Agmates

The executive snouts have been buried well & truly in the trough at AWB over the past two years.

AWB Limited 2008 results show that the company paid $17 million in remuneration to 13 executives plus a further $1,115,481 to the 14 people who served on the board during the year.

AWB Limited has paid more than $15 million in remuneration to two of its Geneva-based officers in the past two years.

According to AWB’s results for 2007-08, former Geneva office manager Thierry Dubois was paid $6.57 million in 2006-07 and $6.75 million the following financial year.

AWB’s financial year runs from October 1st to  September 30th each year. The report shows that Dubois resigned from the company on the 26th of January 2008.

It was a particularly happy  Australia day for Thierry as the AWB board handed him a whopping termination payout cheque for $6,499,523. Thanks for coming Thierry. He had already been paid $254,000 salary for the 15 weeks since the start of the financial year on October 1st 2007, meaning he walked with a massive $6.74 million after 15 weeks, on top of the $6.57 million he’d been paid the previous year.

Not to be out done his replacement Piero Ravano pocketed $2,184,682 for the year including a whopping bonus of $1,764,501.

But apparently there is nothing unusual about this:

AWB corporate affairs general manager Robert Hadler said the payments to Mr Dubois and Mr Ravano were not excessive.

I wonder what  in Roberts mind would be considered excessive?

Newsflash Robert, 99% of wheat farmers and shareholders would not think the payments were excessive either, just bloody obscene.

Ah, at least we know that executive greed is alive and well at AWB.

(Thanks to Agmate Peter)

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This is heart breaking for many farmers who are harvesting a bumper crop follow a number of dismal drought affected wheat crops.

TWO weeks of rain over the northern NSW grain belt have wiped hundreds of millions of dollars off the value of the wheat crop.

“Northern NSW was looking at one of the better crops it has had in a long time,” said AWB general manager of Australian commodities, Stuart Richardson.

“Then, all of a sudden, you have downgrading. It is the worst possible scenario, and it is not just NSW. There are areas of Western Australia that have copped it.

The rain has mostly affected premium Durum wheat  which is used to make pasta. It’s good news though for those farmers with Durum wheat that is not downgraded due to rain:

Typically, Australia exports durum wheat, but the looming shortfall this week pushed the price up close to import parity.

“We have growers who were looking at prices only three or four weeks ago of around $380 (per tonne) delivered Newcastle, yesterday being paid $520 delivered Newcastle,” Mr Martin said.

“Currently durum is commanding a premium above bread wheat of about $200 a tonne; last year it was $300 a tonne, and the year before it was only running at about $30 above bread wheat.

Sssshhheeessshh, who’d be a farmer, you want it to rain sometimes, then not others, then you have to know which variety to grow, where and how to market it, supply & demand dynamics etc.etc.etc – and at the end of the day they have zero control over the one thing that makes their enterprise a success or a failure – The Weather.

That’s a tough Gig.

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Why do farmers have the feeling they’ve been fleeced.

AWB has just released its results for financial year 2008 and they are up a massive 137% on the previous year.

Like fertiliser manufacturer Incitec Pivot and Futuris Elders they can thank farmers for the past years record profit jumps.

AWB reported net profit for the year of $64.3 million, up $37.2 million on fiscal 2007.

AWB’s Landmark Rural Services had delivered its “best ever result” in fiscal 2008, particularly in merchandise and fertiliser, benefiting from increased agricultural activity across the country.

Landmark’s contribution to the result was a whopping $90 million EBITDA up from $54.7 million in FY2007 or $35.3 million / 64%. If you read this presentation you’ll see that:

Merchandise Gross profit grew from $128.1 million to $172.1 million or $44 million / 34.3%. The reason stated on the report was ‘margin management’. i.e. increasing the margins on merchandise sold.

Fertiliser Gross profit grew from $22.9 million to $39.5 million or $16.6 million / 72.5%.

Combined merchandise and Fertiliser Gross profit increased by whopping $60.6 million or 40%.

To give you an idea of how incredible this performance is, the combination of Livestock, real estate and wool gross profit increased by just 2.2% or $2.1 million.

Chemical & Fertiliser manufacturers and retailers have all had boom profits this year.

