World Grain - January 2007 - 7

from the editor-in-chief

Monopoly power headed
for change in New Year

f any forecast may be made of what lies
ahead in 2007 for the world grain industry,
the most likely is major change in how the
two single-desk selling organizations function.
The prospect that the Australian and Canadian
entities with monopoly powers over marketing
of wheat and other grains will be quite different by year's end than they have operated for
the past three-quarters of a century is hugely
significant. It is comparable to - if not more
important than - the transformation that saw
the end of the monopoly purchasing powers
of those two once pre-eminent grain buyers:
Exportkhleb in the Former Soviet Union and
Ceroilfoods in China.
This year marks the 25th anniversary of
World Grain magazine. Looking back to
those beginning years, when buying by Exportkhleb and Ceroilfoods moved markets
and determined the pace of global grain
trade, and realizing how what was then the
Australian Wheat Board (AWB) and the
Canadian Wheat Board (CWB) played similarly all-powerful roles, it seems as if a historic era for global grain markets is ending,
and that a new chapter is at hand.
While the two grain buyers gave way to the
opening of domestic markets, the changes in
prospects for the monopolies have much different propellants. Competitive sellers have
long criticized the Canadian and Australian
marketing systems, mainly contending that

Chairman
Charles Sosland
Publisher/Managing Director Mark Cornwell
Director of Advertising Sales
Dan Flavin
EDITORIAL STAFF
Editor-in-Chief
Editor
Managing Editor,
World-Grain.com Editor
Markets
European Editor
Contributing Editor
Designer

Morton I. Sosland
Arvin Donley
Meyer Sosland
Melissa Alexander
Chris Lyddon
David McKee
Ryan Alcantara

government participation, no matter how
restrained, gives unfair advantage. Even domestic support for these monopolies, which
had their origins in the Great Depression and
rural populism, has not been universal. The
tipping points this year are quite different,
even though each experienced increasing
challenges to the single-desk concept.
In the case of Canada, it is leadership
of the government by a Conservative party
committed to revamping the CWB that seems
to hold out the likelihood of change. The
government intends to conduct a plebiscite
among prairie growers on the monopoly, but
only on barley. The CWB, which fiercely
opposes the government's moves, has asked
that the grower vote address wheat marketing also. When it comes to the idea of the
CWB sharing marketing power, its chairman
called this an illusion. He said that without
the monopoly, "there is little value in the ongoing existence of the CWB."
The situation in Australia is the fieriest.
This is due to the way AWB Limited, the listed company that assumed the mantle of the
Australian Wheat Board, has exposed itself
to attack for its under-the-table dealings with
the deposed Iraqi dictator, Saddam Hussein, in order to maintain its wheat supplier
position. A commission named by the government, in response to charges that AWB
violated the United Nations' oil-for-food

PUBLISHING STAFF
Vice-Chairman
L. Joshua Sosland
President and
Publishing Director
Mark Sabo
Vice-President and
Chief Financial Officer
Melanie Hepperly
Audience Development
Director
Don Keating
Advertising Manager
Nora Wages
Advertising Materials
Coordinator
Debbie Maniez
Digital Systems Analyst
Marj Potts
Marketing Communications
Manager
Carrie Fluegge
Circulation Manager
Judith Arnone

program provisions, criticized AWB and its
board and leadership in strong terms. Calling
it "a failure in corporate culture," the commission cited the possibilities of criminal
charges being brought against the individuals involved. It did not express an opinion on
whether AWB should be stripped of its monopoly, but noted how the company "has lost
its reputation" and that many customers will
no longer deal with it.
Australia's prime minister has promised
major reform of AWB Limited. The company has tried to take the initiative by proposing that the monopoly power be spun off to
a separate entity, AWB International, owned
by the country's grain farmers. AWB Limited would continue to supply services and
would operate as a competitive merchandiser. Its critics contend such a split is insufficient, that the monopoly power needs to
be removed, and that other grain companies
should be allowed to compete.
"A dominance of self-importance" is one
term used by the commission to attack the
AWB. Some might say that is the inevitable
result of monopoly power. Whatever, it is
certainly creating a new and hopefully happier chapter in how grain is marketed around
the world.
Morton I. Sosland
Editor-in-Chief

WORLD GRAIN (ISSN 0745-8991) Volume 25, issue 1,
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World Grain - January 2007

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