Wheat farmers in price dilemma

DROUGHT-stricken wheat farmers will tomorrow get an offer they can't possibly refuse - except that it would be illegal to accept it.

DROUGHT-stricken wheat farmers will tomorrow get an offer they can't possibly refuse - except that it would be illegal to accept it.

The Australian understands that bulk handler CBH will tomorrow offer wheat farmers about $270 a tonne for their wheat, to meet soaring demand in Indonesia and Malaysia.

But the offer cannot be accepted. Wheat farmers can only sell to AWB, which yesterday announced that its pool price would be somewhere between $245 and $255 a tonne.

The attack on AWB's prices comes as the latest plan to get Australian wheat back into the lucrative Iraq market collapses. It is understood that Wheat Australia - a consortium formed to sell wheat to Iraq since the war-torn country will not deal with AWB after the kickbacks-to-Saddam scam - last week tried to cut a deal to sell wheat to Iraq at $211 a tonne. Iraq baulked at the price. When it returned to the table, the world prices had rocketed.

AWB then refused to supply the wheat. It is not known what Wheat Australia proposed paying Australian farmers.

AWB spokesman Peter McBride said the exporter would not have been acting in the best interests of farmers if the deal had gone ahead.

"In light of the reduced supply because of the drought, and current domestic and international wheat price, AWB (was) not prepared to sell at that price," he said.

AWB chairman Ian Donges said the move by CBH was designed to "undermine the single desk" by pulling wheat out of the national pool.

"It aims to cherry-pick selected international markets to benefit some West Australian wheat growers at the expense of all pool participants," Mr Donges said.

The Australian understands that CBH is planning to offer to buy half the estimated five million tonnes of wheat grown in Western Australia this year and will then apply to the Wheat Export Authority for a licence to export two million tonnes to Indonesia.

Wheat Australia had lodged an application to sell another 500,000 tonnes to Iraq.

By law, the WEA must refer the applications to monopoly exporter AWB, which can refuse them.

AWB is resisting pressure to relax its monopoly. It reluctantly agreed not to use its veto in June, allowing Wheat Australia to sell $90million worth of wheat to Iraq.

It is understood the Government now wants AWB to agree - in writing - not to exercise its veto for this year's drought-reduced harvest.

The Government is not keen to make legislative changes to the Wheat Marketing Act, since it would be difficult, if not impossible, to bring the single desk back into existence once it has gone.

CBH chief executive Imre Mencshelyi, who is also chairman of Wheat Australia, would not say how much his company was prepared to pay for Australian wheat.

"We want to offer farmers an alternative," he said. "Farmers will vote with their actions. If they deliver to us, that's an indication that they want an alternative." He said AWB would have to consider the deal "because two million tonnes of wheat is not a hatful of wheat, it's a considerable amount and if there is a price difference, that's important".