Sky rocketing farm input costs over the last 12 months seems to have had more to do with big company corporate profit taking than any reason doled up to empty pocketed farmers.

As I’ve said before.

With a handful of large corporates monopolizing the farm supply sector, this year really has been an extreme case of supply and demand. They SUPPLY and then DEMAND you pay what ever price they ask.

Has there ever been a better example than this year of why farmers should support the smaller independent retailers?

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Southern Australian Wheat farmers, particularly those in the Mallee areas are having a poor wheat harvest. Not only are yields way down they are now struggling with marketing their wheat crop.

Lameroo farmer Fred Maynard says with the deregulation of the wheat market, selling this year’s crop is even more of a challenge.

“We’re lost actually, we don’t know where to sell, what to do, anything,” he said.

“It’s just haywire, it’s terrible actually, there’s that many buyers out there, we don’t know who to sell to, they’re not posting price anywhere, it’s very hard to work out what to do.”

I remind readers we warned this would be the problem for farmers when the Wheat market was deregulated.

John Williamson reminds us what it is like living in the Mallee Country.

Mallee Boy

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With Wheat harvest approaching, the Aussie Dollar plunging and world financial markets in meltdown, I was wondering how growers were coping with the marketing of their crops.

So I called one of our wheat grower Agmates Rowell Walton from Condamine Southern QLD and asked him if he’d share his thoughts with us.

Below Rowell gives us his thoughts and has kindly taken some great photos to show us what his crop looks like. Over to you Rowell [pictured below]

Well what are you doing about marketing your wheat?

Asked Steve Truman, a rare being, trying to tell the truth in the media, an idea which has become inconceivable to most.

I am afraid Steve, I am a little bit lost. The world has changed and the relative stability we once knew is gone. People are talking of 1929 and fear is haunting our financial markets. Free market capitalism is being abandoned at a much faster rate than it ever was able to entrench itself.

You would think that a grower who is well trained in selling his unregulated sorghum crop would have no trouble.

In Southern Queensland domestic regulation began to unwind in the early nineties, and export wheat lost its Guaranteed Minimum Price soon after.

It was under the Labor government and we all blamed Labor but in reality it had nothing to do with the colour of the Party, it was a long buried philosophy rising from the dead, be it incrementally. It was ugly and nasty but a new generation could not recognise it.

In that first year of the removal of the GMP our price slumped to an average $58.00 per tonne from pre harvest $175.00. A QRAA bloke sat at my table and told my family that it was unsustainable and that his advice was to sell up and leave. …well thanks mate we said.

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It’s happened and I still can’t quiet believe it. Australian wheat growers have democratically voted away control of the billion dollar export wheat marketer AWB.

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At a meeting of A class shareholders in Melbourne yesterday, 77% of shareholders [A Class - wheat growers] voted in favour of ending the A and B class share structure. Total shareholder participation increased from 27 to 44% during the adjournment period, and just over 50% of all eligible votes were cast”

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Wheat Grower Mark Dywer was at the meeting:

“I attended the final showdown in Melbourne on September 3, strange irony that the day growers gave away their company was the anniversary of the declaration that Australia was at war with Germany in 1939.

I was not at the first meeting that was adjourned ,but was informed that the treatment doled out to the four dissenting Directors yesterday was nothing compared to that of the first meeting of A class shareholders.

I would like to say that those four directors have done a fantastic job in trying to defend the interests of growers against the greed and selfishness of those that supported the “normalisation” of the company.

Xavier Martin, Roger Schirmer, Colin Nichol and Russell Mckenzie. People should remember they’re stand when they are wondering where, in a few years , the critical mass of the industry has gone.

One WA attendee yesterday got up and said, after the final vote was revealed, that he congratulated the board but was wondering if AWB would be able to act as a receiver of last resort in WA as he didn’t think there would be enough cash around to buy the crop!!!

This is the sort of blind stupid ignorance those of us who have opposed the deregulation of export marketing of Wheat have been up against all through this debate, only now when everything is gone are people waking up to the situation we are facing.”

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No doubt Crikey’s anti-farmer journalist Stephen Mayne, chief protagonist for the change will be chuffed with the result.

