Growers mount fight of their lives to keep profits transparent

3 April 2014
Canegrowers & ACFA Media Release

CANEGROWERS and ACFA have issued the strongest possible warning to the miller of close to half of Australia’s sugar that it must consider the future viability of growers, as news that it plans to break away from QSL and set up its own marketing arm ripples across the industry.

The groups representing over 80% of Australia’s sugarcane growers have united for what they say will be the biggest campaign in the sugarcane industry’s history; to gain legal title over growers’ share of sugar beyond the farm gate – an imperative which they say is mission-critical for grower confidence and profitability.

“The end game is ensuring that the majority of Australia’s sugar continues to be channelled through the industry owned marketer QSL,” says CANEGROWERS Chairman Paul Schembri.  Australian Cane Farmers Association Chairman, Don Murday adds that QSL is owned by the industry and it works because growers and millers have unrivalled transparency in how the profits of the sugar are made and distributed.  “A large corporate entity is not constitutionally required to afford growers this transparency,” he says. “QSL operates in the best interests of growers and millers together.”

The constitution of QSL sets down that it will maximise the profits to both growers and millers, and because it is owned half-half by growers and millers, both groups get unrivalled transparency by the bulk of Australia’s sugar being marketed through the export-desk.

CANEGROWERS and ACFA say when floods, cyclones or disease debilitate production in any given year, the mills are quick to call on growers to stump up two-thirds of any losses – recognising that this is their economic interest in the sugar beyond the farm gate.

“The mills can’t have it both ways. Their position changes to suit themselves.  In one breath they expect growers to cough up two-thirds of any losses – that’s millions of dollars – and in the next breath they turn around and say growers have no ownership and no rights,” says Mr Schembri.

“It is of upmost importance that this two-thirds ownership is legally recognised so that growers are assured that they get maximum benefit from their two-thirds share in good times and bad,” he says.

Mr Murday says that for Australia’s 6000 cane growers, that means keeping the industry-owned marketer QSL in play.

The growing fraternity says that as the largest sugar miller, processing some 14 million tonnes of cane each year, Wilmar is in a monopoly position and has a corporate responsibility to not act in an anti-competitive manner.

“Up until now we have had assurances from Wilmar that they would remain with QSL – it had been a condition of their entry to the market by the Foreign Investment Review Board (FIRB) – but now that time is up, growers need more than year-on-year assurances.  They need rock tight legal ownership over their share,” says Mr Schembri.

“Let’s not forget that growers not only have two thirds financial interest in Australia’s $2 billion crop but they also have ownership over some $11 billion in assets needed to grow the crop,” says Mr Murday. “That’s a big investment which should not be overlooked.”

CANEGROWERS and ACFA say this has the potential to affect all growers. “We don’t want any one company to be in a monopoly position over Australia’s sugar. A strong future for growers and millers involves maintaining their body, QSL, to market – at the very least – the two-thirds economic interest in sugar held by the growers,” CANEGROWERS and ACFA said unequivocally today.

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