The core of agrarian socialism has always been socialising losses while privatising profits. The next crisis looming for AWB is what happens if West Australian wheat farmers see their potential profits socialised to cover AWB hedging losses.

Since international wheat prices hit the roof, there’s been growing concern about how exposed AWB is to forward sales locked in around $200 a tonne, concern stirred along by single-desk archenemy and former GrainCorp chairman Ron Greentree who provocatively told the AFR he had written off $2.4 million he was owed by AWB as a “bad or doubtful debt”.

PM did a nice job on Friday while the AFR had a crack yesterday and the Oz jumps on the bandwagon today, lumping it in with a nice story on yet more disclosures  from the Cole inquiry that raise questions about other deals done in Italy, Turkey and Pakistan. (Yes, Virginia, there was a lot more for Cole to look into if his political masters let him.)

But it’s the hedge question that’s been trashing AWB’s share price while the company remained silent – until now. An AWB spokesman confirmed to Crikey that the company, like all global wheat traders, had been affected by the recent wheat price volatility.

“We’ll let the market know of any material developments,” he said. Asked if, by implication, the losses on hedging were not yet “material”, he said yes.

“Material” generally means an impact of 5% or more on the annual result. The $150 million loss suggested in the PM report would certainly be material but it is not impossible that AWB is being optimistic in how it’s treating last week’s big losses – smoothing them over a two year time frame of futures trading.

But back to the West Australian farmers lucky enough to have a wheat crop when international prices are soaring – how keen are they to sell their wheat to AWB at a price averaged down by AWB’s loss-making hedges and lower-priced long-term contracts?

Of course, they don’t have much choice. The domestic market can only handle so much wheat, after which it has to be exported – and there’s only one company allowed to do that. Ain’t agrarian socialism grand?