Who can forget his rantings at the first AWB EGM when urging all A Class shareholders to listen too him and not those farmers who opposed the move.

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“Sadly, agrarian socialism, hairbrained nostalgia and misty eyed agri-politics remains alive and well on some farms if the pathetic contributions from growers such as Jock Munro and Bob Iffla are any guide.”

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But in the end 77% of Australian wheat growers agreed with him.

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Western Australian Farmers Federation calls for AWB – No Vote:

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CONTROL VALUE OF AWB A-CLASS (GROWER) SHARES COULD BE WORTH IN EXCESS OF $100,000,000.

The right to control a company has value, and, in the case of an Australian Securities Exchange Top 200 company, this value is considerable, and in the instance of AWB, is estimated to be worth in excess of $100,000,000 by way of a control premium.

AWB is seeking to convince grower shareholders to give up the value of control for nothing. The cost to AWB B-Class shareholders to gain control will only amount to the cost of the company’s aggressive publicity campaign.

If growers are going to give up control, then they should be adequately rewarded for that loss of control. This should be achieved by negotiating a cash value for their right to control.

The Board of AWB realises that the dual-class shareholding does constrain the company in terms of takeover value and is therefore attempting to consolidate control to a single class of shareholder at minimum cost to the company and its B-Class Shareholders.

WAFarmers members who are AWB A-Class (grower) Shareholders and have not yet voted at AWB’s adjourned Extraordinary General Meeting, now have another opportunity to have their say.

By voting, these members have the opportunity to capture the real value of their A-Class shares.

A-Class (grower) Shareholders who have already voted, need do nothing. A-Class (grower) shareholders have the right to elect the majority of Directors to the Board of AWB Ltd. This bestows the right of control in theoretical terms to growers shareholders.

A-Class (grower) Shareholders should oppose this opportunistic control grab and ensure they ultimately get the real value for their A-Class shares by voting AGAINST the resolution to remove Article 2 from the Constitution.

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All articles on the battle for control of AWB.

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Western Australian wheat grower Mic Fels “Halcyon Downs” Esperance, WA writes:

I encourage wheat growers who haven’t yet voted in AWB’s EGM to do so as a priority.

The No vote was about to prevail by a margin of 0.3%, with 27% participation last week, which means there must have literally been only a handful of votes in it.

YOUR VOTE DOES AND SHOULD COUNT.

Rupert Murdoch’s News corp is often referred to as another dual class shareholder company similar to AWB. Obviously there are some big differences but consider this.

If Rupert wanted to retire and give up his control of Newscorp, would he just tell the board they can take over now and thanks for the memories? I’m pretty sure he would say: here’s control of the company, how about say a million or so shares to compensate me for handing it over?

The farming industry has a sorry track record of giving away what it should trade, are we the only ones playing nice guys in the cold hard commercial world?

We are being ripped off if we just give away control of one of Australia’s top 200 companies. It has a real value, Rupert knows that, Brendan and Gordon definitely know that and we are crazy if we don’t expect that in return for our constitutional right to control AWB.

If the No vote gets up this (the 2nd) time, the AWB board will have to get real and come to us with a decent offer next time. They can’t just keep serving up the same rehashed dud deal. This should be a win-win not a win-lose deal. The B class shareholders will be getting a bit towey about what this is all costing, it is in their (our) interests to wrap this up too.

Some would say it is too hard to work out what it is worth, but it should be a straight negotiation as with any commodity.

We put what we expect on the table, lets say 2000 shares per A class entitlement, and no doubt the board, representing B class shareholders, will come back with an offer reflecting the price they are prepared to pay for the gain they expect to get.

If it is good enough we support the yes vote with over 75% and they get to walk away with control, if not they need to meet the market with a better deal.

The board is not going to like this idea but that’s purely because they will have to buy something they had hoped to steal.

The loyalty “vote no” argument never convinced me, and ironically it seems to be some kind of bizarre loyalty driving A class shareholders to do ” what’s right” for AWB by voting yes, even if they stand to gain nothing from it.

Make no bones about it, if we normalise AWB it will not have any allegiance to us and that is just the real commercial world.

If we want to mix it with the big players we need to grow up a bit and defend our right to a fair share of the pie.

