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GCA Grains Week 2002 “Food From Thought”

GCA Grains Week 2002 “Food From Thought”. Brendan Stewart Chairman AWB Limited. 2001/02 Market Review. Good news: Major reduction in major exporter and world stocks Tighter US balance sheet But: Big increase in production and exports from minor exporters Slow US export demand

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GCA Grains Week 2002 “Food From Thought”

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  1. GCA Grains Week 2002 “Food From Thought” Brendan Stewart Chairman AWB Limited

  2. 2001/02 Market Review Good news: • Major reduction in major exporter and world stocks • Tighter US balance sheet But: • Big increase in production and exports from minor exporters • Slow US export demand (slowest sales program since 1976/77)

  3. World Wheat Production and Consumption

  4. China Outlook • Remains the major swing factor • WTO accession – but Government importing will still only occur when stocks are drawn down • Trade Import Forecasts 1.5mmt for 2001/02 3-5mmt for 2002/03 • Uncertainty remains regarding the issuing of their tariffs

  5. 2002/03 Market Outlook Bullish Factors • Lower global stocks (down 10mt to 133mt in 2002/03) • Further tightening of US balance sheet • Potential North American Hard and Spring Wheat Crop Problems • Dryness in Canada • Higher Chinese imports Bearish Factors • Big increase in production in major 5 exporters • Continued competition from non-traditional exporters – particularly India • Greater competition leading to smaller US sales program • Better crops in the Middle East – lower imports

  6. Political Factors Impact Market • Agricultural policies of the US and the EU still affecting the market • Subsidies remove farmers from market signals which leads to oversupply • Oversupply helps depress prices – Chicago Wheat Futures

  7. US & EU Agricultural Protectionism • US and EU Governments pay out more than A$1 billion per day on subsidies for their farmers – Australian treasury cannot compete • US considering new US$170 billion farm bill and EU looking to expand • Must seek for a fairer and more equitable trade system through the WTO • WTO has its own challenges: • EU looking to introduce environmental rules • also using the Cartagena Protocol on Biosafety to establish a system that by-passes WTO to restrict trade

  8. Conclusion • Single Desk system a critical counterpoint for growers against the vagaries and distortions of the world market • Single Desk only provides real value when it represents a complete chain – from inside the farm gate right through to the international customer • Real value comes from having a single grower controlled organisation managing and capturing value along the grain supply chain • AWB constitution commits us to maximise returns for growers who deliver to the Pool – BHCs do not have this commitment • Proposed changes set us on a slippery slope towards deregulation at the growers’ expense

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