be bought was reduced and more and more people starved.

    If they had broken the sanctions to sell the wheat for less and thus helped the Iraqi people to get more food for their buck that would be good, but they sold it as expensively as they could so the Iraqi people got less food for their buck.

    And they covered it up while Saddam Hussein got over $300 bucks of taxpayers cash to torture people, build the palaces with the gold taps that Howard said made him sick, bullets and payments to suicide bombers that the world condemns.

    The hypocrisy of Lindberg and co is breathtaking and Howard and Downer should both quit over this, be charged with the crimes of corruption, bribery and mass murder.

  4. I would have thought that Your Party Andrew would have been all over this. Why has there been no mention of the fact that this is not just about wheat? Why has the public not been informed of all the facts regarding the AWB.? Like the fact that they purchased in August 2002 the Westfarmers Landmark live export interests and the live exsport funds were used and abused.? I have written to Rud whom of course . He is covering the AWB enquiry and has also failed to disclose this to the public. I dont expect the animal rights lot to know about this because the leaders is about 4 thousand years behind the eight ball. It is possible thast Kevin Rud himself does not know that the AWB own the interests in Live Exports. However i would have thought Andrew you would have been delighted to do a press R considering your ongoing efforts to end the live trade which we one hunderd percent support you on.By the way the letter to kevin Rud is titled> Feeding the Chooks. I am sure at least you will understand if not our friendly Floss.
    Cheers Andrew

  5. To Floss From George Lawyer and partner of Wendy Lewthwaite.
    Dear Floss [aka Suzzanne] What a suitable name for Andrews blotter]
    fYI I find you rude to first of all Andrew and my partner Wendy. She has single handedly formed a Company with not only Muslim leaders but others to create thousands of jobs in Australia while showing compassion for animals and working towards peace and harmony. Compassion may be one of the words you have difficulty understanding so I suggest you look it up. Wendy has a major problem with neck and shoulder pain as a result of an accident. She tends to bash things out without worrying too much. Personally I find it refreshing that somebody just bashes it out the way it is whithout the garbage you carry on with. They are called REAL people
    Read these Floss to educate yourself as to whom you are being so unnessarily aggresive.
    .www.halakindmeats.com . if you scroll down you will see a picture of myself.That would be the goodlooking bloke at the bottom Ha!. http://www.livexports.com http://www.rspcaqld.com and go to ban live Exports http://www.aicol.com.au our ENGLISH International school http://www.mysterymountain.com.au

    I never get involved in writing on this blotter although I am often in the office, but you floss are just too much. What is it you claim to do other than use a political blotter to throw personal insults at people. Really Andrew may I recommend you should make a rule on your blotter not to use it to take personal attacks on people. It degrades your blotter which by the way i think is a good effort. I support Wendy that the fact the AWB purchased live exports from Westfarmers should come out to the public while the enquiry is underway.I also would welcome your input into HKM and I know Wendy has requested of you several times. HKM is the only thing that will replace live exports ./
    George Czaus
    Czaus Lawyers and business Advisor and partner of Halal Kind Meats http://www.halakindmeats.com

  6. Just a reminder to people to read the comments policy for this site (the link is under the comment box at the bottom of the page). I’m happy to consider suggestions for amendments to it, but basically while I prefer civil discourse, in the interests of open debate I give pretty wide leeway to people to be strongly critical if they feel the need.

    While I’d much prefer commenters not to get abusive towards each other, if you are prepared to make public comments here it is unavoidable that you may be subjected to a critical response from another commenter. As would be obvious from plenty of the comments, that includes the ability for people to be critical of me.

    I usually only delete or edit comments if (a) I think they come close to being legally defamatory or (b) they personally criticise a third party who is not in a position to respond.

  7. To Wendy and George

    Well fair enough on re-reading the offending comment, it was unnecessarily harsh and so I apologise. (And Andrew please feel free to remove it.)

    Wendy I find your comments hard to follow and understand at times. Which I find frustrating because – especially as from what I can gather, your views are mostly very different to mine – I would like to understand and follow them, so I can at least get an idea of why you think the way you do about the wide range of issues you comment on and perhaps respond.

