The AWB Board today announced its preliminary response to the proposed changes in wheat marketing arrangements announced mid-harvest by the Federal Government this week.
AWB Limited Chairman, Mr Brendan Stewart said the Board was unable to provide certainty because of the lack of clarity in the Government’s proposed changes including how the bulk veto would be applied in future.
Mr Stewart said the transitional arrangements for 2006-2007 to shift the bulk veto from AWB International to the Federal Minister for Agriculture introduces a new public interest test that is much wider than the current test in the AWB Constitution of maximising net returns to wheat growers who deliver to the National Pool.
Mr Stewart noted, however, that the Deputy Prime Minister has indicated that the Federal Government does not want to compromise the position of wheat growers that have already delivered to the National Pool. Over 2,500 wheat growers have currently delivered to the 2006-2007 National Pool.
“Our objective is to work with the Government to find ways of helping growers with cash flow requirements that do not compromise the position of growers who have already delivered to the National Pool and those wheat growers who deliver during the rest of the harvest,” Mr Stewart said.
Mr Stewart today reconfirmed previous advice that the Estimated Pool Return (EPR) for the National Pool is volume sensitive.
“The current EPR of $250 per tonne, plus Golden Rewards increments of approximately $10 per tonne, is based on a forecast National Pool volume of four million tonnes,” he said. “If this is not achieved, then the EPR may be materially affected.”
“The EPR already includes the net affect of hedging and foreign exchange transactions entered into by AWB Limited in relation to the National Pool.”
Mr Stewart said company earnings are materially influenced by the volume in the National Pool and AWB Harvest Finance performance. AWB Harvest Finance also has an underwriting exposure to significant reductions in National Pool EPRs.
“AWB will not be in a position to provide any further earnings guidance until the Federal Minister for Agriculture determines whether any bulk permit applications will be approved,” he said.
“We will keep the market informed of any further material developments as and when they occur.”
Media contact: Peter McBride, 03 9209 2174 or 0417 662 451
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