Wheat Marketing in Transition: The Transformation of the Australian Wheat Board

159 Pages·2012·1.06 MB·English

by  Linda Courtenay Botterill (auth.)

Wheat Marketing in Transition
ENVIRONMENT & POLICY
VOLUME 53
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Linda Courtenay Botterill
Wheat Marketing
in Transition
The Transformation of the Australian
Wheat Board
Prof. Linda Courtenay Botterill
Faculty of Business and Government
University of Canberra
Canberra, ACT 2601
Australia
P reface
T he origins of this book lie in the public furore that surrounded revelations in 2005
that Australia’s monopoly wheat exporter, AWB Limited, had been one of the worst
offenders in cooperating with Saddam Hussein’s regime to bypass the sanctions
imposed by the United Nations against Iraq. AWB Limited had been responsible for
the payment of some $US221 million in kickbacks under the humanitarian
component of the ‘Oil-for-Food’ program, which began in 1996 and ran until the
invasion of Iraq by the Coalition of the Willing in 2003. In Australia, the involvement
of AWB Limited became a major political scandal, threatening to end the careers of
senior Cabinet Ministers in the Howard Government and, incidentally, providing a
springboard for the rise of Kevin Rudd to the leadership of the opposition Australian
Labor Party and ultimately to the Prime Ministership.
T he present project was motivated by my strong sense that the reporting of the
scandal, and the political debate around AWB Limited’s actions, was incomplete. It
was fl awed in several important ways. First, the analysis was ahistorical; it was
ignorant of the background to the monopoly wheat exporter’s dealings with Iraq and
its unhappy experience with earlier sanctions against Iraq. Second, it was confused
about the nature of the company at the heart of the story. AWB Limited had its ori-
gins as the statutory Australian Wheat Board which had been established in 1948
but which underwent a process of privatisation in the mid-1990s. The privatised
entity continued to be the benefi ciary of a legislated monopoly over wheat exports,
however, it was not a government agency and its employees were not government
employees at the time the sanction-busting activities took place. Throughout the
public debate in the mid-2000s, this important distinction was lost as media com-
mentators and politicians continued to refer to AWB Limited as the Australian
Wheat Board. Third, the debate did not recognise the essentially secretive nature of
the international wheat trade; a trade which is dominated by several large, privately-
owned companies who play their cards very close to their chests. The main implica-
tion of this characteristic of the wheat trade was the unrealistic expectation that
offi cers within the Department of Foreign Affairs and Trade who were involved in
the management of the sanctions could know whether the price of wheat on a
contract had been infl ated to disguise the payment of kickbacks.
v
vi Preface
T his book seeks to provide a more considered and complete examination of the
Oil-for-Food scandal; but that is only part of the story. The Australian Wheat Board
was a longstanding and well respected institution of Australian rural policy. It out-
lasted many of the Australian Government’s support measures for agriculture which
were steadily dismantled from the 1970s onwards. The Wheat Board enjoyed strong
support from wheatgrowers and it represented important collective values with their
origins in the 1930s. The Australian Wheat Board, and then AWB Limited, was the
institutional embodiment of these values and it is the institution of collective mar-
keting on which this book focuses.
I n the mid-1990s, I was employed as Manager, Strategic Planning at the Grains
Council of Australia, the peak industry body representing Australia’s graingrowers.
In that role I was involved in the early stages of the debate around the privatisation
of the statutory Australian Wheat Board, drafting discussion papers and attending
meetings with growers to discuss the future of the collective marketing arrange-
ments. I was exposed to the passionate attachment many growers felt for the Board
and its role as monopoly exporter. I was also aware of the many challenges that
these collective arrangements were facing in a policy environment which favoured
deregulation and minimal government intervention in markets. The Oil-for-Food
scandal probably accelerated the demise of collective wheat marketing in Australia
but it was arguably inevitable. As the book describes, the industry underwent major
changes in the 1980s, including the loss of the Wheat Board’s monopoly over the
domestic wheat market and the writing was on the wall for the remainder of the
Board’s statutory powers.
T he story of the privatisation of the Australian Wheat Board has not been told
and, as indicated above, the involvement of AWB Limited in the Oil-for-Food scan-
dal has been given only an incomplete treatment to date. I hope that the account that
follows will address this and, as well as fi lling an important gap in the history of
Australian rural policy, will provide lessons for similar arrangements, notably the
Canadian Wheat Board. The story of the Wheat Board highlights the pitfalls of
privatising a monopoly in a way which left important powers with the new body and
blurred the distinction between the government agency and a private company seek-
ing to maximise its profi ts and its share price. As an account of a longstanding
institution from cradle to grave, the book also seeks to fi ll a gap in the historical
institutionalist literature which to date has been focused on institutional birth and
survival. I hope that considering the demise of an institution and the factors which
contributed to that end provide some insights into institutional strategies of repro-
duction; and the need to consider the unintended consequences of apparently suc-
cessful adaptation to change.
I would like to thank the many grains industry insiders who spoke to me both on
and off the record during my research for this book. I am also grateful to the former
Chief Operating Offi cer of the Grains Council of Australia, David Ginns for releas-
ing many of the Council’s internal papers to the Noel Butlin Archives at the
Australian National University; where they were not only accessible to me but are
available to any other researchers interested in this fascinating piece of rural policy
history. There are still many stories buried in those papers waiting to be told.
Preface vii
T here are of course many other people to thank for supporting me as this project
unfolded. My husband and dive buddy Bob is my escape from academia and our
time spent together underwater provides a blissful and precious change of pace and
focus. However, this book is dedicated to my father who, as the most over-qualifi ed
research assistant possible, made an invaluable contribution to this project at a time
when I was feeling slightly overwhelmed and struggling to make progress. He has
shown immense interest in my academic career and is probably unaware how much
that means to me.
Linda Courtenay Botterill
C ontents
1 Introduction ............................................................................................... 1
Analytical Framework ................................................................................. 2
Historical Institutionalism ....................................................................... 3
The Role of Values .................................................................................. 6
Making Rural Policy in Australia ........................................................... 8
The Socio-Political Context ........................................................................ 10
The Book’s Structure .................................................................................. 14
References ................................................................................................... 17
2 Australian Wheat Industry Policy in Context ........................................ 21
Wheat in the Australian Economy .............................................................. 22
Wheat Exports ......................................................................................... 26
The National Contribution ...................................................................... 28
The Rural Policy Paradigm ......................................................................... 29
References ................................................................................................... 31
3 The Birth of Collective Wheat Marketing .............................................. 33
Institutional Development and Change in the Wheat Industry ................... 34
The Nature of the Policy Community ......................................................... 39
The Birth of the Australian Wheat Board ................................................... 41
A Parallel Case: The Establishment of the
Canadian Wheat Board ........................................................................... 44
The International Context ........................................................................... 46
Conclusion .................................................................................................. 48
References ................................................................................................... 49
4 From Orderly Marketing to Deregulation 1948–1988 ........................... 51
A Changing Rural Policy Paradigm ............................................................ 52
Institutional Development and Change ....................................................... 56
The Industries Assistance Commission Reports ..................................... 57
The McColl Royal Commission ............................................................. 59
Reviews of Statutory Marketing ............................................................. 61
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