However following talks between Mr Vaile and his Iraqi counterpart, Ahmad Chalabi, it is clear that AWB will be shut out of any future Iraqi deals.
AWB is at the centre of allegations it paid A$300 million in kickbacks to the Saddam Hussein regime in breach of the United Nations' oil-for-food program.
The Cole commission of inquiry is investigating the allegations.
Following the meeting between Dr Chalabi and Mr Vaile in Baghdad’s heavily-fortified green zone, Dr Chalabi said the questionable acts of a few would not get in the way of trade between Australia and Iraq.
An overhaul of Australia’s wheat marketing system is now certain and may financially undermine the publicly-listed AWB, which has suffered a 35 percent fall in its share price in the past six weeks.
Dr Chalabi said his country is ready to do business with Australian wheat growers as long as it is not with AWB.
"We are ready now to buy Australian wheat, and we hope to come to some kind of agreement where we can satisfactorily do that without jeopardising anything about the investigation and the results of that."
Meanwhile Mr Howard said he spoke to Mr Vaile who reported discussions were positive for Australian wheat farmers.
"... it was a very good meeting with the Iraqi deputy prime minister Mr Chalabi," he told the Nine Network after speaking to Mr Vaile.
"It's very clear from that that the Iraqis still want to buy wheat from Australia.
"They obviously have some problems with AWB Limited for reasons people understand, but let me put it this way, the whole tone of the discussions between Mr Vaile and Mr Chalabi are very encouraging."
But Mr Howard would not outline any deals that were made with Iraq over wheat sales.
"Well, I don't want to start talking at this stage about particular deals. Let me simply report, which is the case, that it was a very positive meeting and out of that meeting there will be some further work and we'll see how things evolve," he said.