GCA Grains Week 2002

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 A1
  billion per day on subsidies for their farmers
  Australian treasury cannot compete
• US considering new US170 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