AWB (International) Limited (AWBI) today welcomed the release of a new report which examines the future challenges for AWBI and Australian wheat farmers in the international market.
AWBI Chairman, Mr Brendan Stewart, said the report by the Boston Consulting Group (BCG), “Maximising Returns to Growers Supplying the Export National Pool”, shows that in a tough global environment AWBI has been successful at maximising returns to growers who deliver to the AWB National Pool.
“The report confirms that when government subsidies are stripped out of the equation, Australian wheat farmers receive farm-gate prices stronger than those received by their counterparts in the US, Canada or Argentina,” Mr Stewart said.
“Still, the reality is that the market is grossly distorted with farmers in the US receiving almost half their income from the taxpayer”, Mr Stewart said.
AWBI commissioned BCG to undertake the independent report because of its experience and international reputation for strategy and management advice.
“BCG’s brief was to examine the international environment and the outlook for global wheat trade. It also examined AWBI performance within this environment, and how best we could continue to maximise grower returns into the future,” Mr Stewart said.
The report has identified a number of key factors, such as the emergence of new competitors, expanded investment in research and market development from traditional competitors and increasingly sophisticated customers, which will contribute to a more challenging global trading environment for Australian grain growers.
The report concludes that these factors are likely to contribute to the long-term trend of downward pressure on global wheat prices. In a worse case scenario, this could result in a price decline for Australian wheat growers of between US$15-25 over the next 5 years.
Mr Stewart said this study should be a wake up call to the industry.
“It has identified some significant challenges and we must work together to ensure that we meet them,” Mr Stewart said.
“This study shows the international trading environment is only going to get tougher and it is clear that the threat to growers’ returns in the evolving global wheat market will require a united action on the part of the whole industry,” he said.
After assessing the options available, BCG concluded that the best response to the market challenges and opportunities is to strengthen AWBI’s differentiated marketing approach.
The report provides AWBI with a “six point” plan to deliver on this strategic direction:
- Improved research and development/crop shaping meeting current and shaping emerging market requirements;
- Grower communications strategy that builds further trust in AWBI's strategy and drives competitive advantage down the chain;
- Realising supply chain opportunities;
- Boosted trade advocacy;
- Clearly differentiated sales and marketing from competitors; and
- Technical support exceeding customer requirements and competitor offerings.
BCG has estimated that the successful execution of the strategy could create up to US$16 per tonne in grower value, offsetting most of the potential price decline.
“The Board is committed to pursuing this enhanced strategic direction. We are now formulating an implementation plan to deliver on the recommendations,” Mr Stewart said.
Full a full copy of the report, please click on the lin, below:
“Maximising Returns to Growers Supplying the Export National Pool" (PDF 2.7 Mb)
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