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Time to get over single desk decision

A small group of farmers planning to march on Canberra next week and show they are still opposed to the abolition of the single desk are chasing a horse that bolted in October 2005.

While it's been 12 months since the wheat export monopoly arrangements were abolished by the Labor Government, the single desk's fate was sealed when the Volcker report into the Iraqi Oil-for-Food scandal was released, exposing Australia's AWB for peddling $300 million in bribes to Saddam Hussein's corrupt regime.

From that point on, the desk was always a goner.

And despite what a bunch of committed, yet die-hard single desk supporters would like to think, no Government - whatever its stripes - is going to bring it back.

The previous Prime Minister John Howard deferred making a decision to get rid of the single desk until after the 2007 election (by which time he was out of office) but behind closed doors in the Coalition party room it was clear the desk was on borrowed time.

Now in farmer-land, I think the jury is still out on whether the new system worked for farmers during the last harvest.

You could not judge the prices farmers received fairly because of the global economic meltdown, and a massive wash-out of the northern harvest also compromised any true comparison of the new system with the old.

Single-desk advocates say the new system is crippling farmers.

So, where is the proof? How many farmers have been forced off their land because there is no longer a single desk?

How many farmers have abandoned growing wheat because there is no longer a monopoly?

I genuinely want to know. But I also what some facts and figures. Quit the emotion, please!

The Government claims more wheat is going into more countries than ever before.

The people who believe the single desk can be reinstated are in dreamland because neither of the major parties will ever bring it back.

These farmers would be better off investing their efforts to work with the Government to iron out the flaws in the new system so it can work for them.

At the moment they are refusing to acknowledge the free market is here to stay, and are flogging a dead horse in the process.

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Hi Lucy, thanks for the sensible article. I think the monopoly was actually gone from July 1st 1999 because that was the date that the corporate AWB Ltd took over from the statutory Australian Wheat Board. Most wheat growers were asleep at the wheel and did not even notice for a couple of years until AWB Ltd started to gouge the National Pool.

When the AWB Ltd executives realised how truly ineffective the Wheat Export Authority was and they were effectively accountable to no-one they really got stuck in. The Pool Remuneration Model and the Out Performance Incentive allowed them to record terrific profits for the company on paper, and make themselves look great. A senior executive on $300k or $400k could top up their annual salary with a $200 bonus. That kind of system was unsustainable and it was only a matter of time until it came unstuck, the Oil for Food scandal aside.

As to benefits to growers, the market analysts recorded the immediate boost to the cash market in WA last year when competition arrived in the market and WA growers could start gaining the benefits from their proximity to markets in Asia. The die-hards that want a return to a compulsory price averaging system, because that's what the monopoly was, want someone to subsidise their business because they either refuse to, or are incapable of upskilling. You are correct in saying that those days are not coming back.

Posted by damian capp, 19/06/2009 7:45:14 PM
Lucy, you have managed to confuse the single desk and AWB. The single desk is all about grower equity in marketing their crop, a comparative advantage to Oz growers in the international markets and an opportunity to avoid the trades discounting to farmers at harvest. There are many different models. The AWB is now just another grain trader, antagonistic to growers' best interests. The "deregulated market" is about grain traders profiteering at grower and consumer expense, corrupting the price signals.

The old AWB single desk was always a hybrid (floating a regulated body), design to fail as was alluded to by Heffernan. To do nothing about the current shambles will simply see the industries long term diminishment. In our farming enterprise (five growers) we have cut our wheat production by two thirds as a result of last harvests discounts and chaos; we are now growing coarse grains for our new feedlot. We intend to move completely away from grain production for export or domestic sale. What implication would this sort of action have for the grain industry? Well, "frankly my dear I don’t give a damn". Cheers

Posted by Ken and Susan, 19/06/2009 8:59:00 PM
If 18 months ago a 15% tax/tonne was invented to fund benevolant multi nationals, not even 20% of grain growers would have supported it. However tell farmers that they will surely make more money by pitting their own equity against the Chicago Board of Trade instead of our collective equity and the use of expert fulltime traders and the gullible, greedy, "savvy" dissenters turned up! Somehow these 20 to 30% were called a majority - sounds like Iranian politics to me.
Posted by uncommon sense, 19/06/2009 11:45:17 PM
Just wait til Australia has a record harvest again which will come again after this record drought is over ... then we will see just how good this deregulated marketing system is ... the opponents of single desk will then be begging the government to reinstate it .....
Posted by A WheatGrower, 22/06/2009 12:16:08 AM
So now as a young, reasonably 'skilled up' grower I find we have a broken system. One that does not reward quality through premiums back to the grower, a system that has predictably not coped with multiple exporters trying to use the same infrastructure, and we have 'skilled up' growers who have lost a lot of money trying to 'market' their own grain due to extreme market and seasonal variability. What went wrong Damian? What was the rush to abolish a national bulk export pool? We still had the container market operating side by side. As a young grain grower I am disgusted by the outcome of the abolition of the single desk, and I condemn the Labor and Liberal coalition that delivered it.
Posted by cannona, 22/06/2009 9:00:08 AM
Those growers who want an average price have any amount of pools to deliver their wheat into. These have plenty of expert traders and many are selling into markets the AWB with the single desk never had access to. Also if you think pitting your own money into hedging on the CBOT is different to a pool manager doing it for you, just remember it is all your money in the long run. Regulated marketing is gone and as the headline says -get over it.
Posted by observer, 22/06/2009 10:21:22 AM
Maybe Lucy Knight should get off her backside after she has her weetbix or other cereal with milk, then her toast (bread, made out wheat) then her coffee with milk and sugar possibly and tell me why I had to suffer a loss this season of $80 to $90 per ton of wheat I grew. I like many others around me have reduced wheat production in favour of pulse crops and other cereals like oats and barley. We need base prices to survive. Would you like to look at my grain invoices!!!!
Posted by movingaway, 22/06/2009 11:46:52 AM
The removal of the Single Desk National Pool arrangement has placed huge marketing, finance and storage risk on growers. They will react to that situation by reducing plantings. The first big season will see chaos as a large tonnage remains on farm and in warehouses owned by regional monopolies. That some may choose to ignore this fact through ignorance or lack of understanding is of no consequence.
Posted by Merino wether., 22/06/2009 4:24:08 PM
Moving away still has not answered Lucy's question on supplying the evidence as to how you come up with your 80 to 90 dollars a tonne worse off. Obviously movingaway cannot prove how these figures were calculated and has chosen to personally attack the person rather than supply the debate with some hard core facts. I know your response will be AWB's hedging program would have captured the money. Rubbish - AWB said for years it never hedged more than 30% of the crop before September. By then CBOT was well below the $13 high earlier in the year. Also given the collapse of the subprime morgage market where AWB sourced it's money to run the pool, where would AWB have found the money and at what cost would it have been to the grower? Lucy you are spot on.
Posted by movingon, 22/06/2009 7:12:08 PM
When I started growing wheat with the AWB regulated marketing I knew at sowing time EXACTLY how much per ton I would receive ... but now I don't have a clue and the supporters of deregulation call this progress ...
Posted by A Wheat Grower, 23/06/2009 10:53:39 AM
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Lucy Knight is the Rural Press Canberra Bureau chief based in Parliament House.
Protesters last year calling for the single desk to be retained.
Protesters last year calling for the single desk to be retained.
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