This is no trifle matter, please vote if you haven’t yet done so and I hope I have given you enough reason to vote NO. Feel free to vote Yes next time if we are made a decent offer.

Please forward this to anyone who you think might be interested, our networks are our only ally against the massive publicity machine at AWB.

You need to vote before 2pm Monday 1st September.

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Mic Fels is a delegate on the WAfarmers grains council.
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AWB is fudging the figures claiming that the vote to do away with AWB dual class shareholding is on a knifes edge.

With 15,809 votes submitted from a possible 55,000. The final tally was:

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10346 votes for

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3968 against

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1495 open proxies

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To get the 74.7% total in favor you have to assume that the 1,495 open proxies would all be in favour. This is clearly not the case. If the open proxies fall in the same ratio as the Yes & No votes then the bid falls well short of the 75% threshold at about 72%.

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Interestingly AWB’s cause has been championed by Stephen Mayne.

Mayne (pictured) is an Australian journalist and self-described shareholder activist.

He is also a co founder of the People Power Party. He unsuccessfully stood as a candidate in the Victorian legislative election, 2006.

Mayne also ran as an independent for the seat of Higgins, against incumbent treasurer Peter Costello. He received a primary vote of 1.98 percent (1,615 votes).

Mayne works for crikey.com and he savages the farmers supporting the No vote in his online diatribe today. It must be remembered that Mayne holds just a 120 odd B-Class AWB shares.

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“These four recalcitrants copped an awful shellacking at the meeting [ what Mayne does not mention is that the shellacking was from him - he's a link to a video of his harassing of the 4 dissenting farmer directors] ……

[ Graincorp experience proves Maynes argument is not reality ]

….and proved to be inarticulate advocates supported by a tiny minority of looney supporters [ he is referring to actual wheatgrowers ] from the floor. As a debating exercise it was all one traffic and the recalcitrants [ farmers directors ] were clearly spooked about getting sued [ who could blame them after Maynes outburst ], which almost certainly will happen if the reform program fails and they remain as directors breaching their fiduciary duties to act in the best interests of the company as a whole.

Sadly, agrarian socialism, hairbrained nostalgia and misty eyed agri-politics remains alive and well on some farms if the pathetic contributions from growers such as Jock Munro and Bob Iffla are any guide.”

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To be fair and too his credit Mayne then leaves his farmer bashing to give some actual facts -

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However, the board’s decision to accept a Victorian Farmers Federation proposal to adjourn the A class meeting and effectively extend voting was certainly controversial.

At one level it was changing the goal posts. The proxies suggested that 74.7% [ as we pointed out, this can't be the case, hence note he says suggested not are ] of farmer shares supported the change, which fell fractionally short of the super majority required.

However, given the turnout was only 27% and the support for change was so overwhelming, another two weeks of voting is justified in the circumstances.

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Now back to giving the farmers a final bit of a bash:

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AWB was clearly aware it was a contentious step by the tone of its press release yesterday and the recalcitrants [ read farmers ] are already bleating with the lamentable Bob Iffla quoted in The AFR comparing the situation with Zimbabwe.

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But then he slips back to realism again and makes a couple of insightful observations.

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Whilst at one level, the extension was the equivalent of Jeff Kennett extending voting by two weeks after falling agonisingly short in the 1999 Victorian election, corporate voting in Australia follows the strange path of having the equivalent of the televised leaders debate after 99% of the votes have been cast before the proxy deadline.

This extension means that all voters can now digest the arguments from yesterday’s meeting and make a more fully informed decision.

Based on what we heard yesterday, the reform option really is a no-brainer but the “no” case should at least be given full access to the share register to canvass, plus an ability to appoint scrutineers to look over the shoulder of Computershare as it counts the votes that flow in after this final frenetic round of arm-twisting.

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It is to be assumed that the large wheat growers have already voted. The balance of those to vote will be small to medium wheat growers who will now decide the fate of control of AWB.

