With Liberal Party members slanging off at each other over the government’s compromised compromise of a wheat policy, it would be rather bemusing if it actually wasn’t quite what it seemed.

It’s very appealing to describe the policy as a straw man – designed to fail. After all, once you knock the heads off wheat, straw is what’s left.

The decision to leave the effective export monopoly with AWB for the coming harvest keeps the National Party and most farmers quiet until after the election.

But the very demanding timetable for setting up a new grower body to run the single desk by March with the stipulation that AWB not be involved could provide an easy post-election excuse for whoever’s in power to deregulate wheat.

The government will not be spared constant pressure in the lead up to the election by the companies it’s dudded on wheat exports. Graincorp’s CEO, Tom Keene, tells tonight’s Eureka Report that he’ll be lobbying hard and loud with the message that the industry is missing out on $120 million in savings by not having contestability.

And there will be direct pressure on agriculture minister Peter McGauran as Graincorp effectively ignores the spirit of the announced policy. Says Keene:

Clearly we’ll also be pushing though to seek approval for the export of bulk wheat as we can with the Minister having the right of veto. We’ll be looking to lodge permits for that in the near term as soon as the rules are clear.

It would be a reasonable bet that fellow would-be wheat exporters ABB and CBH will try something similar.

The bottom line for battered AWB comes from Macquarie Equities’ view of the announced policy:

The impact of this on AWB depends on whether the AWBI demerger includes the pool management division. If it doesn’t, our price target is $3.33 and if it does, our price target falls to $2.58. If the demerger misses the March 2008 deadline, deregulation becomes a possibility. This would reduce our price target to $1.85 per share.

That’s a long way from this morning’s high of $3.60. There must be some brave souls prepared to take ABN Amro’s tip that AWB is a turnaround stock.