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AWB’s end not so controversial

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Canada will experience similar challenges and opportunities as Australia did when it lost its single desk for wheat marketing, but the outcome may be different, says Geoff Honey of Grain Trade Australia.

While Canada is poised to see a relatively abrupt end to the single desk this summer, Honey noted a transition fund was set up in Australia and had grown to A$600 million by the mid-2000s. The Australian Wheat Board became a publicly traded company in 2001 and following a scandal involving wheat sales to Iraq, the single desk was eliminated entirely in 2008.

When the changes took place in Australia, all the levels of government were in favour, and no court actions were pursued, said Honey, noting that is far different from the current situation here. As a result, Canada appears to be entering the open market from a “standing start,” Honey told reporters prior to a presentation at Crop Week in Saskatoon. The uncertain legal situation in Canada also may be causing some concern amongst importers, he added. As wheat had been Australia’s major grain export prior to the end of the AWB single desk, Honey said there were some growing pains in terms of logistics and moving grain from the ports in the immediate aftermath of the changes. However, he said those problems have since worked themselves out. Other changes to the Australian structure include an increase in international trading houses now participating in the Australian market. In addition, Honey said accredited wheat exporters have climbed from one to 25. Pooling is also still an option in Australia, with up to nine different companies offering pooling options for producers.

Another interesting development in the Australian wheat market over the past few years has been the sharp increase in wheat exported by container. Smaller companies and individual operations are shipping more than two million tonnes of wheat annually via container into niche markets, said Honey.

When asked if Australian farmers were better off with or without a single desk, Honey was diplomatic, but said overall profitability will come down to the individual grower’s marketing skills.

About the author

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Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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