    I find it useful to write a comment in word or notepad first before posting it, that way you can run the spell check through and fix grammar and punctuation as well. I don’t believe its being pedantic or arrogant to fuss about spelling and grammar, nor does it make me not “a REAL person”.

    It just means people are more likely to understand what you are saying and to take it as a contribution to the discussion rather than a rant.

    I hasten to add I’m as prone to making spelling and grammar mistakes as anyone else (especially as I’m one of those immigrant people whose early education was in a different language – I just think its worth at least trying to be as clear as possible.

    I tell you what – I’ll promise not to be nasty or personal again if you don’t call me Suzanne again – given that’s not my name. (Feel free to call me Flora though, Floss is just the family nickname.)

  8. Hello Floss Thats ok . My partner is a little annoyed about other issues. Like the fact after years of loyalty someone could just wipe us off their web and refuse to explain why for months despite requesting a reason. Especially when that same person had stood by the other person through difficult times without them even being aware of it. To be honest i am not a computer person by any means. Your apology is excepted. Andrews right in as much as if we dont agree its our problem. You say your thoughts are different to mine. Thats ok otherwise Andrew would not have much of a blotter would he.[smile]Re The Wheat From The Chaff I really do not understand the silence from you Andrew regarding the AWB enquiry and the link to live exports . I take it you of course knew of the quick quite sale in the middle or just after the 60 minutes report by Westfarmers to AWB. Did you not? Considering its right into the Animal Welfare side which you have worked so hard for I am a little confused at your silence. The public wont know if we dont tell them Andrew. . Re the Wheat From The Chaff . The AWB enquiry was the best thing that happend as far as we were concerned for a chance to highlight live exports and the connections and ownership by AWB. I will just have to tell the public the truth about the AWB owning the live export interest they brought from westfarmers and the cruel way much of these funds came from. For anybody who is interested in the enquiry into the AWB we contacted federal police with info of suspicion of funds going to dodgey ground two and a half years ago.Now the Government claim they are surprised.So anyway Floss i just came on line for the last few weeks as a break really from what I do.I am probably not that much different to most people. I like animals and elderly people. I do what i can and probably a bit more to help both. Old Fashioned. Call a spade a spade . Does anybody know who is looking into Westfarmers in regards to the AWB?Or am i talking to myself again?Best wishes to you and your family Floss .

  9. I think that introducing competition into wheat marketing arrangements makes a lot of sense. We hear a lot from the Howard government about how competition is the way to go. In the case of wheat, competing grain marketers would have to prove to growers that they will provide the best price, terms and service. If not, growers can choose an alternative marketer for the following grain pool. The argument that a single desk can somehow use its monopolistic position to get the best price is flawed since there are many grain producers around the world and ultimately the AWB is a price taker, not a price maker for what is a commodity product. Sure, it might have been able to squeeze a few extra dollars out of Saddam Hussein on the contract price, but it turns out they were paid straight back in as kickbacks on the transport costs. If we had a number of grain marketers competing against each other for growers’ business, then any sort of unfair advantage gained by bribery would be exposed immediately by the competition declaring unfair practices (and illegal in this case). Competition is good not only for pricing but also for accountability. To have allowed this scandal to occur it is clear that the current arrangements, both government and AWB, need complete overhaul to both restore credibility in the eyes of world markets and improve what was a fundamentally flawed marketing system.

  10. Now we have it all the way to the US congress because either Downer, Howard or Vaile knew if Norman the good republican had a good look at things in October 2004 he might find the corruption just a tad too early for Howard’s liking.

    I believe Howard gave the instructions largely because Thawley always parroted his views, even about locking up kids in the desert.

    With Howard being a micro-managing, anal-retentive PM it would be impossible to believe he didn’t know especially when they were doing the Free trade thingy and cutting out sugar and stuff.

    When was that again? Before the last election I believe.

    Downer and Vaile should step down right now. They have to appear at the Cole Enquiry and if George Galloway has to appear before the US congress so should these two prats. Downer is a pathetic specimen and a real embarrassment to South Australia and Vaile sold out everyone with his FTA as we have already seen.

