Australia's national wheat exporter AWB Ltd has so successfully diversified that some have begun to wonder if it's preparing for an eventual end to its controversial export monopoly.
Reporting stronger-than-expected profits for the year to September 30, the former Australian Wheat Board revealed this week that wheat exports provide only 20 percent of group profits.
Five years ago, when the Australian Wheat Board was privatised, its only two businesses were the wheat export monopoly and domestic grains trading.
Now the Landmark rural trading and services division, which AWB acquired in September 2003, contributes twice as much to the bottom line as wheat exports.
AWB is also into ship chartering, runs 432 shop-front branches offering rural goods and services, manages 65,000 head of cattle, has just purchased a A$1.58 billion ($1.17 billion) rural loan book, and is moving further into real estate and quasi-banking.
AWB chief Andrew Lindberg was circumspect when questioned at a briefing for reporters and analysts on Wednesday on whether he was preparing an exit strategy from the government-granted wheat export monopoly, known as the "single desk".
"In any business that's subject to regulation, there's always risk," Lindberg said when asked if AWB's diversification moves reflected concerns it may lose the monopoly.
"It's just prudent that we continue to diversify our income stream and build a strong business. But we don't have any expectations that there will be changes in the near or medium-term in relation to the single desk," Lindberg said.
The next government review of the desk, under the national competition policy, will not be held until 2010, after official reviews in 2000 and 2004 and an annual appraisal of AWB's performance by the government panel, the Wheat Export Authority.
But Lindberg acknowledged this week that the monopoly would "always be an issue". It has been at the centre of a storm for years, under attack from rival wheat exporter the United States, which claims it is anti-competitive, and from private traders who want a piece of Australia's wheat export trade.
The Australian government has so far stood by the monopoly, which is strongly supported by Australia's 35,000 wheat growers, who farm in sensitive electorates that can sway elections.
But export monopolies for barley, sugar, rice and other farm commodities have been partly dismantled or watered down in recent years, in line with the national competition policy of the government of Prime Minister John Howard.
Lindbergh on Wednesday acknowledged that AWB's income from the wheat export monopoly was expected to continue to decline as a proportion of group earnings.
AWB would not lessen its focus on its monopoly of Australian wheat exports, Lindbergh said. But he also revealed AWB has its eye on becoming a major trader of Black Sea and Latin American wheat, in competition with private global grains trading giants such as the Cargill group.
AWB in recent years has already made comparatively cautious moves to establish international trading centres in Geneva and New Delhi, to trade 3-4 million tonnes of grains in 2005.
New AWB centres planned for Eastern Europe and Latin America were seen trading up to 10 million tonnes of low-cost Black Sea, Argentinean or Brazilian wheat, in around five years time.
This would be a significant proportion of the 16-17 million tonnes of Australian wheat exported by AWB in most years. Meanwhile, AWB continues to express confidence it will be a major wheat supplier to Iraq, and that controversy over its sales during Saddam Hussein's years will not affect exports.
But difficulties abound. It was revealed this week that AWB is still negotiating with Iraq over who will pay the demurrage on three ships carrying Australian wheat that were left unloaded off Umm Quasar port for six weeks this year, at a cost of about A$100,000 a day.
While Australia and the United States competed for sales, Iraq insisted for weeks that the wheat be contaminated with iron dust. Tests eventually showed it was not.