Sugar marketing – clearing up misconceptions
The Sugar Industry (Real Choice in Marketing) Amendment Bill 2015 passed Queensland Parliament on 3 December and became law after receiving Royal Assent two weeks later on 17 December.
This is a major step forward in securing certainty for the sugar industry.
It opens the door to deliver genuine competition in sugar marketing and thereby overcomes the imbalance in market power that favoured the mills.
This will ensure ongoing security for growers and millers into the future. CANEGROWERS is committed to working with all mills and QSL to ensure smooth implementation of the new legislation for the 2017 season and the longer term.
Here are a few facts (to counter some of the misconceptions out there):
1. The Bill is not re-regulation of the industry
Providing growers’ choice in marketing, the Bill protects farmers’ rights against mill monopoly behaviour by providing a framework that restores balance in negotiating power between mills and growers. It does not reinstate the 250 sections that were removed from the Sugar Industry Act 1999.
2. The Bill will not negatively impact on the Queensland economy and jobs
The Bill creates contestability in the marketing of raw sugar. That competition will ensure raw sugar marketers continually strive to improve their performance. Competition will stimulate economic growth and employment opportunities across the industry, especially in the cane growing sector, the sector that drives the size and vibrancy of the whole industry.
3. The Bill is about protecting small businesses against monopolies & enforcing competition
The Bill establishes a regulatory structure that prevents mills’ potential misuse of market power, addresses market failure and establishes a contestable market in the provision of raw sugar marketing and pricing services.
4. The Bill provides growers with an ability to choose how the sugar that determines 100% of the value of cane is marketed.
Explicitly sharing in the revenues from the sale of raw sugar, growers currently have and have had a say through an industry owned marketing entity in the marketing of raw sugar for over 100 years.
Given the price of cane is linked to the price of sugar, there is no dispute over the fact that growers have a clear economic interest in the raw sugar produced from their cane. The Bill simply continues growers’ rights.
5. The Bill operates if growers and mills cannot reach agreement in the negotiation of cane supply agreements.
The Bill is explicit in providing for and allowing mills and growers to reach agreement for the supply of cane and pricing and marketing of sugar on whatever terms they agree.
If there is no agreement the Bill provides a framework for agreement and a process to resolve any deadlocks in the negotiation of cane supply agreements using the Commercial Arbitration Act 2013.
6. The Bill should not impact on international investment
Foreign corporations invested heavily in the industry under a voluntary marketing structure in which growers are partners in the marketing of raw sugar, a structure that underpinned strong growth and investment across the industry. This investment was and is welcome.
The Bill should not be seen as a reason for a reduction in investment. In fact, as mill profitability is largely determined by throughput of cane, the increased confidence among growers brought about by this Bill will have a positive impact on farm investment and expansion decisions.
7. Ownership of cane and sugar is not altered
The Bill does not interfere with the chain of ownership of sugar. As is presently the case, the ownership of cane transfers to mills in accordance with the provisions of cane supply agreements and the ownership of sugar transfers from mills in accordance with the provisions of their sugar supply agreements. The industry’s price risk management and marketing activities will continue in accordance with the relevant agreements.
Bundaberg, Isis & Mackay Mills roll over with QSL until 2019
QSL advised that on Friday 18 December, Bundaberg Sugar, Isis Central Sugar Mill and Mackay Sugar rolled over their Raw Sugar Supply Agreement with QSL, extending their current contracts until 30 June 2019.
QSL Chief Executive Officer and Managing Director Greg Beashel thanked the three millers for their continued support and said he looked forward to growing QSL’s contracted tonnage for future seasons under Queensland’s new sugar marketing legislation, which received Royal Assent and became law yesterday (17 December). Greg also said that QSL is committed to working with industry stakeholders regarding the smooth implementation of these changes, but in the interim, QSL remains focused on maximising returns for our members and serving the interests of growers and millers for the long-term prosperity of the Queensland sugar industry.
As of Thursday, 17 December, the Sugar Industry (Real Choice in Marketing ) Amendment Act passed having received Royal Assent and is now law.