    Was Howard protecting the wheat industry which is only 15 % of the world’s wheat trade and only about 1% of our GDP or was he protecting his butt for dancing with the devil? After the lies and scandal of the TAMPA, SIEVX and the children not thrown – all of which involved Iraqis, I tend to believe the latter.

    This little bit of “storm in a teacup” as Lindberg claimed is now an international monster and it bloody well should be, it is a disgrace so serious that every single Murdoch editor is demanding a bigger enquiry.

  11. “Was Howard protecting the wheat industry which is only 15 % of the world’s wheat trade and only about 1% of our GDP or was he protecting his butt for dancing with the devil? After the lies and scandal of the TAMPA, SIEVX and the children not thrown – all of which involved Iraqis, I tend to believe the latter.”

    Well that’s just rubbish Marilyn and doesn’t help your credibility one little bit, however I do agree with you re tha FTA. What;’s the Dems position on that at the moment Andrew. If I remember correctly only the ON Senator was up in arms about it before they signed it.

    As for this topic, I’ll wait a bit longer till I give my opinion.

  12. Geoff Howard and his whole government lied through their teeth about the TAMPA, kids not thrown and the SIEVX so I fail to understand how that ruins the credibility you claim I didn’t have anyway.

    The FTA was enabled in the parliament on 13 August after a great deal of angst about sugar being excluded and Vaile defending that, it was given royal consent on 16 August and until it came into force on 1 January 2005, with great results for the US and lousy for us, it could be cancelled by either side if anything was deemed to be dodgy.

    Along comes Norman Coleman in October 2004 who already believed that the AWB were making kickbacks and Thawley is sent along. Thawley was Howards advisor on Foreign affairs before he was given the sinecure of Ambassador to Washington so he would have had to be aware of all those trades and thingys wouldn’t he?

    It would seem Thawley lied through his teeth at his masters bidding compeletly forgetting of course that he was no longer Howard’s advisor but Ambassador for Australia and liable to a different set of rules. He was no longer just to cover Howard’s butt but it looks like he did.

    They wriggled out of the whole investigation and Downer says “they co-operated fully with Volcker” – kicking and squealing like stuck pigs they allowed AWB to give some documents is more the truth.

    It is amazing just how much was going on that the AWB board, Vaile, Downer and Howard all play Schultz over isn’t it.

    Geoff I don’t know if you are aware of it but the entire transcript for each day is available on the website of the AG each night. They make fascinating reading.

    The AWB were stealing from the starving and giving to the starver. It is as simple and deadly and revolting as that folks.

  13. I agree with Marilyn about Downer and Vaile. The thing about the Murdock stuff is off beat however. You see the donations given to the libs Nats and a few crumbs to the chooks[labour are all conected to many other scams. This is just one of them. Now at the rsk of annoying You M its a well kept secret that Murdock and Packer have huge interests in Live Exports. So if AWB own live exports and Packer and Murdock are doing biz with AWB then hello dont you think this is just the tip of the iceburge? Of course we will never get to read about it now will we. After all donations to partys must pay off some time , must they not. We wont even get close to exposing the truth. Do you know anything about shaving an enquiry. Its simple. At an open enquiry you must make sure its nothing short of sensational. After all the public are not complete fools and it is on ocashions such as this that they feel they must play the game and acknowledge it. Downer and Vaile may very well give evidence. So what.If it takes that and some of Packers best boys and Murdocks to dress it up a bit with a lively day at the enquiry so be it. Its a long way from what you said to whats put before an enquiry beleive me.I feel sorry for that poor guy who left suffering a nervous breakdown. I can just imagine how he is behind the scene. Poor Bugger.I truely think we need to form another party before they put a stop to that as well. We need a party that wont give preferences to labour etc . We need people. Lots of people power. Thats all we need.I think we need to re vist the whole structure of how this country is run.

  14. What is it about these blog sites that cause people to spell like four year olds?
    Wendy, in the name of the God’s, please get hold of a dictionary or download a spellchecker because your valid argument loses some credibility when you spell; iceberg as…iceburge, believe as… beleive and occasions as…ocashions. Remember, I before E except after C.
    These are not typo’s but spelling mistakes.
    Furthermore, pay the courtesy to people when you are writing about them to check how they spell their name, Kevin Rudd has two d’s in his surname, not one d as in your spelling of Rud!
    In my view these errors show a lack of respect towards the intended reader of your statement.
    I don’t know about ‘more people power’ but more people making an effort to check their spelling would be an improvement.