Of course the AWB will pull out all stops and throw a mountain of money at trying to influence the growers as they have done up to date. Those activities included -

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• The Notice of Meeting was sent to every A class shareholder and we provided a company call centre number to answer any detailed questions.
• The Managing Director, Gordon Davis, also conducted a national road show of 37 shareholder meetings in all major wheat grower centres to explain the changes and answer any questions in detail.
• Over 2,000 wheat growers attended the meetings – that represents more than 10 per cent of all A class shareholders.
• As part of the information campaign, AWB commissioned research by IPSOS on grower loyalty and issued a number of media releases to ensure widespread coverage in the rural press of the key issues.
• In Western Australia, we also placed advertisements in the rural media quoting grower support for AWB Constitutional reform.
• We did this in WA because it was the only State where a major grains organisation opposed the reforms and we were keen to show that the 2particular grains organisation did not represent all wheat growers on this issue.
• Finally, AWB ran a call campaign by its Grain Marketers and a proxy monitoring company, Radar, to ensure that wheat growers had received the Notice of Meeting and were intending to vote.
• The backing of every farm organization in Australia including – The Grains Council of Australia, The Victorian Farmer Federation, The South Australian Farmers, Agforce, the State farmers federation in Queensland, The WA Grain Group; and The Eastern Wheat Growers.
• Not to mention the backing of – The Australian Shareholders Association, Riskmetrics, Corporate Governance International; and Regnan.
• Not to mention the backing of every mainstream media organization in Australia, Plus internet media companies like Crikey.

The Board is comfortable that this was a comprehensive program at a reasonable cost to B class shareholders to promote the company recommendation supporting Constitutional reform.

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Despite the massive amount of resourses thrown at this by AWB they still could not get 75% A class farmer support.

The majority of the 55,000 A class shareholders are mum and dad investors, and wheat growers, in rural and regional Australia.

Four organizations with bugger all recourses have managed to frustrate the AWB’s move to oust grower control:

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• The WAFarmers Grains Council
• The Wheat Growers Association,
• The Wheat Growers Action Group
• Agmates Rural Media

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What is now clear is that over the next 11 days, independent Australian mum and dad grain growers will now decide if the AWB remains under grower control. Just the way it should be.

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In an extraordinary move AWB directors today extended the time AWB A class shareholders have to vote on the resolution to remove the dual class shareholding and with it grower control of the board.

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“AWB Chairman Brendan Stewart ( pictured above ) said 74.7 per cent of A class shareholders who had voted prior to the meeting were in favour of Constitutional reform at this stage but only 27 per cent of A class shareholders had voted.

The AWB Constitution requires at least 75 per cent of A class shareholders who vote to vote in favour before any change can occur.

Given the importance of this vote, the time for A class shareholders to vote has been extended to ensure that there is sufficient time and opportunity to raise participation and secure a decisive result.”

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Thats right folks, you read it right just 27% of A Class shareholders (wheat growers) bothered too vote on the critical issue of who should control they’re $1Billion dollar company.

This is despite the board of AWB conducting a series of grower information seminars in regional areas across Australia. The Wheat Growers Action Group had also been extremely active in lobbying their fellow wheat growers to vote against the changes.

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Update 22/08/2008 @ 11.30am -

From a disgruntled A Class Shareholder:

“What a disgraceful meeting, culminating with lies and distortions.

The main resolution was to get rid of A class or grower shares, and the constitution requires 75% to carry the resolution.

10346 votes cast for the resolution
3968 against
1495 open proxies were cast,

If you assume all open proxies are in favour of the resolution and do not take the A class votes at the meeting, convened for the purpose of voting then you can obtain the spin necessary to assert 74.7% in favour. This still looses the resolution.

None of the A class shares in the room were counted even though people had traveled from all over Australia with hands full of them.

Then as if to say we have lost the vote ( the second time) but we will not accept the outcome the Chairman adjourns the meeting, one can only assume to see if he can find a way to circumvent the legal constitution.

What remains is to see what legal advice has to say about the behaviour of the Chairman. Perhaps he has broken the law/constitution and we will see the authorities pursue him so the company’s voters can receive justice.

And to suggest the 4 board members who support the position verified by the votes on the day as per the constitution are not at risk is to confirm the chairman’s ability to distort the truth, he has in fact seen the written material which is the reason for the caution reflected in the answers given at the meeting.

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Update 22/08/2008 @ 7.30pm

Mum & Dad Farmers will Decide who Controls AWB

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See all articles on the fight for control of AWB

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