Processors may continue to pay for wheat monopoly

The country's wheat exports are currently traded solely by AWB, set up as the monopoly agency.

However, after being implicated in a breach of United Nations sanctions, the company will now be dissolved following the 2007/08 wheat harvest.

A new export body will then be set up by March next year to take over the monopoly, said Australian prime minister, John Howard.

AWB accepted the government's decision, but suggested that "single desk" monopoly system would continue to work in the best interests of grain producers and processors.

"AWB will continue to maximise financial returns to growers through the national pool for the 2007/08 harvest and maintain our commitment to service key export markets," said company chairman Brendan Stewart.

The decision is likely to be welcomed by producers in the country despite criticism from both the EU and US, who believe that monopolies like AWB distort global wheat prices by removing competition controls.

Though Australia is becoming increasingly important to wheat supply, grain processors in Asia, who are most reliant on the country's grains, are most likely to be affected by the monopoly.

"Australia is consistently about the world's second or third largest producer of wheat," a United States Department of Agriculture commodity analyst told AP-FoodTechnology.com .

The analyst added that of around the average 15m tonnes of wheat produced annually in the country, more than half found its way onto the foreign market.

The USDA suggested that these estimates were likely to fall following recent droughts in the country affecting harvests, further hiking prices.