New Australian wheat exporters are negotiating prices to buy wheat from AWB Ltd and will then negotiate sale prices for export to Iraq, said a spokesman for three companies appointed to deal with Iraq.
The three companies, which will trade Australian wheat to Iraq while Baghdad suspends business with monopoly exporter AWB, are now forming a joint venture to run the trade, he said. Pricing negotiations with the former Australian Wheat Board AWB had begun and would continue in coming days, Mario Falchoni, spokesman for GrainCorp Ltd, said.
Eastern grains handler and trader GrainCorp, South Australian barley exporter ABB Grain Ltd, and unlisted Western Australian grains handler and exporter Co-operative Bulk Handling, were last on Friday approved by the Australian government to export wheat to Iraq during Baghdad's suspension of business with AWB.
The Iraqi Grain Board last month froze business dealings with AWB while an Australian government-appointed inquiry, headed by Supreme Court judge Terence Cole, investigates whether the company broke Australian laws in wheat dealings with Iraq.
The inquiry was to have reported by March 31, but Prime Minister John Howard said on Sunday that there would be an extension, "probably until the end of May or June". The inquiry followed a United Nations report last October, which accused AWB of providing up to $222 million in kickbacks to the former Iraqi government of Saddam Hussein.
Baghdad's freeze stopped AWB from bidding in a current tender for 1.5 million tonnes of wheat.
A lightning visit to Iraq by Australian Deputy Prime Minister Mark Vaile a week ago secured agreement by Baghdad to buy 350,000 tonnes of Australian wheat, provided it was not supplied by AWB.
GrainCorp, ABB Grain and CBH said on Friday they would acquire the wheat from AWB's export pool, for sale to Iraq. The head of the Iraqi Grain Board, Khalil Asia, told Reuters in Baghdad on Sunday that prices for the 350,000 tonnes of Australian wheat would be decided later that day. "We're not at a position where anything's been finalised. The best-case scenario is that'll happen by the end of this week. It'll be a matter of days," Falchoni told Reuters on Monday. It was not expected that discount prices could be paid to AWB for wheat from the pool: "I don't think they'll be looking to do us any favours," Falchoni said.
But the financial return to the group of three would need to account for its responsibility for the wheat between Australia and Iraq, and that would need to be reflected in prices negotiated with both AWB and with the Iraqi Grain Board, he said.
Negotiations had already started with AWB and would continue. Australia's largest farmer group, the New South Wales Farmers Association, has expressed concern that a one-off deal with Iraq outside AWB's monopoly could erode the "single desk".
"We're not running a political agenda, it's a commercial agenda, and we're filling a gap to make sure we help retain those overseas markets," Falchoni said on Monday.
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