29 October 2014

Close to two thirds of Australia’s cane farmers will have their incomes impacted by a sugarmiller intent on preventing them from using their own marketing company, and so needState or Federal legislation to give them competitive choices, Queensland Sugar Limited (QSL) Chief Executive Officer and Managing Director Greg Beashel said today.

Mr Beashel said QSL’s concerns for the state’s 4000 cane growers and the $1.5 billion sugar export industry were outlined in its submission to the Federal Senate Committee Inquiry into current and future arrangements for the marketing of Australian sugar. This submission is now available on the inquiry’s website.

The Federal inquiry, as well as State Government and ACCC investigations also currently underway, were prompted by the decision of three sugar millers – Wilmar, Mitr Phol’s MSF and COFCO’s Tully Sugar – to withdraw from the system provided by QSL from July 2017. QSL currently undertakes the marketing of cane growers’ economic exposure to sugar on a not-for-profit and transparent basis.

Mr Beashel said that as an entity whose primary objective was to promote the interests of the Queensland sugar industry, QSL was extremely concerned that due to the monopoly position held by millers as the only buyers of cane in most growing regions, most Queensland growers would have no choice in who manages their sugar returns.

“QSL does not support a return to the statutory single desk that was dismantled in 2006,” he said.

“What growers need is choice where marketers compete for the right to market a
grower’s economic exposure to sugar. Such competition will lead to more innovative
solutions, balanced risk and a fairer outcome for all.”

Mr Beashel said what Wilmar, MSF and Tully Sugar were doing was akin to an employer saying, ‘I pay your superannuation so you have to use my superannuation fund’.

“The Federal Government introduced the Super Choice legislation nearly a decade ago giving employees the ability to choose the fund that manages their retirement savings,” he said. “Cane growers should also have the right to choose and need a similar legislative framework. In this case it is a choice about who it is that manages their income.”

Mr Beashel said QSL welcomed competition and had actively encouraged an industrynegotiated choice arrangement, but the three millers were pressing ahead and imposing their own arrangements despite widespread and often heated grower opposition to their plans.

“I guess the public relations damage caused by this is outweighed by the potential
commercial gains from extending their milling monopoly to gain control of the sugar QSL is currently marketing on the growers’ behalf,” he said. “In light of this, we believe government intervention is now the only way left to modernise sugar marketing and protect the growers supplying Wilmar, MSF and Tully mills.

“Our Senate Inquiry submission advocates establishing a statutory ‘grower choice’ regime where mills would be required to give growers the freedom to choose who markets the sugar they have price exposure to under their cane supply agreements.”

Mr Beashel said this could be achieved at either a State or Federal level via amendments to the Queensland Competition Authority Act, the Sugar Industry Act or the Competition and Consumer Act.

The QSL submission also outlined concerns regarding control of Queensland’s six bulk sugar terminals, currently leased and operated by QSL.

“QSL has a five-year lease with Sugar Terminals Limited to operate these on a cost-recovery and open access basis,” Mr Beashel said. “We would like to see an access regime established to ensure any other potential operating parties are prevented from using the terminals to advance their own commercial interests to the detriment of other users.”

QSL’s submission is available in full on the Senate Inquiry’s website at
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Rural_and_Regional_Affairs_and_Transport/Sugar/Submissions