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Annex 5: Major state trading companies - food exports


Australia

The Australian Wheat Board Ltd. (AWB) is the country’s major national grain marketing organization and one of the world's largest wheat management and marketing companies. Its core business function is to serve the needs of Australian grain growers, and specifically wheat growers, by marketing and financing their grain. In particular, AWB has responsibility for the management and marketing of all Australian export bulk wheat. In 1999, the government guarantees for AWB operations were lifted, and AWB became a commercial entity, although with a monopoly on wheat exports. AWB also competes in the trading and management of non-wheat grains including barley, sorghum, oilseeds and pulses. The Board can provide credit to buyers, normally up to 360 days.

Around 90 percent of the grain managed by AWB is wheat, and its wheat pools are a significant contribution to the Australian economy, accounting for around 3 percent of the total value of Australia's exports and about 12 percent of Australia's total farm exports.

The Rice Marketing Board for the State of New South Wales has a monopoly on rice exports in Australia. The Board provides trade finance through the operation of a Growers Capital Equity Roll Over Scheme, for procurement and storage of rice. It has appointed SunRice, previously know as the Ricegrowers’ Co-operative Limited, as its’ agent to operate those facilities - in local purchases and exports.

Cambodia

The Green Trade Company is a public company involved in the trade of foodstuffs and other commodities. It owns rice mills and warehouses, and is involved in export/import trade. It also manages food-security stocks, and is involved in market operations to maintain price stability. The company is under the technical supervision of the Ministry of Commerce and under the financial supervision of the Ministry of Economic and Finance.

Canada

The Canadian Wheat Board (CWB) is the world’s largest wheat exporter. CWB is a farmer-controlled corporation created under Canadian federal legislation that markets wheat and barley through a “single desk” on behalf of farmers located in Manitoba, Saskatchewan, Alberta and the grain growing region of British Columbia. Thus, CWB pools grain from the producers in Western Canada and exports it on their behalf; the total earnings (plus government subsidies) are distributed among the producer pro rata their deliveries (this is known as a "price pool"). In 1999/2000, the CWB handled 16.4 million tonnes of wheat, and 7.2 million tonnes of other grains. CWB accounted for some 18 percent of world exports. The CWB can either deal directly with the buyer or with grain companies which act on its behalf. There are 24 accredited exporters and two international exporters which purchase grains from the Board for resale to customers. The customer decides whether to deal directly with the CWB or to use one of these private grain companies.

The most common payment mechanisms used are:

While most of the CWB’s sales are paid cash, some 5 percent to 15 percent is on credit. In 2001/2002, credit sales stood at C$521 million, 12 percent of total sales, down from C$703 million the previous year.[23] If it provides direct credits, the CWB borrows the money from the market (through issuing commercial paper and medium-term notes, rather than through bank borrowing), lends it to the client (at a mark-up), and is itself responsible for obtaining reimbursement. If it fails in the latter, it has recourse to the Government.

China

The Government exercises full control over international trade in rice and other cereals. Decisions on the volume of imports and exports are taken by the State Planning and Development Commission in consultation with the State Council. China usually exports rice of medium to low quality, while importing high quality fragrant rice. The Ministry of Foreign Trade and Economic Co-operation administers the cereal trade, while actual transactions are carried out by state trading enterprises, of which the China National Cereals, Oils and Foodstuffs Import and Export Corporation (COFCO) is the major one.[24] COFCO manages the country's rice exports (and has a monopoly on rice imports), accounting for more than a tenth of world trade. It is a regular bidder on tenders by state-importing organizations. COFCO is also a large exporter of maize, and active in a range of other food crops. While COFCO dominates in rice, the country’s other licensed international grain trading enterprise (owned by a provincial government and active in exports since April 1999), the Jilin Grain Group Imp. & Exp. Co. is the major maize exporter, with an estimated export volume in 2002 of 4 million tonnes. It also exports rice.

India

India's state-run Project and Equipment Corporation is a large exporter of non-basmati rice, often selling through bidding on tenders.

Myanmar

Myanmar has a mandatory rice procurement policy in which farmers must sell a fixed amount of rice to the Government each year at less than half the market price. If farmers do not produce enough to meet their quota, they must buy extra rice on the market to make up the deficit. The Government uses the procured rice to provide low cost rice to selected groups, and for exports through Myanmar Agricultural Produce Trading, an agency of the Ministry of Commerce.

Pakistan

Pakistan is a major rice exporter. All trade is done by the private sector. The state-owned Rice Export Corporation was abolished several years ago. Today, another state trading agency, the Trading Corporation of Pakistan (TCP), plays a limited role in the rice trade by facilitating government-to-government exports through the private sector. The TCP A modest export financing scheme, managed by the State Bank and channelled through commercial banks, provides special credit facilities to certain exporters who have irrevocable proof of orders. The Government, in consultation with the Rice Exporters Association of Pakistan, has established a quality review committee to certify the quality of rice prior to shipment in an effort to boost the image of Pakistani rice, especially Basmati rice.

Thailand

The Grain Division of the Department of Foreign Trade of Thailand often responds directly to tenders for rice imports, and if successful, then enters into government-to-government deals. In 2000/01, the Government was allowed to trade up to 500 000 tonnes (compare to 750 000 tonnes in 1999/2000). The rice trading structure of Thailand gives emphasis to the private sector. Inter-government rice trade will take place on a case-by-case basis, and only if it is necessary. Rice exports within the international rice pool are supervised by the Department of Foreign Trade, Public Warehouse Organization, and the Marketing Organization for Farmers. The Bank of Thailand and the Export Import Bank of Thailand can provide trade credit to paddy rice traders and rice exporters.

Viet Nam

In Viet Nam, the Northern Food Corporation and the Southern Food Corporation Inc. (Vinafood I and II), both state entities, dominate rice exports (but there are also other government-owned and private rice exporters). The Southern Food Corporation accounts for about half the country's exports and somewhat less than one tenth of world trade. It is responsible for large government-to-government contracts which are the result of successful bidding at tender. It also administrates the export quota of others - mostly provincial governments who may use (international) private traders as their agents. The Northern Food Corporation is a smaller exporter. It administers export quotas, but its own exports are mainly limited to government-to-government contracts with politically important allies. It accounts for less than one percent of world market trade.


[23] Canadian Wheat Board. Annual report 2000/2001, Winnipeg.
[24] FAO. 2001 Review of basic food policies, Commodities and Trade Division. Rome.

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