Sugar marketing in Queensland

In April 2014, milling company Wilmar Sugar indicated it would end its sugar marketing arrangement with the industry-owned not-for-profit marketing company QSL from the end of the 2016 season. Tully Sugar and MSF Sugar also took that decision meaning new arrangements would be required before the commencement of the 2017 crush.

The decision meant:

  • Growers supplying those companies would be forced to market their economic interest sugar through the milling company’s channels. As grower earnings are calculated on a formula which links the export price of the raw sugar to the price of their cane, they have a direct financial link to the marketing outcome.
  • Millers would extend their regional milling monopoly power to include marketing.

Growers were immediately alarmed and outraged at the move by the milling companies and rallied in numbers demanding the right to choose between the millers’ proposal and QSL fearing for their future profitability.

Family farmers faced being placed in a situation where one company had complete control and could sell sugar to its own overseas partners or subsidiaries at a price below what could be achieved by an independent trader in the open world market.

If allowed to proceed unchallenged, this change to marketing arrangements would have allowed the mills to unilaterally put their only other competition out of business, leaving the way clear for mills to set up their own marketing business in its place, with no competition.

In December 2015, amendments to the Sugar Industry Act 1999 were passed by a majority of members of the Queensland Parliament requiring mills to offer marketing choice to growers and therefore provided for competition in the provision of sugar marketing services.  

Two agreements are required to make this happen.
1.    a Cane Supply Agreement (CSA) between the growers and a mill for the supply of cane to the mill; and
2.    an On-Supply Agreement (OSA) between the mill and the alternate marketer/s who may be chosen by growers.

To see the latest on the issue, read the CANEGROWERS media releases.