  15. Everyone knows how to spell reasonably well Bob – but Andrew doesn’t have a spellchecker – most of the spelling errors come fronm non typists typing quickly. While there is a case to be made for proofing, the point of e communication is speed

    I thought his name was Crudd?

  16. Sorry
    Off topic reply to off topic comment

    No… I’m sure it’s Dud Ken.

    I agree with the spellchecker complaint.

  17. Geoff you are starting to sound like a bossy prefect. Get a grip. You dont have to inform everybody everytime you identify a post as being “off topic”. Not everybody takes the policy box that we tick so seriously. Did Andrew give you a job? As adults I am sure we can handle a bit of deviation without need for an announcement.

    I find it interesting that there are certain people who are really into keeping people on topic at different times. I think its a control thing just like ticking that comments policy box. Its ridiculous, we are adults.

    I would have to say that I agree that people should consider using spellcheck. It doesn’t actually influence how I feel about the writer but it makes the reading of the post so much more difficult and less enjoyable.

    Most of the time I write on word and then when I am finished I post it on the site. I have also had it happen so many times when I loose my post and it is so frustrating so that helps protect me from that. I am sure I am not alone!

  18. Sorry
    Off topic reply to off topic comment.

    Ahhhh… apparently I do Jolanda.

    “1. Ensure your comment is relevant to the discussion at hand – if you wish to comment or ask a question ‘off-topic’ either indicate clearly you are doing so at the beginning of your comment or use my email address to contact me directly.” :-)

    BTW, I’d rather a spellchecker here than writing things elsewhere and cutting and pasting to here. As for the typos… I do ’em but am not pedantic or worried enough to make an issue of it when others do.

  19. On topic – isn’t the AWB getting inteersting. Unfortunatley for Crudd Dud and fellow travellers no constituency of JWH really cares. Those frothing are rusetd on anti howards so damage probably marginal.

    Off topic – lots of posts are not enjoyable Jolanda spelt well or not………….

  20. Ken

    Off topic. I have to agree with you again, some posts are not enjoyable spelt well or otherwise.

    On topic. You are right about AWB getting interesting. Thing is that the opposition can act like they are jumping up and down all they like, they use the same process and procedure of covering up and denying and they are no less corrupt. The same Laws also protect them. The Government knows that their fellow Politicians will make some noise and make an appearance, so as to present a picture, but that they will hold back and the damage will be only marginal as this is in both their best interests.

    Problem is that in previous situations like this the media used to filter information but now with the internet things are very different!

    I believe that at the end of the day we have to look at the positive. The matters have been exposed and are being aired and that is a good thing and encourages transparency and accountability. They may not admit to what they have done and what has gone down, but the people are not stupid and they will use that at election time to influence their decision. All we need now is a decent party headed by vision and integrity to lead Australia forward – the change in culture I believe has started it just needs to gain momentum.

  21. I dont agree with it completely Geoff. I understand where you are coming from as our Government does need a level of protection to exercise thier duties as they are often dealing with corrupt Countries.

    Problem is that the system, process and method of dealing with complaints and issues is not just used for Government officials at the top, it is for all of those employed by the system and that means that the ordinary person employed by the Public Service is also protected so as to ensure protection for the Government and that is so very wrong as there is alot of prejudice, malice and spite out there being served by ordinary people with a chip on their shoulder and that is doing serious damage to society and that is going unchecked.

    Nobody should be above the Law and in that respect I think this enquiry is good. It sends the message to those in power to look carefuly at what they are being told and to ask questions as they may very well be made to answer even if they are not held accountable.

    Its a start!

  22. 26 The public should be demanding a broader term of reference. There is no justice as usual in this white was enquiry. Downer being basically brighter as usual ;put on a better face. Vaile looked like a lyer and a dill which he is.

    What a load of crap
    Of course they knew and it does not stop there either

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