AWB Chief Welcomes Competition
In Wheat Exports (From Commodity News for Tomorrow)
Agribusiness AWB Ltd. (AWB.AU) is well-equipped to operate in a competitive export wheat market in Australia, even
though that means the loss of its special status as majority exporter, Managing Director Gordon Davis said Monday.
In a historic overhaul of the system resulting in major changes for AWB, the new Labor Party government has
pledged to accredit multiple exporters of bulk wheat from July 1 - effectively introducing competition and ending AWB’s monopoly role.
“We believe it’s time they did,” Davis told Dow Jones Newswires in an interview. “It’s appropriate commercially. It’s appropriate for the industry to move on.”
“We look forward to be able to structure our business for that environment.” AWB will do well in the new competitive environment, he said.
The company has significant strengths in terms of longstanding relationships with growers and customers, and a
capacity to execute exports, he said.
At stake is an annual export trade from Australia that can reach A$5 billion and 18 million tons in volume, which is almost 20% of the wheat globally traded each year.
“We’ve been doing a lot of work on how the market might evolve,” Davis said, playing down comparisons between the
new competitive market and the Statutory market in which AWB has operated.
“They’re quite different beasts and people will get successful on quite different criteria,” he said. That said, “we can retain a significant share of the market.”
Ending the single desk system as it is called in Australia and which dates from World War II, comes at a time when the outlook for agribusiness is improving.
Davis said he’s heartened by the seasonal outlook with good rainfall over crop lands in Queensland and northern New South Wales in recent months and predictions of average to above average rains in southern Australia in the coming months.
Moreover, the upbeat seasonal outlook comes at a time of strong global wheat prices, he said.
“There is a very strong incentive to plant, and with average seasonal conditions, returns should be extremely strong,” he said. “If we can get an average year of production with these record prices, you’d get a very buoyant year for the grains industry.”
The Australian wheat industry has suffered two years of drought, producing just 10 million metric tons in 2006 and 13 million tons in 2007, well below the longer term annual average of about 22 million tons.
Australia is normally a major global supplier of wheat after domestic annual needs of up to 7 million tons are met.
In Wheat Exports (From Commodity News for Tomorrow)
Agribusiness AWB Ltd. (AWB.AU) is well-equipped to operate in a competitive export wheat market in Australia, even
though that means the loss of its special status as majority exporter, Managing Director Gordon Davis said Monday.
In a historic overhaul of the system resulting in major changes for AWB, the new Labor Party government has
pledged to accredit multiple exporters of bulk wheat from July 1 - effectively introducing competition and ending AWB’s monopoly role.
“We believe it’s time they did,” Davis told Dow Jones Newswires in an interview. “It’s appropriate commercially. It’s appropriate for the industry to move on.”
“We look forward to be able to structure our business for that environment.” AWB will do well in the new competitive environment, he said.
The company has significant strengths in terms of longstanding relationships with growers and customers, and a
capacity to execute exports, he said.
At stake is an annual export trade from Australia that can reach A$5 billion and 18 million tons in volume, which is almost 20% of the wheat globally traded each year.
“We’ve been doing a lot of work on how the market might evolve,” Davis said, playing down comparisons between the
new competitive market and the Statutory market in which AWB has operated.
“They’re quite different beasts and people will get successful on quite different criteria,” he said. That said, “we can retain a significant share of the market.”
Ending the single desk system as it is called in Australia and which dates from World War II, comes at a time when the outlook for agribusiness is improving.
Davis said he’s heartened by the seasonal outlook with good rainfall over crop lands in Queensland and northern New South Wales in recent months and predictions of average to above average rains in southern Australia in the coming months.
Moreover, the upbeat seasonal outlook comes at a time of strong global wheat prices, he said.
“There is a very strong incentive to plant, and with average seasonal conditions, returns should be extremely strong,” he said. “If we can get an average year of production with these record prices, you’d get a very buoyant year for the grains industry.”
The Australian wheat industry has suffered two years of drought, producing just 10 million metric tons in 2006 and 13 million tons in 2007, well below the longer term annual average of about 22 million tons.
Australia is normally a major global supplier of wheat after domestic annual needs of up to 7 million tons are met.