Australia's annual Grains Week conference, dominated by international trade issues this year, was barely over when news hit the screens that the United States department of agriculture had signed an agreement to donate 180,000 tonnes of wheat to Indonesia.

AWB Ltd, Australia's monopoly wheat exporter, remained critical of US wheat donations. "We remain concerned about the impact that aid donations have on commercial sales," AWB's spokeswoman said. "We continue to seek assurances from the US that commercial sales won't be displaced through donations and that those donations are targeted to those people in need."

The latest US donation to Indonesia comes as concern mounts over the possibility that Australian grain may get caught in the crossfire of a US-European subsidy war.

US Farm Bureaupresident Dean Kleckner, during a visit to Australia, said in Perth that he was advising against reactivation of Export Enhancement Programme (EEP) subsidies on grain exports. However, Kleckner stressed that domestic political pressure by US farmers for grain EEP subsidies could mount as they tried to export overflowing stocks of grain.

Statements by industry leaders this week show that the Australian industry is just as opposed to US wheat giveaways to Indonesia as it is to direct subsidies. "Provision of food aid by the U.S. is not necessarily on purely humanitarian grounds and its aggressive use of credit arrangements in traditional Australian grain markets is a real concern," Australia's federal agriculture minister Mark Vaile said at the Grains Week conference.

The full extent of US erosion of Australia's share of the Indonesian grains import market is not yet publicly known, but various recent comments by the AWB have shown that Australian sales to Indonesia will be greatly down in the currentshipping year to September 30. In 1997/98 Indonesia was Australia's biggest customer for wheat, taking 2.4 million tonnes.

The latest US wheat donation to Indonesia was signed by the USDA with Catholic Relief Services for supply in fiscal 1999. The receiving organisation will sell the wheat in Indonesia to raise funds for agricultural development projects, a U.S. official said.

USDA also continues to work with Indonesia on a separate government-to-government donation of 200,000 tonnes of wheat, which is still under negotiation. All this follows a Clinton administration decision last year, as Asian markets collapsed and US wheat bins overflowed, that the US might donate up to 1.5 million tonnes of wheat to Indonesia. This was subsequently scaled back to about 600,000 tonnes, according to Australian industry sources.

They also say that a recent US donation to Indonesia involved 170,000 tonnes. The USDA on Thursday said that several large US wheat donations were still pending, with a pact to donate 430,000tonnes of wheat to Indonesia not yet signed. So far the USDA has earmarked some 5.11 million tonnes of wheat, flour and bulgur for donation to at least 28 countries. The biggest giveaway will be 1.7 million tonnes to Russia, if disagreements over NATO's bombing of Yugoslavia do not so anger the Russians that they refuse to accept.