Home' AWB Marketing Guide : Marketing Guide 2012 Contents // 19
• Freight, storage, infrastructure and logistics support: Like
other pool providers, the AWB Pools require access to significant
amounts of freight, upcountry storage, infrastructure and
logistics support and is subject to increases in the costs thereof.
The AWB Pools also compete with other exporters to secure
sufficient port capacity to support the grain marketing program.
AWB Pools seek to mitigate certain execution challenges
(including delivery interruptions and associated financial
consequences) by leveraging Cargill’s local export execution and
logistics teams. Similarly, the breadth of the national AWB Pools’
origination footprint allows us to consider other options such
as the shifting of sales to different ports or regions to minimise
non-performance of a contract arising as a result of interruptions
in infrastructure or logistics.
• Counterparty credit and performance risk: As a trading
vehicle the AWB Pools Trust is subject to non-performance risk
by its customers, suppliers and hedging counterparties. In order
to minimise any non performance exposures we seek to sell on
terms which ensures we receive payment prior to passing of
title. Rarely would AWB Pools sell to customers on credit terms.
• Insolvency of a Pool: The AWB Pools are managed as a series
of sub-funds within a single seasonal trust, the 2012/13 AWB
Pools Trust. The trust structure seeks to protect one seasonal
trust from another seasonal trust. However, within the 2012/13
AWB Pools Trust, the trustee is able to attribute the charges and
liabilities it incurs in managing the 2012/13 AWB Pools to the
particular Pool in respect of which the charges and liabilities
relate. In addition, some fees charges and expenses are incurred
in respect of management of all the 2012/13 AWB Pools, and
are apportioned between the AWB Pools. In the event that the
liabilities of a 2012/13 AWB Pool exceed its assets, the liabilities
may be met from the assets of the other 2012/13 AWB Pools.
• Conflict of interest: Cargill Australia Limited (CAL) is appointed
to provide services to AWBHFP and the AWB Pools in relation to
the management of the AWB Pools. CAL’s extensive international
network provides access to world markets for Australian grain
As CAL and other members of the Cargill Group are in the
business of grain marketing and trading on their own account,
the objectives of the Cargill Group (as well as the way in which
the Cargill Group seeks to achieve these objectives) may be
different to that of the AWB Pools. For example, CAL may seek
to achieve its objectives based on different risk tolerance levels
reflecting arbitrage opportunities and may employ different
strategies and tools in conducting its own business as compared
with providing similar services to the AWB Pools. Consequently,
the financial performance of CAL in conducting its own business
is not indicative of the financial performance of the AWB Pools.
In order to manage any potential conflicts of interest that may
arise between the interests of CAL or its associates and related
bodies corporate and the AWB Pools, the directors of AWBHFP
and CAL will at all times pay regard to their obligations and will
ensure that all such potential conflicts are resolved fairly. In
particular, when allocating significant sale opportunities, CAL has
agreed to ensure that all such opportunities will be allocated in a
fair and equitable manner between its own trading business and
the AWB Pools.
• Geopolitical risks: We take advantage of our access to
Cargill’s global network in buying, selling, marketing and
distributing grains to minimise the potential adverse impact
of uncertainties such as international political development,
changes in government policies, restrictions on foreign trade
and government sanctioned embargos, currency repatriation and
other developments in the laws and regulations of countries in
which the end customers reside.
• Key personnel: CAL, as a service provider to AWBHFP and
the AWB Pools, employs a dedicated pool management team.
The pool management team sets strategies for and oversees
the operation and management of the AWB Pools in addition to
working with the broader team to seek opportunities to market
and sell the pooled grain. The risk of the death, disability or
withdrawal of key personnel adversely affecting the operations
and management of the AWB Pools is mitigated by Cargill’s
global strength. Should anything unforseen arise in relation to
key pool resources Cargill has access to a global trading and
marketing team to cover personnel changes.
The foregoing is not a complete list of the risks involved in selling
your grain to the AWB Pools. You should read the Terms and
Conditions in its entirety and consult with your advisers before
making an offer to sell your grain to the AWB Pools.
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