SYDNEY, Dec 22, 2006 (AFP) - Australia on Friday awarded licenses to two companies to export wheat to Iraq and Indonesia, the first since exporter AWB was stripped of its 67-year-old monopoly over its role in the Iraq kickbacks scandal.

Agriculture Minister Peter McGauran's decision to grant bulk export permits to Wheat Australia and West Australian-based CBH comes two weeks after the government temporarily removed AWB's right to veto other companies' applications.

The government transferred that right to McGauran soon after the 10-month Cole Inquiry found AWB had funnelled some 220 million dollars in bribes to Saddam Hussein's regime to secure lucrative wheat contracts.

The move followed anger among farmers in Western Australia over AWB's decision in November to block a series of applications by CBH that would have earned Australian growers higher prices.

The new licences, chosen from 46 applications, permit Wheat Australia to export 300,000 tonnes to Iraq and CBH to send 500,000 tonnes to its Indonesian flour mills.

"Iraq is a long-standing and important market for Australian wheat and as AWB is currently unable to export to that country, I believe it is important to maintain the presence of Australian wheat in that market," McGauran said.

After AWB was banned from trading with Baghdad in February, the then trade minister Mark Vaile flew to Iraq to seek assurances that the AWB scandal would not jeopardise future trade with Australia.

McGauran said the new licences were in the best interests of growers, despite objections from colleagues in his rural-based National party, which forms part of Australia's coalition government.

"This is, to a significant degree, a compromise between those who are passionate supporters of a single desk (system) and those who would want instant deregulation," he said.

Although AWB has warned that grower returns could be slashed if farmers were allowed to sell through another company, McGauran said the new licences would not affect the national pool price, into which Wheat Australia and CBH would pay 4.0 dollars (3.1 dollars US) for each tonne they exported.

"This will provide certainty for those 3,000 national wheat growers who have already delivered to the national pool and those who will supply the pool in the future."

Earlier, chairman of AWB International Ian Donges warned he would have to wind-up the company if the government granted export permits to competitors.

The government will spend the next three months consulting the industry about permanent changes to the monopoly after the Cole Inquiry cleared the government of knowledge of the payment of massive bribes to Iraq.

mb/mfc

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