Fed: US wheat sales to Iraq soar as AWB ban continues

AAP General News (Australia)
08-07-2006
Fed: US wheat sales to Iraq soar as AWB ban continues

By Robin Pash

CANBERRA, Aug 7 AAP - The United States has "reclaimed" the Iraq wheat market, securing
three quarters of the country's imports while Australia's grain trade with Baghdad flounders.

Embattled monopoly wheat exporter AWB remains locked out of the lucrative market, with
Iraq maintaining its trading ban on AWB while the company faces an inquiry into the kickbacks
it paid to the former regime of Saddam Hussein.

Iraq has consistently been one of Australia's biggest markets since AWB first began
shipments to the country in the 1950s, but exports have fallen dramatically since the
UN's oil-for-food program ended with the 2003 invasion by US-led forces.

US Agriculture Secretary Mike Johanns, who has just completed a visit to Baghdad, says
America has won 72 per cent of the country's market share for wheat over the last year.

Figures from his department show American exporters shipped 2.3 million tonnes of wheat
to the country in 2005-06.

"So Iraq is now the third largest purchaser of US wheat," Mr Johanns said.

"Every indication is that there's satisfaction with that, that they're pleased with
the purchases from the United States."

The US did not supply wheat under the corruption-ridden United Nations oil-for-food
program for Iraq that ran between December 1996 and March 2003.

AWB shipped 12 million tonnes of grain to Iraq and was the program's biggest supplier
of food, agreeing to the corrupt government's demands for $290 million in illicit payments
in the process.

US wheat sales to Iraq resumed in 2003-04 with shipments of 247,000 tonnes, increasing
to 490,000 tonnes in 2004-05, then a huge leap to 2.33 million tonnes last financial year.

AWB shipped 715,000 tonnes of wheat to Iraq in 2005-06.

Mr Johanns said he was confident of strong, ongoing sales to the country.

"It's a market that we have successfully reclaimed in the last year, and I'm optimistic
about additional sales in the future."

Iraq usually imports about three million tonnes of wheat a year, with Australian product
accounting for up to two thirds of that figure.

Baghdad suspended trade with AWB - although not with Australia - in February as details
of AWB's illicit payments to Saddam's government emerged at the Cole inquiry into the
affair.

AWB then reluctantly gave up its legislated right to veto bulk exports by other companies
to allow Australia's only grain sale to Iraq for 2006 to go ahead.

Wheat Australia, a consortium made up of grain handlers CBH, GrainCorp and ABB, began
shipping the 350,000 tonnes of wheat to the Iraqi port of Umm Qasr last month.

But the group could find it tough to make another sale when Iraq announces its next
tender, with AWB unlikely to relax its veto again.

Australia's wheat exports to Iraq over the last decade have been a mixed bag, but have
generally exceeded one million tonnes.

AWB said it always expected to face increased competition from the US once the oil-for-food
program ended.

"We expected (Iraq) to be a fully contestible, commercial market going forward," spokesman
Peter McBride said.

A spokesman for Trade Minister Mark Vaile said the US export figures were not surprising
given Iraq's trading ban on AWB.

Labor accused the government of adding to the problem by mishandling the AWB scandal.

AAP rp/sb/sp

KEYWORD: IRAQ WHEAT (WITH FACTBOX)

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