AWB’s management of the Single Desk system is driven by its constitutional objective to maximise returns to AWB National Pool participants - an integral part of which is to improve efficiencies and reduce costs along the supply chain for growers, said AWB Limited’s Chief Operating Officer Jill Gillingham.
Speaking at the Agriculture Australia 2002 conference in Sydney today Ms Gillingham highlighted that of all the companies involved in the Australian wheat industry, AWB is the only one with a formal obligation to return maximum possible revenue back to growers who deliver to AWB National Pool and a Government regulator to ensure it performs this task.
"When it comes to the supply chain we have the best interests of growers in mind and consequently everything we do is aimed at generating efficiencies and passing cost savings back to growers," said Ms Gillingham.
"The role of the AWB National Pool in relation to the wheat supply chain is to, on behalf of growers who are Pool participants, manage the grain flow and negotiate with service providers to ensure wheat destined for export in this country travels along the least cost pathway to reach the end customer, thereby meeting our constitutional obligation to maximise returns for growers.
"Supply chain costs are undoubtedly a great burden on the wheat industry in Australia costing growers around $1.6 billion annually, however unfortunately in attempting to lower these costs AWB National Pool encounters monopoly Bulk Handling Companies (BHCs) that are often very reluctant to allow for increased transparency or reduce their charges," said Ms Gillingham.
"To combat supply chain costs, AWB National Pool has a comprehensive strategy that involves management of grain flows, collective negotiations with service providers on behalf of all wheat growers and a program of encouraging competition along the supply chain.
"In this context, the AWB National Pool’s integrated management of the supply chain offers the best of both worlds. It maintains the critical link between international customers and growers while at the same time at the service provision level it encourages investment and much needed competition," said Ms Gillingham.
In reaction to the AWB National Pool’s supply chain strategy, some service providers have suggested radical changes to the set-up of the Single Desk system and AWB National Pool.
"Before any major changes are agreed to questions must be asked of those advocating change - the current system delivers proven benefits to growers, so how any changes will improve the system without threatening these benefits must be established.
"Also we must ensure that any proposed changes are not designed to thwart AWB National Pool’s attempts to lower costs by further entrenching the BHCs monopoly positions.
AWB supports dialogue on ways of potentially improving the Single Desk system but believes that those who are advocating such a radical modification of the current arrangements need to make the case for change and release all the details on how any change will benefit growers," said Ms Gillingham.