Here is a link below to the Queensland Office of Parliamentary Counsel web site that has published the amending act. http://www.legislation.qld.gov.au/LEGISLTN/ACTS/2015/15AC032.pdf
This means the Sugar Industry Act now stands amended. In due course a consolidated reprint of the Act will be released, which will include the amendments.
Vote secures choice, fairness and a solid future
CANEGROWERS is congratulating and thanking the Members of the Queensland Parliament who have made a public stand for growers’ rights.
Their support has secured crucial and pro-competition amendments to the Sugar Industry Act (1999), which give growers confidence to invest in and grow the sugar industry.
The parliamentary visitor’s gallery was packed with grower representatives for the late night sitting and dozens more were tuned in to the live feed via the parliamentary website when Katter’s Australian Party (KAP) MP Shane Knuth formally started proceedings on the Sugar Industry (Real Choice in Marketing) Amendment Bill.
“The bill will improve competition in the Queensland sugar industry,” Mr Knuth explained.
“It will also ensure that the mill owners are not the only marketing entity available to growers. It will ensure that growers are not forced to use mill owners as their marketing entity simply because the mills crush the growers’ cane.”
Amendments were tabled by both the Liberal National Party (LNP) and KAP to fine tune the bill’s objective of:
- enabling growers to choose who markets grower economic interest (GEI) sugar,
- linking the cane price to the price of sugar,
- providing for a pre-contractual dispute resolution process, including arbitration to deal with negotiation deadlocks, and
- ensuring growers cannot be discriminated against, regardless of who they choose as the marketer of their economic interest sugar.
After two weeks of almost daily Queensland Government media releases opposing the bill as an attempt at re-regulation, Opposition leader Lawrence Springborg set the record straight explaining that the legislation would create an environment to make deregulation work.
“It does not take the sugar industry back to the 1950s … It does not remove voluntary marketing arrangements. It does not dictate Queensland sugar must be marketed through the QSL or single desk,” he said.
“It creates an environment that ensures there is some balance in an area where there may be a power imbalance.”
As the debate progressed, the speakers alternated – support for the bill coming from the KAP and LNP ranks and opposition from Australian Labor Party (ALP) speakers.
There was a surprise with the ALP’s Mirani MP Jim Pearce stating that he supported growers and was deeply concerned for their future. He cited his background in coal mining as giving him an understanding of how international companies can act.
“I am really concerned about what I might do to the industry and the future of farmers by not supporting the bill before the House,” he said. Nonetheless, his verbal support for the Bill did not translate into a vote for it.
Despite attempts by the ALP to make the debate about personalities and politics, seeking to find discord between the Liberal and National elements of the merged party, when it came time to vote the numbers became clear.
The bells rang, MPs hurried in from their offices and the votes were counted.
The bill passed 45 votes (LNP, KAP and Independent) to 43 (ALP). The passage of this bill is an important step in the process towards ensuring genuine competition in sugar marketing.
CANEGROWERS is ready to negotiate new Cane Supply Agreements which reflect the provisions of the legislation in the districts which require them.
A bit more detail about cane growers concerns
The actions of large multinational corporations with regional sugar mill monopolies are threatening growers’ basic rights.
Three milling companies (Wilmar, MSF Sugar and COFCO) have announced they will cease sugar marketing arrangements with QSL from 2017. This will deny growers the choice to market their Grower Economic Interest (GEI) sugar through their industry-owned and not-for-profit marketing body.
The 1 September edition of Australian Canegrower contained a double-page spread setting out the history of sugar marketing and why now is such a crucial time for growers' choice, rights and futures.
You can see the pages by clicking here or on the image.
CANEGROWERS is calling for pro-competitive legislation to be enacted to recognise the economic interest growers have in sugar and safeguard their right to decide how that sugar is priced and sold.
Farmers need a guarantee of competition and choice in the sugar market.
CANEGROWERS has its own proposal for the future of sugar marketing – one that would guarantee choice for farmers. Click on the link below to view this model.
Pathway to Market Grower Economic Interest (GEI) Sugar
You can watch our explanation of the above Marketing Model over on YouTube.
Click here or watch below.