supply chain - AWB Limited

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Matthew HolgateState Grain Manager, Victoria (left)As the manager of Australia’s Single Desk wheatmarketing system, AWB places great importance oncommunicating and consulting with growers to improvetheir AWB National Pool returns.During the life of the 2003–04 AWB National Pool,several hundred wheat growers from around Australiatoured AWB’s head office in Melbourne to see firsthandhow the marketing of the Australian wheat cropis carried out on their behalf.AWB has a strong on-the-ground presence in ruraland regional areas, with an extensive network ofspecialist grain marketers located across the wheatbelt.Some 375 grower meetings were held during the2003-04 Pool life where key production and marketinginformation was presented and discussed.GOLDEN REWARDSGolden Rewards, the most sophisticated paymentsystem for wheat producers anywhere in the world,continues to play a pivotal role in AWB’s interaction withgrowers by improving wheat quality and Pool returns.Golden Rewards is designed to provide accurate marketsignals to Australia’s grain growers through a paymentsystem that rewards growers for delivering the types ofwheat that international customers demand. Thisinnovative system eliminates ‘cliff-face’ pricing so thereare no severe penalties for growers if their wheat narrowlymisses the mark on one of the designated qualityattributes.When the AWB National Pool first introduced thispayment system in 2000, Golden Rewards incorporatedpayment scales for protein and screenings levels. In2002, it evolved to include payment scales for moisture,in recognition of the fact that dryness in wheat is anattribute valued by processors. Now, growers arerewarded every time they improve the value of the cropby increasing protein levels or reducing screenings andmoisture.The value of Golden Rewards for wheat growers isdemonstrated by the average payment for APW in the2003–04 AWB National Pool. While the APW pay-gradewas finalised at $233.06 per tonne, on average, growersdelivering to this grade received an additional $8.97 pertonne in Golden Rewards quality payments.By specific major pay-grade, the average GoldenRewards premiums were:APH – $12.97 per tonneAHAPWASW– $6.06 per tonne– $8.97 per tonne– $6.85 per tonneASWN – $7.04 per tonneAPDR– $13.04 per tonneAWB regularly reviews Golden Rewards to improvemarket signals to growers and thereby the overall qualityof the Australian crop.In mid-October 2004, AWB announced the next evolutionof the Golden Rewards system. From the 2005-06harvest, under a system known as ‘Premium ChoiceVarieties’, growers will be paid premiums over theEstimated Pool Return for particular varieties that improvethe overall quality of the Australian crop profile.GRAIN MARKETING NETWORKAWB understands a regional presence with specialistgrain marketing staff located throughout the Australianwheat-belt, is critical to its relationship with growers.A strong on-the-ground presence in rural and regionalAustralia allows AWB to listen to growers about theirneeds, as well as provide them with the most up-to-datemarket information and the latest product and serviceadvice relating to the AWB National Pool.During the life of the 2003-04 Pool, as part of theintegration of AWB Limited and the 400-plus Landmarkoffices, AWB strengthened its Grain Marketing division.There are now 50 Grain Marketers located in Landmarkbranches in grain growing areas across the country.Collectively, these AWB Grain Marketers conducted 375grower meetings during the life of the 2003-04 AWBNational Pool, providing key information such as marketsignals, receival standards, AWB wheat marketingoptions and how the AWB National Pool works, alongwith local liaison for initiatives such as grower silocommittees.The major AWB National Pool grower meetings for theyear were the four AWB National Pool Forums held atEsperance and Morawa in Western Australia, Cummins inSouth Australia and Wagga Wagga in New South Wales.More than 700 growers attended the Pool Forums.23
At these forums, AWB senior management discussedand received feedback on AWB’s long-term strategicplan, the market outlook and crop shaping information.In addition, growers had the opportunity to listen to andinteract with Mr Jimmy Chang of Federal Flour Mills inMalaysia, getting first-hand feedback from a majorcustomer of Australian wheat.CONSULTATION WITH GROWERSAside from locally based Grain Marketers, AWB has anumber of other key initiatives to improve two-waycommunications with growers.During the life of the 2003-04 AWB National Pool, therewas an extensive grower visitation program to AWB’shead office in Melbourne, with 450 growers from acrossAustralia briefed on AWBI strategy and National PoolOperations.In recognition of the need to nurture future leadership inthe industry, AWB also held its inaugural Young Leaders’Conference in Melbourne in August 2004.Attended by around 90 young growers from acrossregional Australia, the Conference was organised todevelop the capabilities of the next generation of leadersfor the grains industry and Australian agriculture ingeneral. A program was designed to allow the younggrowers to develop their knowledge and skills and helpestablish relationship networks. The impressive quantityand quality of the applications received to attend theconference reflected the strong interest among youngrural Australians for such an event.AWB’s consultation program with the Grains Council ofAustralia (GCA) and its state affiliates on all facets of theAWB National Pool continued in 2003-04. With at leastthree GCA meetings held at AWB’s Melbourne officeeach year, and regular monthly telephone conferenceswith GCA state affiliate grower groups, this consultationis extensive.The AWB Managing Director’s Roundtable and theregionally based Grower Consultative Groups have againbeen a valuable resource to AWB. These forums playeda key role in providing direction for the company andfeedback on its operations. In particular, they played alarge role in developing the AWBI strategic plan ‘Shapingthe Future’.In February 2004, around 180 growers from theConsultative Groups and the Roundtable met in Canberrafor an AWB Single Desk Summit where the National Poolstrategic plan was discussed and refined.Grower support for AWB’s management of the SingleDesk wheat marketing system remained strongthroughout 2003–04, as did support for the Single DeskDISTRIBUTION PROFILE OF 2003-04 AWB NATIONAL POOL EQUITY1200Cash on hand (millions of dollars)10008006004002000-200-400Feb 2003Mar 2003Apr 2003May 2003Jun 2003Jul 2003Aug 2003Sep 2003Oct 2003Nov 2003Dec 2003Jan 2004Feb 2004Mar 20047 Apr 2004Apr 2004May 2004Jun 20042 Jul 2004Jul 2004Aug 2004Sep 20041 Oct 2004Oct 2004Nov 2004Dec 20045 Jan 2004Jan 2005Feb 2005Mar 200521 Apr 2005Apr 2005May 2005This shows how the cashflow of the 2003–04 AWB National Pool was distributed over the life of the Pool. There were five distributions to growers on 7 April 2004, 2 July 2004, 1 October 2004, 5 January 2005 and 21 April 2005. 24
Page 1 and 2: SUPPLY CHAINImproving Efficiency an
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