AWB has slashed the base fee for managing the 2006-2007 National Pool by 40 per cent to $39.5 million as part of the new business model to accommodate swings in seasonal conditions such as the current drought.
The benefits to growers of this and other initiatives will be:
- Improved National Pool Equities
- Lower administration costs in this and future years
- Greater transparency of cost structures within AWB
- A simpler operating model.
The Chairman of AWB International, Mr Donges said AWB International is focused on maximising net returns to wheat growers that contribute to the National Pool and minimising administrative costs, especially during a drought year.
“The lower administrative cost has been progressively factored into the Estimated Pool Returns that have been announced to maximise net returns to wheat growers participating in this year’s National Pool,” Mr Donges said.
The National Pool is anticipating a total export pool of approximately four million tonnes this harvest to meet core long-standing international customer demand. Based on this tonnage the service fee will be just under $10 a tonne. AWB Limited has agreed to cap its potential to any out-performance-fee to $2/t for the 2006-2007 National Pool. This reflects a change in the structure of the performance fee arrangement, again recognising the impact of drought on national pool participants.
“We will release further details of the revised services agreement once negotiations are completed. The key terms and conditions of the agreement will be released when it is finalised,” Mr Donges said.
The Managing Director of AWB Limited, Mr Gordon Davis, said the lower administration cost of managing the National Pool would be sustained in future years.
“AWB Limited will continue to cut its cloth to meet the circumstances of the drought, and my objective is to keep administrative costs at the new lower level and if possible reduce administrative costs even further,” Mr Davis said.
“The management team at AWB Limited is developing plans to identify further cost savings required to meet the new administrative cost agreed with AWB International,” Mr Davis said.
This announcement follows several initiatives by AWB to protect grower entitlements from unanticipated liabilities including costs arising from the Oil for Food Inquiry and any assessments by the Australian Taxation Office related to wheat sold by AWB International under the United Nations Oil for Food Program.