AWB made the announcement in a statement to the stock exchange on Monday.
The monopoly wheat exporter is being investigated over the payment of almost $A300 million in kickbacks to Saddam Hussein's regime.
AWB says it’s disappointed with the decision and is determined to take whatever steps necessary to rebuild its reputation with customers, growers and shareholders.
The decision precludes AWB from bidding to tender for the export of a million tonnes of wheat to Iraq.
It’s also had a flow on effect for AWB shares which were down more than 6 percent on Monday morning at $A4.38.
Wheat growers worried
Wheat growers have described the IGB’s decision to suspend business with AWB Ltd as “extremely worrying.”
Chris Kellock from the Eastern Wheat Growers Group expects it will hurt growers.
"We're really concerned that this is going to have a real negative impact on our returns," Mr Kellock said.
“This news - if growers didn't realise beforehand, they should
realise now, the single desk monopoly is well and truly past its
use by date.”
Mr Kellock says AWB must accept the blame for the IGB's
decision.
"The problems within AWB stop at AWB. I believe this scam was
developed within the bowels of AWB and that's where the fall-out
for this rejection of our wheat into the market lies," he said.
"This oil-for-food scandal has given our competitors a free kick... There's a lot of hard work to be done and it's probably best done by other companies now, to restore the image of the Australian wheat export system."
Mr Kellock says he hopes Iraq will eventually buy Australian
wheat once again.
"Definitely, we want all available markets open to the Australian grain growers, and I believe in the future our interests are probably best in the hands of other companies that have got their reputations still intact.”
"I think it's extremely important now that all growers have
available to them the choice that most other businesses take for
granted in this country, that is the freedom to be able to export
to whom, and whenever, and at whatever price."
PM defends government’s approach
Prime Minister John Howard, has rejected Labor’s latest allegations of negligence over AWB.
Opposition foreign affairs spokesman Kevin Rudd says the government should have acted on warnings by Treasury officials in 2003 that kickbacks had been paid to Saddam Hussein when he ruled Iraq.
But Mr Howard maintains people should wait until Commissioner Terence Cole has produced his report.
And in a move that could fuel opposition criticisms, public servants have effectively been gagged from answering questions about the AWB at this week’s Senate estimates committee hearings.
Notification of the ban came from Senator Nick Minchin who claimed that examination of officials by the committee might only be appropriate in the future.