In 2005 the United Nations oil-for-food scandal made international headlines and destroyed Australia’s monopoly wheat export system — known as the single desk.
At the heart of the scandal was AWB Limited, which was accused of paying $300 million in kickbacks to Saddam Hussein’s regime through a Jordanian trucking company.
History of AWB Limited
- AWB was founded in the 1930s to regulate the wheat market after the Great Depression
- It was a government body until 1999, known as the Australian Wheat Board
- AWB then became a private company owned by wheat growers, before being sold in 2010
The controversy sparked a fierce debate over the single desk system and ultimately led to its destruction, with this week marking 10 years since deregulation.
Ron Storey was a senior executive with AWB for nearly 20 years, before leaving in 2000 to start his own company.
“I think it was traumatic, to be honest; I think the growers were justifiably upset,” he said.
“There was a lot of trauma, a lot of argument, a lot of bitterness, some people wanted the change and others were fighting to retain what they believed was a preferred system for them.”
What was the single desk?
The single desk was the monopoly AWB had over Australia’s wheat exports, where growers’ produce was pooled together and sold in bulk to international markets.
Colin Nicholl says the single desk gave Australia an advantage in international wheat markets.
Supplied: Colin Nicholl
“AWB made all the decisions for the farmers, so the timing of sale whether we would sell pre-harvest, at harvest, post-harvest, what grain to hold, what grain to sell, what grades to sell,” Mr Storey said.
“That was fundamentally the difference back then compared to what we’ve got today, where individual farmers have control over those decisions themselves.”
Western Australian farmer Colin Nicholl was on the WA Farmers Federation Grains Council at the time of deregulation.
“It was the following of the enquiries that took place that virtually started to drive the nails into the single desk,” he said.
The Hyden farmer said the single desk system allowed AWB to get the most out of overseas markets.
“It also enabled AWB to promote the sale and use of Australian grain overseas and it did that very well,” he said.
End of an era
At the time, the scandal was described in dollar terms as the biggest corruption of its kind in the nation’s history.
AWB avoided criminal charges for its role in the scandal but the company was left in upheaval.
It prompted the Cole Inquiry, which found in 2006 that AWB paid $300 million in kickbacks to Hussein’s regime.
Gordon Davis took over as chairman of AWB during the Cole enquiry.
“There was a whole series of elements that came together, not just oil-for-food — the market structure, the export task falling increasingly on SA and WA, the tactical impact of the 2006 drought.” he said.
Mr Davis said after the decision had been made to abolish the single desk, AWB did not stand in the way.
“We undertook that we would not do anything that would harm an orderly transition to the new arrangements the Government had flagged they were going to introduce,” he said.
Grain analyst with Mecardo, Andrew Whitelaw said after the market was deregulated it opened up Australia to foreign wheat export companies.
“We suddenly went from having one exporting company, to I think at one point there were 30 registered exporters for bulk,” he said.
South-west Victorian farmer Nick Shady said that was the worst part of the change.
“Part of what we’ve seen is security of payment in the grain market since then hasn’t been good, you’ve had a lot of companies come and go and farmers being unpaid,” he said.
10-year report card
But Andrew Whitelaw said it was impossible to say which system would have been better.
“It’s almost impossible to analyse from a numbers point of view whether it was a good thing or a bad thing, because we can’t really look at it in hindsight, you can’t test any hypotheses because you can’t have both running in comparison,” he said.
“But I think it has been a case that growers have had to spend longer looking at markets, and it’s become a bigger activity and not necessarily an activity the average farmer enjoys doing.”
Victorian farmer Nick Shady isn’t too optimistic about the future of Australia’s wheat market.
While most farmers have come on board some, like WA farmer Colin Nicholl, still believe the single desk was a better system.
“It’s going to be very difficult to bring it back because there are so many forces that are against it,” Mr Nicholl said.