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There has been increasing media and industry speculation regarding the services agreement between AWB Limited (AWBL) and AWB International (AWBI) for the operation and management of the Single Desk.
AWBI Chairman Ian Donges said the only contentious issue appears to be a break fee clause in the services agreement.
“The services agreement reflects normal commercial business practices and the current break fee clause is designed to reimburse AWBL for investments made in pool management systems,” said Mr Donges.
“The clause was put in place to ensure AWBL increased investment in the National Pool over the long term. Examples of the long term investments made by AWBL which have enhanced the Single Desk include Shaping the Future, Golden Rewards, Premium Choice Varieties, IT systems and staff.
“The clause ensures that AWBL can recover some of its fixed costs on these investments if the agreement ends. It also provides incentive to AWBL to continue to invest in systems and services which ultimately benefit pool participants,” said Mr Donges.
Mr Donges said AWBI will be renegotiating the services agreement with AWBL to reflect the recent corporate changes to increase the separation between AWBI and AWBL.
“The services agreement will have all appropriate legal checks and safeguards as part of functional separation between AWBI and AWBL and once the new services agreement is completed it will be publicly released,” said Mr Donges.
“Any break fee clause would be negotiated by AWBI and AWBL Board and would take into account the Constitutional requirement to maximise returns to growers,” said Mr Donges.
As previously announced, AWB has implemented a number of corporate changes to increase the separation between AWBI and AWBL as part of its response to the Williams Review.
Once completed the new services agreement will take effect from 1 October 2006.
For further information contact Peter McBride, 03 9209 2174 or 0417 662 451