[Kabar-indonesia] AFR: Indonesians demand AWB loses monopoly

[Joyo at aol.com]

Australian Financial Review
Tuesday, November 7, 2006

Indonesians demand AWB loses monopoly

Morgan Mellish, Jakarta

Some of the biggest buyers of Australian wheat, Indonesian
flour mills, are threatening to source more of their $1.3
billion of annual needs elsewhere unless the Howard
government removes the single desk monopoly from AWB.

The Indonesian Flour Mills Association has written to
federal Agriculture Minister Peter McGauran warning that
unless its producers get better access, they will start
buying more grain from markets such as the United States,
the European Union and Canada.

In its letter to Mr McGauran, the association has demanded
Canberra either dismantle AWB's wheat export monopoly or
force Australian flour producers - who can now deal directly
with farmers - to buy through AWB.

"We feel the single desk wheat purchase policy has created
an unlevel playing field between the Indonesian wheat flour
industry and the Australian wheat flour manufacturers that
are exporting to Indonesia," the association's letter says.

"If Australian wheat, due to the current wheat policy,
remains unfair, then we don't have any other alternative
than looking for other wheat sources and to reduce further
AWB's market share [of Indonesian wheat imports] of 60 per
cent."

According to the association, Indonesia last year bought 4.7
million tonnes of wheat worth just under $1.3 billion on the
world market. Of that, 2.7 million tonnes worth $729 million
- a market share close to 60 per cent - came from Australia.
The rest came from Canada, the US and elsewhere.

Franciscus Welirang - who chairs the association and is CEO
of Bogasari, one of the biggest flour millers in the world -
said Australian producers could buy their wheat from farmers
up to $US15 ($20) a tonne cheaper than the price charged to
overseas buyers by AWB.

"We have to compete against Australian flour and they can
get a lower wheat price [in Australia]," he told The
Australian Financial Review. "We've complained about that.
It's unfair."

The threat by the association, which is one of AWB's biggest
customers, has added to pressure on the government to reform
AWB, which is embroiled in a major scandal over $290 million
in kickbacks paid to the regime of former Iraqi dictator
Saddam Hussein.

The commission inquiring into the kickbacks, headed by
former judge Terence Cole, is due to report to the federal
government on November 24.

The Indonesian threat follows a warning in September from
the World Trade Organisation that Australia should consider
changing its wheat export monopoly if it wanted to convince
other countries to cut their damaging export subsidies. The
European Union and the US have also argued the monopoly
gives Australian wheat exporters an unfair advantage.

Mr McGauran, who met Indonesian flour producers in August,
said the government would review the single-desk policy
after the Cole inquiry into the kickbacks scandal handed
down its findings later this month.

"Until then, the Australian government stands behind the
wheat export single desk, which it considers benefits
Australian wheat growers and the nation's export
performance," Mr McGauran said.

An AWB spokesperson said it was not surprising the
Indonesians were trying to buy wheat more cheaply but the
AWB's role was to maximise returns to farmers.

In a separate move, the association has lodged another anti-
dumping complaint against Australia's largest flour
exporter, Manildra Group, with Indonesia's Ministry of
Trade.

The move in effect pits Bogasari, which has 70 per cent of
the Indonesian flour market, against Manildra, which is a
major Liberal donor and is expanding its flour imports into
Australia's northern neighbour.

Mr Franciscus accused Manildra of using its political
connections to the Howard government to bully Indonesia.
"Manildra is very strong politically," he said.

"I think they threaten Indonesia. When we did anti-dumping
[actions in the past], we proved everything, but the
Indonesian government has no guts."

Manildra general manager Peter Simpson said: "We've
undergone quite a few dumping actions brought about by
Bogasari which have never been proved true.

"We've had the audit inspectors, or what ever you call them,
come down and we've had no problems at all. Like anyone, I
guess they're trying to protect their market any way they
can."

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Joyo Indonesia News Service
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