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

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Presentation on theme: "GCA Grains Week 2002 Food From Thought Brendan Stewart Chairman AWB Limited."— Presentation transcript:

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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