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Wheat lobby disrupts australias leading agrobusiness { February 6 2006 } Original Source Link: (May no longer be active)
http://www.theaustralian.news.com.au/common/story_page/0,5744,18051895%255E601,00.htmlhttp://www.theaustralian.news.com.au/common/story_page/0,5744,18051895%255E601,00.html
US wheat lobby urges ban on AWB
Geoff Elliott, San Antonio
February 06, 2006
(AWB Limited is Australia's leading agribusiness and one of the world's largest wheat marketing companies.)
AUSTRALIAN farmers could be frozen out of the world's biggest wheat exchanges under a plan by the US wheat lobby recommending that Congress and three powerful commodity exchanges ban AWB from US markets.
If implemented, the ban would disrupt the world trade in wheat, as AWB is one of the biggest users of the exchanges.
It would also kill AWB's monopoly on exports, forcing Australian farmers to market their wheat individually.
Alan Tracy, president of the US Wheat Associates, which represents 80 per cent of US wheat growers, told more than 200 delegates at the group's annual general meeting at the weekend that he would ask Congress to "suspend the AWB monopoly from participating in the US futures markets".
AWB uses the exchange's futures, or forward, contracts extensively to lock in wheat prices for farmers.
"While our suggestion of this option has caused some heartburn at the exchanges, it is one action that would have a real impact on AWB," said Mr Tracy, a former White House adviser on agriculture during the Reagan administration.
"We think it's worth putting on the table."
US farmers also called for AWB executives to be prosecuted, claiming that US authorities could have jurisdiction over the wheat exporter because its subsidiary company, AWB USA Ltd, operates out of offices in Portland, Oregon. However, Foreign Minister Alexander Downer yesterday dismissed Mr Tracy as a longtime opponent of the Australian wheat growers.
There are three main exchanges in the US: the Chicago Board of Trade, the Minneapolis Grain Exchange and the Kansas City Board of Trade.
Mark Bagan, chief executive of the Minneapolis exchange, said any such ban would be unprecedented in the history of the US futures markets.
He said he had not been told of the Wheat Associates proposal, and he would not support a ban.
"All market participants that are using our markets for price discovery are welcome," Mr Bagan told The Australian.
"We support the Australian Wheat Board and what they do in our market place."
While he was aware of the Cole inquiry into AWB's involvement in the Iraq oil-for-food scandal, Mr Bagan said AWB had not specifically violated any of the rules of the futures market.
"The only market participants that are ever banned in the US futures exchanges are people that are violating the rules of the Commodities Futures Trading Commission (the chief regulatory body)," Mr Bagan said.
The oil-for-food inquiry "doesn't have anything to do with futures exchanges or futures regulation", he said.
Officials from the Chicago and Kansas exchanges did not return calls yesterday.
A ban would end AWB's ability to run the single desk. "From our standpoint, what we would like to see is that much additional pressure towards eliminating the monopoly status in the first place, not punishing individual Australian wheat farmers," Mr Tracy said.
The wheat associates have long called for the dismantling of the Australian single desk system, the chief reason they did not support the US-Australia free trade agreement.
Mr Tracy said he was gathering support in Congress, particularly after revelations last week that the Australian Government had lobbied senator Norm Coleman, head of the Senate investigations committee, to drop an inquiry into AWB's involvement in the oil-for-food program.
"It is a big mistake to mislead a US senator, as the Australians have just discovered," he said.
Mr Tracy also revealed that House of Representatives congressman Earl Pomeroy, a Democrat from North Dakota, a wheat state, had contacted him and was "examining options for pursuing the issue".
The Bush administration is supporting the US wheat lobby's push for reform of single-desk operations, namely Australia's and Canada's, through the World Trade Organisation's DOHA round.
"We can wait and hope the Australians will do the right things themselves, and rid themselves of this dinosaur," Mr Tracy told delegates. "Or we can take actions here that will call international attention to the AWB's anti-competitive and illicit behaviours. I say let us not sit on our hands."
Mr Tracy called on the US to prohibit any financial support for AWB's US subsidiary through the use of the US Export-Import Bank programs, particularly for wheat sales to Iraq and the US Department of Agriculture's export credit program.
The USDA suspended AWB on November 10 but reinstated the company a few days later, saying AWB has agreed to a voluntary suspension.
But Mr Tracy claimed the department had reinstated the AWB after "Australia's Foreign Minister got to an under-secretary at our State Department, and politics won the day".
"We think this was wrong, that USDA was right, and that the suspension should be re-established now."
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